Wednesday, September 03, 2008

Give only to one charity

When you've long held a position that runs against conventional wisdom, and when no one else seems to notice the basic insight that led you there, discovering that same idea was put forward in a well-known online publication is quite the thrill. Such was the case when I first encountered Steven Landsburg and this wonderful little 1997 article arguing that we should only give to one charity:
CARE is a noble organization that fights starvation. It would like your support. The American Cancer Society is a noble organization that fights disease. It would like your support, too. Here's my advice: If you're feeling very charitable, give generously—but don't give to both of them.

Giving to either agency is a choice attached to a clear moral judgment. When you give $100 to CARE, you assert that CARE is worthier than the cancer society. Having made that judgment, you are morally bound to apply it to your next $100 donation. Giving $100 to the cancer society tomorrow means admitting that you were wrong to give $100 to CARE today.

You might protest that you diversify because you don't know enough to make a firm judgment about where your money will do the most good. But that argument won't fly. Your contribution to CARE says that in your best (though possibly flawed) judgment, and in view of the (admittedly incomplete) information at your disposal, CARE is worthier than the cancer society. If that's your best judgment when you shell out your first $100, it should be your best judgment when you shell out your second $100.
Exactly! In the end, you will always have to use some estimate of the amount that a charity will benefit from each additional dollar. If you think that charity X will (on average) save one life for every $100,000 that it receives, and charity Y will (on average) save one life for every $200,000, you should give your contributions exclusively to charity X. Maybe you're wrong about charity X being superior, but the mere presence of uncertainty shouldn't affect your decision. If your best guess is that X is better than Y, then to the best of your knowledge, diverting money from X to Y will cost lives.

Many people complain that it's wise to "diversify," which demonstrates that they either (1) don't understand the economic rationale behind diversification, or (2) admit that they're giving for their own enjoyment, not for the benefit of the recipients. As Landsburg explains:
When it comes to managing your personal portfolio, economists will tell you to diversify. When it comes to handling the rest of your life, we give you exactly the same advice. It's a bad idea to spend all your leisure time playing golf; you'll probably be happier if you occasionally watch movies or go sailing or talk to your children.

So why is charity different? Here's the reason: An investment in Microsoft can make a serious dent in the problem of adding some high-tech stocks to your portfolio; now it's time to move on to other investment goals. Two hours on the golf course makes a serious dent in the problem of getting some exercise; maybe it's time to see what else in life is worthy of attention. But no matter how much you give to CARE, you will never make a serious dent in the problem of starving children. The problem is just too big; behind every starving child is another equally deserving child...

Here's a thought experiment for charitable diversifiers. Suppose you plan to give $100 to CARE today and $100 to the American Cancer Society tomorrow. Suppose I mention that I plan to give $100 to CARE today myself. Do you say, "Oh, then I can skip my CARE contribution and go directly on to the American Cancer Society?" I bet not.

But if my $100 contribution to CARE does not stop you from making CARE your first priority, then why should your $100 contribution to CARE (today) stop you from making CARE your first priority tomorrow? Apparently you believe that your $100 is somehow more effective or more important than my $100. That's either a delusion of grandeur or an elevation of your own desire for satisfaction above the recipients' need for food.
Unless you are so fabulously wealthy (or pick such obscure charities) that giving all your money to a single organization would saturate its finances and cause its per-dollar effectiveness to decline, there is simply no way that you can justify diversifying your contributions as a way of helping those in need. For those who are quantitatively inclined, Landsburg notes that this logic even has a simple mathematical basis.

You might say that some amount of egotism motivating charity is inevitable. I'd agree. But I also think that we should work to stop our vanity from deciding which urgent causes deserve our attention. If we're self-aware enough to realize that personal satisfaction is our main reason for giving, then we should also try to make sure that our personal satisfaction lines up with actual benefits. As I wrote long ago* on this topic:
There's still cause for optimism. If we are really interested in feeling "good" about our actions, then we need to bring perceived good closer to actual good. How? To put it bluntly, we need more information stuffed down our throats. If the nation is headed for economic disaster because we elected careless leaders, let us see it. If people are starving because we aren't donating enough food, let us see it. If they are dying because we aren't spending enough for their treatment, let us see it. Maybe, if we're confronted with hard reality on a daily basis, our desire to be good will lead us to genuinely good actions.

*I actually wrote about this in my application essay for the University of Chicago. After procrastinating until the last possible night before the online application was due, I was in desperate need of an essay topic, and ultimately settled upon how our patterns of charity demonstrate an essential selfishness, using much the same argument that Landsburg makes in his article. (I also made a clumsy analogy to vitamin pills that was way too strange to discuss here.) Ever since, I've been curious what the people reading my application thought of it. I suppose that couldn't have been too bad, since they did give me a full scholarship -- maybe there was an economist on the committee!

1 comment:

Peng said...

I don't agree. Giving to two charities $100 each might simply a reflection of one's risk aversion, and does not imply that one is irrational.

Suppose that one thinks that at least one of CARE or American Cancer Society is worthwhile, but maybe not both, and that the person is 50/50 about which. Given this prior believe, the policy of giving $100 to each would make sure that one does $100 of good, rather than have a 50% chance of doing $200 of good and 50% chance of wasting money. Although this is probably overly simplistic, it give some support to the majority of altruists who donate to multiple charities.