Should You Give Away All of Your Money?

“On your way to work, you pass a small pond. On hot days, children sometimes play in the pond, which is only about knee-deep. The weather’s cool today, though, and the hour is early, so you are surprised to see a child splashing about in the pond. As you get closer, you see that it is a very young child, just a toddler, who is flailing about, unable to stay upright or walk out of the pond. You look for the parents or babysitter, but there is no one else around. The child is unable to keep her head above the water for more than a few seconds at a time. If you don’t wade in and pull her out, she seems likely to drown. Wading in is easy and safe, but you will ruin the new shoes you bought only a few days ago, and get your suit wet and muddy. By the time you hand the child over to someone responsible for her, and change your clothes, you’ll be late for work. What should you do?” ~ Peter Singer

This scenario was posed by philosopher Peter Singer in the book “The Life You Can Save”. Most of us see saving the child as not only a virtuous thing to do, but a moral obligation. Furthermore, if someone said that they walked past a drowning child to save their shoes and not to be late for work, we would most likely regard them as cruel. Nevertheless, we are subjected to a similar situation each day. Consider that the child is not drowning in front of you, but is dying from malaria across the globe, and you have to decide whether to save it or use the money to buy new shoes. Somehow, this example instinctively feels different. It might be the case because of the distance or the overwhelming amount of people suffering from malaria, but it’s very hard to find any morally relevant differentiation. In the consequence of that, the only moral thing to do would be to sell everything and donate it to charity. Living by those standards would be nearly impossible, and convincing anyone to do so is not the objective of this article. Meanwhile, we would like to show that helping is simpler than it seems and give some practical ways of doing the most good even with limited resources.

Consider global poverty, for example, which seems to be a tractable problem as there are also many rich people. But, how much charity can we expect from the global rich?​​ The Economist estimated it to take $65 billion every year on ‘basic transfer programs to lift everyone above the bare-minimum poverty line’. The history of such estimates shows they can largely underestimate this number. As the Economist is a trustworthy medium, twice the amount they state can be a fair and conservative estimate. That would mean we need $130 billion per year for the foreseeable future. Singer estimates there are around one billion rich people nowadays (estimates pre-covid). From this follows that we would need a $130 donation from the billion richest people to alleviate extreme poverty. It sounds like an achievable goal, and this number could be even lower for the average person if the super rich would donate proportionally to their income. For example, there is a community of individuals pledging to give at least 10% of their income to effective charities at “Giving What We Can”, and thus participating in slowly bridging this gap. “Giving What You Can” is an organization providing information about effective giving and connects givers worldwide.

However, it matters not only how much we spend, but also how we spent it. Remember the last time you bought a laptop or a smartphone? You probably invested some time researching the different options, looking for the combination of the highest quality for the lowest price. How fast should your laptop run code? How much battery life should your phone have? Now, would you also reason like this while donating to charity? This is usually a more spontaneous activity, based on the sad feelings emerged by a picture of a panda bear in danger of extinction or a video of underfed children in Africa. Since the intentions of donating are good and the money is given away, people become less critical. Should you give to UNICEF or WWF? It probably does not matter much, as they both make the world a bit better…

But guess what! There is a nice body of research in charity interventions. Consider the graph below, given that you had $100 and wanted to increase the years of schooling children receive. Where most interventions lead to a handful or fewer years of schooling more than the status quo, the information session on returns on education led to more than 20 years of additional schooling per $100 spending. Although such cost-effective interventions do not work everywhere, there also might be more benefits to the interventions than is taken into account by this calculation. Yet, based on this knowledge, to increase schooling years you would first want to exploit information sessions before moving to other measures that provide fewer years of schooling.

The principle of differences in cost-effectiveness reaches quite far and, generally, there is much more good to be done overseas. To consider the problem of blindness, a fair goal is to help as many blind people in the best way possible. You may find that a guiding dog costs thousands of dollars to train, and it supports a blind person for some years. However, the disease Trachoma makes people blind, but can be treated. The eyesight of people dealing with Trachoma can be cured for as little as $50 per person. With the money for one guiding dog you could cure between 400 and 2000 people from blindness.

If such great opportunities exist, which organizations should be funded? Will MacAskill argues in Doing Good Better that some non-profit organizations can be 100x more (cost-)effective than others, just like the example about curing blindness shows. To compare interventions, it is common in the medical field to use quality-adjusted life years (QALYs). These are the extra years lived because of an intervention, discounted by the burden of the disease that may decrease the quality of that year. For many interventions it is hard to quantify the impact, but once measurements like QALYs per dollar can be calculated, an objective comparison can be made.

Luckily, there are great organizations monitoring if charities perform interventions cost-effectively. Among them are Givewell, The Life You Can Save from Peter Singer and Animal Charity Evaluators for animal welfare. It has never been this easy to make the world a much better place. You do not need to fly to Africa or volunteer every Sunday, donating money can go a long way. An innovative, yet relatively simple, way of doing good is proposed as Earning to Give. This means you prioritize a good salary to donate a portion of it to charity. Say you would consider either to become a software engineer for a large company or the CEO of a non-profit being paid 500.000 and 300.000 crowns per year respectively. If you would not take the CEO job, and instead someone else does just as good a job as you would, but instead you become a software developer and donate the difference of 200.000 crowns, you are making a great counterfactual impact.

Giving is not the only way to make the world better, you can also do a lot with your career. Everyone has probably had one of those days when ‘‘What am I going to do with my life?’ has echoed in your mind, followed by ‘How do I make the world better?’ On the website 80000hours.org, you can find a lot of information about how to use the time you have at work in the best possible way if you want to optimize for making the world better. Some strategies for having a high-impact career include work in government and policy in high-impact areas such as climate change, technological development or foreign aid. Other effective work possibilities are leading effective nonprofits, performing research in relevant areas, or applying an unusual skill to a needed niche. Key world problems to tackle span from biosecurity to safe AI and animal welfare — there is something for everyone. If you consider entrepreneurship, for instance, according to Professor William Nordhaus at Yale University, every dollar of profit of an innovative company yields $50 of benefits to society.

A word of caution! Don’t change to the most pressing area without thinking about whether it’s a good fit for you — you still have to be excited about the path you choose. If you want to be strategic, try to build up career capital in the form of transferable skills and explore different options. This might mean internships or meeting with people who are one step ahead. If you want to deep dive into pressing problems, the book ‘The Precipice’ goes into more depth. There’s also the 80,000 hours podcast, where you can pick the episodes that feel the most relevant to your future plans! Don’t get overwhelmed with all the available material, start somewhere and gradually learn more.

This may sound great on paper, but how do you actually get involved? The ideas we discussed are embraced by the Effective Altruism movement, a group of people from all over the world who want to get better at doing the most good. There are many local effective altruism groups who organize events, for instance in Stockholm there is one ‘general’ group for the city and then subgroups for the universities, for instance at KTH, SSE, KI, and SU. The biggest Swedish university group for effective altruism is actually at KTH, and they warmly welcome you to join! The local groups do many things including career advice, ‘fika’ meetups, book clubs, fellowships to learn more about the impact and pressing global problems. The EA KTH group for instance runs a book club, organizes social events and works on EA projects every Tuesday. Moreover, there are many organizations with compatible ideas to effective altruism, such as ‘OpenAI’, ‘Future of Humanity Institute’ and the rationalist movement ‘Less Wrong’ — there’s so much to explore!

Another thing you could do now is to have a look at Effective Thesis if you are starting your bachelor's — master’s — or Ph.D. thesis. They provide guidance and ideas for selecting research topics, and even connect you to researchers who work in the field you are interested in. As a closing remark, there is so much you can do with your time, money, and energy — you don’t have to do everything — but there is a world of possibilities if you want to! Start small, check out one of the sites mentioned, or attend an EA event and see where that leads.

One great way to get started is to send an email to ​​effektivaltruism@ths.kth.se, and you might be one of the two winners that receive a free copy of the Life You Can Save book!