I want to open up the debate again whether to split donations or to concentrate them in one place.

One camp insists on donating all your money to a single charity with the highest current marginal effectiveness. The other camp claims that you should split donations for various reasons ranging from concerns like "if everyone thought like this" to "don't put all your eggs in one basket." My position is firmly in the second camp as it seems to me obvious that you should split your donations just as you split your investments, because of risk.

But it is not obvious at all. If a utility function is concave risk aversion arises completely naturally and with it all the associated theory of how to avoid unnecessary risk. Utilitarians however seem to consider it natural that the moral utility function is completely linear in the number of people or QALYs or any other measure of human well-being. Is there any theoretical reason risk-aversion can arise if a utility function is completely linear in the way described before?

In the same vein, there seems to be no theoretical reason for having time preference in a certain world. So if we agree that we should invest our donations and donate them later it seems like there is no reason to actually donate them at any time since at any such time we could follow the same reasoning and push the donation even further. Is the conlcusion then to either donate now or not at all? Or should the answer be way more complicated involving average and local economic growth and thus the impact of money donated now or later?

Let the perfect not be the enemy of the good, but this rabbit hole seems to go deeper and deeper.

Showing 3 of 6 replies (Click to show all)

you should split your donations just as you split your investments, because of risk.

Isn't it the case that most investment opportunities have essentially the same expected returns, due to market efficiency? In that case you want to diversify, since you can lower the variance without lowering the expected return. But if you can identify a single giving opportunity that has a significantly higher expected return than the alternatives, then it seems like you'd want to concentrate on that one opportunity.

0Alsadius5yMost people give to charity because it makes them feel good - knowing you're helping people is a warm fuzzy feeling that most people enjoy. Obviously this can lead to irrationality pretty easily - look at the ineffective charities kept alive by nice narratives - but if we take that as the base reason, then standard human loss aversion can explain splitting. Your goal isn't to improve the world per se, but instead to have your money improve the world. In other words, the argument about linearity of utility disappears, because one bad decision will destroy all the value you get from charity, and since that value is partially independent of the expected value of the good done in the world, this can happen even if you're investing in the charity with the highest EV. I don't 100% agree with this, but it's fairly close to my gut feeling - I split my political donations, but not my humanitarian donations.
2Evan_Gaensbauer5yThis depends on what someone believes the worthiest target for their donations is. If they're trying to optimize for goals that require the continuance of Earth-originating intelligence, or humanity, than they'll probably want to prevent human extinction. If they believe humanity faces a Great Filter [http://wiki.lesswrong.com/wiki/Great_Filter] or an existential risk in the coming decades, they'll want to donate eventually. Supposedly they'd drive money to organizations will decrease the chances of humanity being destroyed. Of course, this still leaves the consideration that if they invest very well, or invest at the right time, (and know how to identify those things), such that money invested now for period t, increased to value n(x), will be worth more to the target organization at the end of period t, than the original value of money, x, is worth to the organization now. However, its been argued from within effective altruism that the longer you wait to do good, the less the good you do will be worth. A donation is worth more now than later; effort applied at a later time will result in less value than the same level of effort applied now. This is called the haste consideration [https://80000hours.org/2012/04/the-haste-consideration/]. Over time, the marginal increase in value of an investment over time comes up against the (presumed) marginal decrease of donation at any given time. I figure one could try measuring or calculating the rates of change here, and then figuring out some point at which the curves of them cross which would provide the optimum time to withdraw money from investment and donate it for maximum impact. However, that seems difficult. I'm not aware of something like this previously being done, and I follow effective altruism closely. So, if this has all been quantified, that report hasn't been widely circulated. This seems all the more important on LessWrong, because users on this site are more likely to care about existential risk reductio

Open thread, Dec. 15 - Dec. 21, 2014

by Gondolinian 1 min read15th Dec 2014309 comments


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