In search of effective altruists

ABSTRACT

The effective altruism movement argues that people wanting to do the most good they can should donate to charities fighting poverty in poor countries overseas, rather than to charities helping people in need in wealthy countries. This is because there is greater need in the developing world meaning it is possible to save lives or improve living conditions at reasonably low cost. However, most people living in developed countries prefer to donate to charities helping people in need in their own country, rather than charities helping people in need in the developing world. This paper analyses why this might be. We conduct a discrete choice experiment to determine the relative importance people place on the effectiveness of a donation, the need of recipients, and whether the donation will be spent at home or overseas. We find that many people place more weight on where the donation will be spent than on how effective it will be. We also find that a significant number of people are not aware, or do not believe, a donation will be more effective in the developing world. In addition, many people’s donation decisions are guided by emotion or intuition, rather than rational calculation.

KEYWORDS:

• Effective altruism
• charitable donations
• discrete choice experiment
• charity choice

JEL CLASSIFICATION:

• O1
• C93
• D64

Acknowledgments

This research was funded by a University of Otago Research Grant (UORG). An earlier draft of this paper was presented in seminars at the Lincoln Economics and Finance Research Group, University of Lincoln (Lincoln, UK) and at the Lilly School of Philanthropy, IUPUI (Indianapolis, US) and at the Australasian Development Economics Workshop (Perth, Australia, June 2019) and the New Zealand Association of Economists Annual Conference (Wellington, New Zealand, July 2019). We are grateful to seminar and conference participants for the many helpful comments received. We are also very grateful to an anonymous referee for many helpful suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Note that whereas in Knowles and Sullivan (2017) participants were asked who the researchers should donate to; in Schons, Cadogan, and Roumpini (2017) and Herzenstein and Posavac (2019) participants donated their own money.

² Interestingly, Karlan and Wood find providing such information increases donations for donors with a history of giving large donations, but reduces donations for donors with a history of giving smaller donations. A possible reason they provide for this result is that small donors are more likely to be motivated by warm-glow, with large donors being more motivated by pure altruism, and that the latter are more likely to care about how effective their donation is.

³ For more details, on the method, we refer the interested reader to Hansen and Ombler (2008).

⁴ On average, participants answered 11 trade-off questions in our DCE.

⁵ A major advantage of the PAPRIKA method is that it generates weights for every individual participant, rather than average weights for the sample as a whole as other DCE methods tend to do. Having weights for every participant was vital for our survey design. However, a disadvantage of this method is the requirement than each attribute is in the same order for each participant.

⁶ These percentages do not add to 100% as, for some participants, two attributes were first equal, meaning no one attribute was the most important for those participants.

⁷ We acknowledge that placing a lot of weight on recipient need would also lead to wanting to donate to recipients in developing countries. However, this would not make this participant an effective altruist. To be an effective altruist the motivation needs to be to maximize effectiveness.

⁸ Of these 168 participants, there were three who chose the Salvation Army (and one choosing the neither charity option) that mentioned high administration costs at World Vision being a reason for not choosing World Vision. In addition, two participants who chose the Salvation Army questioned whether money donated to World Vision would get to those in need.

Additional information

Funding

This work was supported by the University of Otago [not applicable].