High Impact Investment

If you want to support a charity, should you invest the money so that your donation grows in size before it is given? The typical answer is no; helping a charity immediately will usually have a future 'return' in the form of its beneficial impact at least comparable to any pecuniary return on your investment. Perhaps you've decided that investment is worthwhile, however - maybe you're a budding Warren Buffet.

How should you invest your money to maximise your altruistic impact in the future?

Risk Averse Investors

Most people are risk averse. To see this, we need only look at insurance, an example of people paying money to reduce the risk of extremely bad outcomes. If somebody insures their house against fire, they will pay more money on average than they will receive on average in insurance if their house is burnt down. Insurance companies are after profits; if they are paying out (to recompense those whose houses are burnt down) more than they are taking in (from everybody insuring against fire) then they will stop offering fire insurance. Assuming that insurance is a zero sum game, this means that people taking out fire insurance cannot be making money out of it on average.

So on average, fire insurance is not a good bet if all you are interested in is maximising your average bank account balance. However, most people quite reasonably care more about preserving a minimum bank account balance than maximising its average, so they are happy to buy fire insurance. A similar rationale can be applied to investment. Investors pay risk premia to avoid risk. This is why safe assets like gilts have lower returns than more risky assets.

In microeconomic theory, the standard explanation for this is that investors have a diminishing marginal utility of money¹. Whether or not you consider this explanation valid, being more tolerant of risk in your investment will clearly earn you a better return. If you care more about saving more lives on average than you do about guaranteeing that a certain number of lives will be saved, it may be worth taking riskier investments. There are fewer diminishing marginal returns to charitable donations; so long as people are in areas at high risk of malaria, purchasing bed nets at a rate of $5 will be worth doing.


^{1. To illustrate this, imagine somebody who has no money (and no other possessions). We'll call them Max, since that happens to be my name and I've got very little money! There are a lot of things that I want to buy, but can't. I am more eager to buy some things than others, however; a car may seem attractive, but if you gave me £20,000 I would be more likely to spend it on a place to sleep than a car. Simplifying for the purpose of example, imagine that cars and cheap flats both cost £20,000. If I am given £20,000 I will buy a flat, increasing my welfare by a certain amount. If I am given another £20,000 I will buy a car, increasing my welfare again. This second increase must be less than the first because I wanted a flat more than I wanted a car. Therefore the second £20,000 is of less value to me than the first. Therefore there is a diminishing value to each unit of money that I am given. This is the diminishing marginal utility of money.↩}

Radical Moral Ideas: Speciesism

Who Are These 'People' You Care About?

In my previous blogposts I've discussed the implications that radical altruism has for ethics. Yesterday I considered what altruism towards future people might imply. Today I'm going to have a go at considering what happens when we examine our definition of people.

Most people who are likely to read this post won't believe that race is reasonable grounds upon which to care more or less about somebody. If you're truly egalitarian, nation probably shouldn't make a difference either, although the widespread preference of national/local charities over international ones suggests that many give a priority to the welfare of people in their own nation. Why might this not be reasonable?

For me, it seems that it's the quality of subjective experiences that I care about when thinking altruistically. It doesn't matter where you're from, everybody can experience pleasure and pain and all the other complex emotions that make up life. At least, you can experience these things unless you're a human vegetable, at which point (provided we're certain you're not just locked in) cutting off life support isn't doing much harm. Certainly discriminating on the basis of other mental qualities seems unfair to the mentally disabled and young infants. No matter how unintelligent someone is, so long as it is possible for their subjective experience of the world to be made better or worse I find helping them an appealing idea.

If this is the case, then why not care about the suffering of animals? That they're "not human" seems to me to be no more convincing an argument than that other humans are "not English" or "not white". Such an attitude is, to use an ugly word, speciesist. In fact, it seems likely to me that some mentally advanced animals like elephants, dolphins and dogs are probably significantly more capable of meaningful subjective experience than young infants. We should, therefore, care deeply about their welfare.

If you accept this argument, then a few actions seem imperative. Firstly, you should become vegan. The food looks a lot less tasty, I agree. If I were to go vegan, I'd have to learn how to get cooking tofu right, which seems quite a challenge. But all the same, something like 60 billion animals a year are killed to produce food, living lives of great suffering. If you find this argument convincing, you'll also want to check out effective animal charities and donate to them.

Radical Moral Ideas: Cost-Effective Charities

This is the first of a series of posts I'm planning to write on moral ideas that would radically change our ethical priorities if we were to accept their premises. Each have a lot of extremely clever people convinced, although they tend to make an unconventional first impression.

How much do you care about other people?

Most people agree that killing is wrong. It doesn't seem to matter much whether this is by killing somebody in front of you with a gun, by deliberately failing to hit the brakes on your car, or by launching an inter-continental ballistic missile at their house. Somewhat more contentious is the division between active and passive killing. Is shooting somebody worse than deliberately failing to hit your brakes or failing to tell them that a particular item of food is lethally contaminated? To some degree, at the very least, all of this seems bad.

How much cost can a person be expected to bear to avoid killing? If your car's brakes are broken, and you must swerve your car into a ditch to avoid hitting a person, are you morally obligated to bear the cost of repairing your car? Peter Singer gives a powerful example that appears to decide the argument: if you must ruin your expensive shoes to rescue a child from a pond, you should surely do so.

If we accept these arguments then we've established that it is right to bear a cost of up to several hundred pounds in order to save the life of someone else. In fact, the most cost-effective charities can save lives for roughly this value¹. It seems imperative, therefore, to give much more money to these most cost effective charities.

A corollary of this is that you should not give money to less effective charities. Charities fighting cancer and helping the disabled have laudable aims, but their operating costs are high. Donations to them save fewer lives than donations to more cost-effective charities, thereby causing more people to die.

<sup>1. The NHS guidelines approve drugs that prolong lives2 at a cost of less than £20,000 annually.↩
2. Actually the relevant criterion is the quality adjusted life-year or QALY.↩</sup>