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Effective Altruism, GiveWell, and GiveDirectly: How to Give Money to the Poor
Scott Jackisch   Jul 14, 2015   Oakland Futurist  

I attended the 2014 Effective Altruism Summit, and this essay describes what I learned.  

Effective Altruism is the idea that charitable giving should actually produce measurable results.  It’s an evidence-based approach that is supposedly in contrast to more conventional charities.  

Some people have told me that large groups like the Gates Foundation do demand evidence of efficacy when funding projects, so it’s not clear how different Effective Altruism really is.

Apparently Peter Singer is a big promoter of this movement, but I haven’t read his work. One of the other attendees suggested that I start with Singer’s essay entitled: Famine, Affluence, and Morality.

I have been fairly successful in my career, but one thing I do feel that I am lacking is meaning.  I feel that giving to help people in need will actually help my own well-being by adding more meaning to my life.

I am attracted to this idea of measurably effective giving because I feel that I have been fairly successful in my life, but I have been failing to give back enough.  I have been very influenced by Seligman’s PERMA model when considering my own self-actualization.  PERMA is an acronym describing well-being.  It encompasses Positive emotions (happiness), Engagement (state of flow), Relationships (social life), Meaning (involvement in things greater than ourselves), and Accomplishment (success).  I am not really a very happy person (I suspect I’ve always had a more active right prefrontal cortex), but I do find my work engaging and I have some decent relationships.  I have been fairly successful in my career, but one thing I do feel that I am lacking is Meaning.  

I feel that giving to help people in need will actually help my own well-being by adding more meaning to my life.

I heard about the Effective Altruism movement at various rationalist meetups and also at CFAR.  I have been very inspired by the many bright people in these communities that truly hold the greater good as their highest life goals.  I have met many gifted folks who feel obligated to apply their talents to having a positive impact on the world.  I often feel humbled when I compare their ambitious and noble sentiments to my own narrow self-interest, and I am grateful to them for providing a model of altruism and service which I can strive to emulate.  Of course there are always murmurings from the Dark Enlightenment fringe that perhaps seeking the greater good is not the most virtuous goal.  But I haven’t been turned to the dark side yet and remain in light for the moment.

One of the most influential Effective Altruism organizations is GiveWell, which evaluates charities to find the ones that that are “evidence backed, thoroughly vetted, and underfunded.”  I heard about this group a couple of years ago and have previously donated to the Schistosomiasis Control Initiative, which focuses on deworming efforts in sub-Saharan Africa and is still a top-rated GiveWell charity.  I had no idea that intestinal worms were such a problem and that it was so cheap to treat.  I guess it stands to reason that folks won’t be able to work or go to school if they are too sick from parasitic illness.

Currently, GiveWell’s top rated charity is GiveDirectly, which donates cash directly to poor people in Kenya and Uganda.  They give recipients a single lump sum (equivalent to about 1-year’s income) and allow the recipients to spend the money any way they see fit.  I was initially attracted to this idea since it lacked the paternalistic quality that most charities have.  The mechanism of cash transfer is M-Pesa.  I gave a small amount earlier this year, but when I saw Paul Neihaus’ presentation, I was completely blown away.  I had no idea how rigorous GiveDirectly’s methodology was.  The most impressive thing to me was the fact that GiveDirectly conducted a preregistered Randomized Controlled Trial to test the effectiveness of their giving.  This is basically the gold standard of research, and many academic studies don’t meet this level of rigor.  The study confirmed the following benefits of GiveDirectly’s program:

Transfers from GiveDirectly have large, positive, sustainable impacts across a diverse set of outcomes, including:

Assets, with recipients increasing asset holdings by 58% primarily through investments in livestock and home improvements (including iron roofs)
Business and agricultural income, with income gains implying a 28% annual rate of return on transfers
Expenditures, with increases in nearly every category, but not tobacco, alcohol, or gambling
Food security, with a 42% reduction in the number of days children go without food
Mental health, with large reductions in stress and depression and increases in life satisfaction, as measured using validated psychological scales

The study also found no evidence of impacts on crime, conflict, or inflation.

One detail Niehaus noted in his presentation at the EA Summit was that domestic violence was reduced and recipient’s cortisol levels actually went down.  This is just amazing to me.  It’s one thing to give people a self-report questionnaire asking how stressed they are, but actually measuring this physiological marker for stress provided even more evidence of a benefit.

I can’t emphasize enough how truly impressed I was by GiveDirectly’s methodology.  They are extremely transparent and actually track the number of bribes paid by recipients in the process of receiving the cash.  This is an extremely hard-nosed and realistic thing to track, and Niehaus suggested that few other charities are tracking this sort of information.  

GiveDirectly also makes excellent use of technology.  In Kenya, they use M-Pesa, a mobile phone based way to transfer money.  They pay a lot of attention to fraud prevention and have several high tech solutions for this.  They discovered that a simple way to identify the poorest people who are most in need is that they tend to have thatched vs. metal roofs.  GiveDirectly used satellite imagery to help validate eligibility by having the images judged cheaply via Mechanical Turk.  Their data entry procedures are also first rate, and include geotagged timestamps for every data point as it’s collected in the field.  This also helps cut down on fraud.

It’s interesting to hear stories about how the money is spent.  The payments are in one big chunk deliberately, so that people can make real investments.  One person built a fish pond, another bought a power saw and set up a business cutting wood for hire. All sorts of little livelihoods were launched, from musicians who bought guitars to earn money playing in clubs, to a person who bought a motorbike to taxi folks around on.  As Niehaus pointed out, there is no charity donating power saws to the poor, and not every person would be inspired to set up a sawing business.  But giving a chunk of cash to each person allows them to turn their own skills and inclinations into vocations for themselves.  This is not something that could have been planned from above.

As impressed as I was by GiveDirectly, I must say that I was surprised that their presentation was in a side room, while a CFAR presentation was given in the main theatre.  If this was a principled decision, it suggests that the organizers have an interesting philosophy.  They appeared to privilege the importance of CFAR, which teaches rationality techniques to high functioning first world people, over GiveDirectly, which is helping some of the poorest people in the developing world.  This is an interesting proposition that seems to mirror Peter Thiel’s thesis that innovation is more likely to save the world than globalization.

Thiel’s general thesis is hard to argue with, the world clearly needs huge innovations in energy, water, and food to support the world’s burgeoning middle classes.  Innovation is more frequently driven by highly functional developed world people than low functioning developing world people, so I can see why Thiel would want to invest here.  But I will say that this bet is a long shot.  It’s much harder to throw money at the innovation problem.  

I attended a CFAR workshop and have a great deal of respect for their team and their approach, but it’s very hard to estimate how much world saving innovation will be created by each dollar donated to them.  Risk averse turtle that I am, I prefer the sure bet that my cash will directly improve the lives of people who are the worst off.

Image #2: A simple way to identify the poorest people who are most in need is that they tend to have thatched vs. metal roofs.

Another IEET essay on Effective Altruism can be found HERE

Scott Jackisch is a blogger at the Oakland Futurist, where he reports on conferences, symposiums, and salons. He is interested in cognitive science, Quantified Self, the Long Now, the Silicon Valley entrepreneurial scene, and he’s the founder/director of East Bay Futurists.

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