Tuesday, May 5, 2020

Rational Charitable Giving

In my book, How to Teach Lawyers, Judges, and Law Students Critical Thinking: Millions Saw the Apple Fall, but Newton asked Why, I emphasize the importance of using critical thinking in the law.  Of course, critical thinking applies to countless aspects of our lives, even ones we would never connect with critical thinking.  One of these is charitable giving.  Do you use critical thinking when you donate money to charities?

There is a new social movement called effective altruism that applies critical thinking to charitable giving.  The best introduction is a short lecture by Eric Gastfriend.  (here at 46:23).  Effective altruism is "doing the most good you can for the world given the resources you have." 68% of donors do not research the charities they give to, and only 3% give based on relative performance of the charities.  This has several results.  First, donors do not know the charities that need funds the most.  For example, heart disease charities receive only a small percentage of donations in the health charity pool, despite the fact that it is the leading cause of death.  Second, donors do not ask whether a charity is causing, not merely correlating, with positive change.  Third, donors do not know which charities are most cost-effective--which ones get the most bang for a buck.  For example, it costs $40,000 to train a guide dog.  For the same amount, third world countries can restore the vision of 1,000 people through cataract surgery.  Finally, donors do not ask whether the charity is having a positive effect.  In fact, "1) the vast majority of social programs and services have not yet been rigorously evaluated, and 2) of those that have been rigorously evaluated, most (perhaps 75% or more), including those backed by expert opinion and less-rigorous studies, turn out to produce small or no effects, and, in some cases negative effects."  (here)

Of course, many people will not have the time to do the research necessary for effective altruism.  Fortunately, others have done this with some charities.  The Life You Can Save, Effective Altruism, Give Well.

In sum, when donating to charities adopt an evidence-based mindset.

Here is another introduction to effective altruism.

(Scott Fruehwald)


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