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> Better yet, give it to many such someones in parallel, because portfolio theory exists. This is a bit of a controversial topic among many people I know--not
by ahh 12y ago
> Better yet, give it to many such someones in parallel,
because portfolio theory exists.
This is a bit of a controversial topic among many people I know--not settled by any means--but portfolio theory doesn't really say what you think it does here. In particular, portfolio theory suggests diversification because it reduces variance, generally at the cost of some (small) amount of return. _Since your utility from money is concave_, variance reduction improves expected utility.
Your utility from lives saved in the third world is (or should be), I think, linear. (Perhaps even convex, though that's a much more complicated argument.) While if I were a doctor, the 100th life I saved would seem a lot less interesting than the first, I don't think it has any less moral impact. Conclusion: variance reduction has little to no value, and if you think charity X is (in expected value) any measurable amount more efficient at $goal than Y, you should reallocate all donations from Y to X up to the limit of what X can efficiently spend.
- cjbprime 12y agoJust to back you up, the idea that risk aversion is not applicable to charitable giving and that you should optimally give to only one charity is fairly uncontroversial amongst the Effective Altruism movement, and has been talked about since before that movement had a name: http://www.slate.com/articles/arts/everyday_economics/1997/01/giving_your_all.html http://www.slate.com/articles/arts/everyday_economics/1997/0...
- maxbrown 12y agoIt's an interesting article, but I'm not sure I buy it. Boiled down, it sounds like the author is arguing for philanthropists to have only one cause. But maybe I care equally about helping this generation with hunger and future generations with saving the rainforest. I get that I could help hunger more by redirecting my rainforest money, but why is it logically the case that I should? Also, I find it interesting that the article discusses multiple causes, but not multiple organizations within one cause. There are hundreds if not thousands of organizations focused on cancer - to which do I give my donation? Only one?
- cjbprime 12y ago> But maybe I care equally about helping this generation with hunger and future generations with saving the rainforest. This is exactly the "delusion of grandeur" being argued against in the article, though: "[people donate] as if they were thinking, "OK, I think I've pretty much wrapped up the problem of heart disease; now let's see what I can do about cancer."
- maxbrown 12y agoBut aren't you making an assumption here that I have full, transparent knowledge of both the short-term and long-term efficiency of charity X and Y? The diversification buys me reduced risk of concentrated failure, I would assume just the same in philanthropy. If I give 100% of my donation to one organization, and it turns out they "perform" worse than I expected, it may have been better to split my donation among multiple organizations all of whom I expect to be highly efficient but cannot necessarily predict. Particularly in cases of multi-millions or billions when, even split, the money will meet a minimum threshold to make a difference.
- nialo 12y agoThat's an excellent description of trading reduced expected return for reduced variance actually means. What you seem to be saying is that your utility function isn't actually linear in lives saved, but is instead slightly concave or perhaps has a step change where the utility goes from 0 for lives < n to some positive number for lives > n (for some relatively small n).