Thursday, September 29, 2011

Do you give to charity to help people or for other reasons?

Tim Harford wrote (in an old Slate article):

If people really were altruistic, there would be much less volunteering.

It would almost always be more effective to volunteer less, work overtime, and give more. A . . . banker can pay for a lot of soup-kitchen chefs and servers with a couple of hours' worth of his salary, but that wouldn't provide the same feel-good buzz as ladling out stew himself, would it?

In fact, the closer you look at charitable giving, the less charitable it appears to be. A recent experiment by John List, an economist at the University of Chicago, and a team of colleagues, showed that donations are less than magnanimous after all. Using controlled trials to compare different methods of door-to-door fund-raising, professor List's team discovered that it was much more effective to raise funds by selling lottery tickets than it was to raise funds by asking for money. This hardly suggests a world populated by altruists seeking to do the maximum good with their charitable cash. . . .

Even the way we choose to dole out cash betrays our true motives. Someone with $100 to give away and a world full of worthy causes should choose the worthiest and write the check. We don't. Instead, we give $5 for a LiveStrong bracelet, pledge $25 to Save the Children, another $25 to AIDS research, and so on. But $25 is not going to find a cure for AIDS. Either it's the best cause and deserves the entire $100, or it's not and some other cause does. The scattershot approach simply proves that we're more interested in feeling good than doing good.
For that last point, Harford credits Steven Lansburg, who elaborates on why the idea of "diversifying" doesn't make sense with charity the way it does in other areas:
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.

That is not to say that charity is futile. If you save one starving child, you have done a wonderful thing, regardless of how many starving children remain. It is precisely because charity is so effective that we should think seriously about where to target it, and then stay focused once the target is chosen. . . .

If your charitable contributions are small relative to the size of the charities, and if you care only about the recipients (as opposed to caring, say, about how many accolades you receive), then you will bullet all your contributions on a single charity.
Tyler Cowen gives another reason to donate to relatively few different charities, though he avoids giving the extreme advice to donate to exactly one, in Discover Your Inner Economist (a great little book which I can't recommend highly enough):
Charities make most of their money off what is called a "house file." The house file consists of donors who have been giving loyally for years. A good house file . . . brings in much more than it costs to maintain. . . .

If a mailing brings in thirty cents for every dollar spent, that mailing probably went relatively well by the standards of the sector. A fifty-cent return per dollar spent is a smashing hit.

Why spend a dollar to get thirty or fifty cents? The answer is simple: the charity is investing in developing its house file. . . .

We now have a new way to make the world a better place. Once we have found some good charities, we should tell them not to rent out our name and address to other mailers. Virtually all charities rent out or swap names and addresses to similar groups; what better way is there to find new donors than to look for people who are already giving to related causes?

"Remove the name" requests save charities thousands of dollars on their mailing costs. (193-194)
A post on Less Wrong argued:
Imagine you are setting out on a dangerous expedition through the Arctic on a limited budget. The grizzled old prospector at the general store shakes his head sadly: you can't afford everything you need; you'll just have to purchase the bare essentials and hope you get lucky. But what is essential? Should you buy the warmest parka, if it means you can't afford a sleeping bag? Should you bring an extra week's food, just in case, even if it means going without a rifle? Or can you buy the rifle, leave the food, and hunt for your dinner?

And how about the field guide to Arctic flowers? You like flowers, and you'd hate to feel like you're failing to appreciate the harsh yet delicate environment around you. And a digital camera, of course - if you make it back alive, you'll have to put the Arctic expedition pics up on Facebook. . . .

[But] when your life is on the line, things like impressing your friends and buying organic pale in comparison. You have one goal - staying alive - and your only problem is how to distribute your resources to keep your chances as high as possible. These sorts of economics concepts are natural enough when faced with a journey through the freezing tundra.

But they are decidedly not natural when facing a decision about charitable giving. Most donors say they want to "help people". If that's true, they should try to distribute their resources to help people as much as possible. Most people don't. In the "Buy A Brushstroke" campaign, eleven thousand British donors gave a total of £550,000 [about $850,000] to keep the famous painting "Blue Rigi" in a UK museum. If they had given that £550,000 to buy better sanitation systems in African villages instead, the latest statistics suggest it would have saved the lives of about one thousand two hundred people from disease. Each individual $50 donation could have given a year of normal life back to a Third Worlder afflicted with a disabling condition like blindness or limb deformity.

Most of those 11,000 donors genuinely wanted to help people by preserving access to the original canvas of a beautiful painting. And most of those 11,000 donors, if you asked, would say that a thousand people's lives are more important than a beautiful painting, original or no. But these people didn't have the proper mental habits to realize that was the choice before them, and so a beautiful painting remains in a British museum and somewhere in the Third World a thousand people are dead.
Last year, David Sedaris wrote about how he was able to get people to donate extra money to him, beyond just paying for his books, even when he was already a fabulously successful author (via):
A couple of books ago, I put a tip jar on my signing table and I made over $4,000 on my tour. The problem was then I started hating people who didn’t tip me. I didn’t say anything to them, but I would just sit there thinking, “You cheap son of a bitch. I just signed four books and you can’t even give me a dollar?” And why should they? But I just got so involved in it. I had to stop doing it.

I told people it was all for me to spend on candy. They were delighted because it’s funny to give money to someone who doesn’t need it. If there had been a beggar outside the bookstore, at the end of the evening, he might have had 75 cents where as at the end of my best evening in Dallas–[I had] $530 in tips.