I agree with Mr Mind that there are a number of questionable hidden assumptions here. I would suggest that if you truly care about improving the world, you should seek to invest, not to give to charity. Ideally, this would be an area in which you already have some expertise, so you can pick wise investments. Most problems that charities work on are also business opportunities for entrepreneurs to solve; by being part of that, your money will do far more good in the long run. Market feedback makes sure that for-profit businesses really are solving the problem, whereas charities generally just drift.
For example, I am far more excited by Endaga (see e.g. here, here) providing cheap technology for mobile networks for rural areas in the third world, than I am about sponsoring a bike ride across Zambia to raise awareness of poverty. Only one of these activities has the chance to do anything about African poverty, and we all know it ain’t the charity.
I would suggest that if you truly care about improving the world, you should seek to invest, not to give to charity. Ideally, this would be an area in which you already have some expertise, so you can pick wise investments. Most problems that charities work on are also business opportunities for entrepreneurs to solve; by being part of that, your money will do far more good in the long run. Market feedback makes sure that for-profit businesses really are solving the problem, whereas charities generally just drift.
There are lots of people who are trying to maximize their individual return on investment (through buying stocks and stuff), so opportunities there are thoroughly picked over. By contrast, there are a relatively small number of dollars chasing Wikipedia-style projects that accelerate economic growth without delivering financial returns to their creators, so ROI should (theoretically) be much higher.
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For example, I am far more excited by Endaga (see e.g. here, here) providing cheap technology for mobile networks for rural areas in the third world, than I am about sponsoring a bike ride across Zambia to raise awareness of poverty. Only one of these activities has the chance to do anything about African poverty, and we all know it ain’t the charity.
Typically when LWers talk about charitable giving, we are talking about effective altruism.
I didn’t say anything about trying to maximise your investment. I strongly suspect that the people behind Endaga, for example, could get more money by operating in a more conventional business environment. Entrepreneurship in the third world is emphatically not thoroughly picked over, but it is just not as profitable as selling to rich Americans. If you are willing to pay that opportunity cost, you can have a big effect.
Secondly, effective altruism is a result, not a process. If the most effective way of helping the world is to give nothing to charity and set up businesses instead, then effective altruism would say set up the businesses. I am precisely questioning the assumption that effective altruism == charitable giving.
To forestall an objection: I think investing with a goal of improving the world as opposed to maximizing income, is basically the same as giving, so that comes into the category of how to spend, not how much money to allocate for it. If you were investing rather than giving, and had income from it, you’d simply allocate it back into the category.
It’s not a strawman, I linked to an actual website. No, those people don’t call themselves Effective Altruists, but they are engaged in altruism and are trying to be effective. EA is an outcome, not a process, and the EA movement has no patent on it. Yes, it’s a weakman, in that I deliberately chose an obviously ineffective charity. But my opinion of the rest of the EA movement is not much higher. The comparison is neither bed nets nor deworming—according to GiveWell’s top ranked charity, it’s sending money unmonitored, and hoping against 60 years of experience that this actually improves things rather than just being a leaky bucket.
it’s sending money unmonitored, and hoping against 60 years of experience that this actually improves things rather than just being a leaky bucket.
There not much experience with sending money directly. Most of aid spending traditional went to big organisations and not to individual people in form of money.
You might try reading up on microfinance, it seems like it’s in the same reference class as your idea. Givewell writes about it here (and other places).
If I want to invest in companies being started in Africa, I’m going to have to do one of two things: make investments myself or give my money to someone else to invest it for me. If I make investments myself, I’ll either do it remotely (which seems like a bad way to get to know investment opportunities, do due diligence, etc.) or travel to Africa and effectively work as an angel investor myself. Giving the money to someone else to invest seems like it might run in to the same sort of problems that giving the money to someone else to do good deeds with would, but it could be mitigated by my money manager’s incentive to get a good return for me in order to attract additional clients. So this idea seems more or less equivalent to: find a venture capital firm operating overseas and invest your money with them. My impression is that venture capital firms typically have institutions rather than individuals as their clients; I’m not sure if there’s a good reason for this.
Investing in the stock markets of developing countries is another idea. My friend who’s an expert on economics has told me that it’s common for a country’s economy to grow well while its stock market performs poorly, I guess due to a high amount of turnover among the companies listed? I’m not sure how this would effect the EA implications of investing in a developing country’s stock market.
I agree with Mr Mind that there are a number of questionable hidden assumptions here. I would suggest that if you truly care about improving the world, you should seek to invest, not to give to charity. Ideally, this would be an area in which you already have some expertise, so you can pick wise investments. Most problems that charities work on are also business opportunities for entrepreneurs to solve; by being part of that, your money will do far more good in the long run. Market feedback makes sure that for-profit businesses really are solving the problem, whereas charities generally just drift.
For example, I am far more excited by Endaga (see e.g. here, here) providing cheap technology for mobile networks for rural areas in the third world, than I am about sponsoring a bike ride across Zambia to raise awareness of poverty. Only one of these activities has the chance to do anything about African poverty, and we all know it ain’t the charity.
My rebuttal:
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Typically when LWers talk about charitable giving, we are talking about effective altruism.
I didn’t say anything about trying to maximise your investment. I strongly suspect that the people behind Endaga, for example, could get more money by operating in a more conventional business environment. Entrepreneurship in the third world is emphatically not thoroughly picked over, but it is just not as profitable as selling to rich Americans. If you are willing to pay that opportunity cost, you can have a big effect.
Secondly, effective altruism is a result, not a process. If the most effective way of helping the world is to give nothing to charity and set up businesses instead, then effective altruism would say set up the businesses. I am precisely questioning the assumption that effective altruism == charitable giving.
In that case your example of bike rides is pretty bad. It’s a strawman. The comparison is bed nets or deworming.
This thread is interesting, but off-topic. There is lots of useful discussion on the most effective ways to give, but that wasn’t my question.
To forestall an objection: I think investing with a goal of improving the world as opposed to maximizing income, is basically the same as giving, so that comes into the category of how to spend, not how much money to allocate for it. If you were investing rather than giving, and had income from it, you’d simply allocate it back into the category.
It’s not a strawman, I linked to an actual website. No, those people don’t call themselves Effective Altruists, but they are engaged in altruism and are trying to be effective. EA is an outcome, not a process, and the EA movement has no patent on it. Yes, it’s a weakman, in that I deliberately chose an obviously ineffective charity. But my opinion of the rest of the EA movement is not much higher. The comparison is neither bed nets nor deworming—according to GiveWell’s top ranked charity, it’s sending money unmonitored, and hoping against 60 years of experience that this actually improves things rather than just being a leaky bucket.
There not much experience with sending money directly. Most of aid spending traditional went to big organisations and not to individual people in form of money.
You might try reading up on microfinance, it seems like it’s in the same reference class as your idea. Givewell writes about it here (and other places).
If I want to invest in companies being started in Africa, I’m going to have to do one of two things: make investments myself or give my money to someone else to invest it for me. If I make investments myself, I’ll either do it remotely (which seems like a bad way to get to know investment opportunities, do due diligence, etc.) or travel to Africa and effectively work as an angel investor myself. Giving the money to someone else to invest seems like it might run in to the same sort of problems that giving the money to someone else to do good deeds with would, but it could be mitigated by my money manager’s incentive to get a good return for me in order to attract additional clients. So this idea seems more or less equivalent to: find a venture capital firm operating overseas and invest your money with them. My impression is that venture capital firms typically have institutions rather than individuals as their clients; I’m not sure if there’s a good reason for this.
Investing in the stock markets of developing countries is another idea. My friend who’s an expert on economics has told me that it’s common for a country’s economy to grow well while its stock market performs poorly, I guess due to a high amount of turnover among the companies listed? I’m not sure how this would effect the EA implications of investing in a developing country’s stock market.