Mass_Driver comments on Efficient Charity - Less Wrong

31 Post author: multifoliaterose 04 December 2010 10:27AM

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Comment author: Mass_Driver 05 December 2010 10:52:12PM 1 point [-]

I couldn't get anywhere from this latest link -- it's a dead Wikipedia page for me.

Part of why I asked what you mean is that "aid" sometimes encompasses great power military aid and aid from the IMF, World Bank, etc. -- institutions whose primary motivation is often not so much to reduce poverty as it is to promote loyalty to the great power or to the neoliberal economic ideology du jour. I'm not just saying this out of generic leftish peevishness; the tribal part of my brain is quite glad, e.g. that America is donating billions of dollars to the Israeli military, but I wouldn't expect that to have more than a trivial effect on, e.g., increasing the job opportunities for Ethiopian Jews. Likewise, as a holder of Argentinian bonds, I'm pretty happy that the IMF is offering "aid" to support the Argentinian budget, but I can't pretend that this aid will ever reach los gauchos. On the contrary, it'll probably cut their government health benefits.

It's cool if you don't care about suffering per se and you do care about economic growth, but honestly I find it hard to even articulate a hypothesis on which, e.g., de-worming initiatives don't foster economic growth. I wouldn't be starting many local businesses if my brain couldn't get calories out of my gruel because they went to a tapeworm first.

Comment author: taw 06 December 2010 08:34:33PM 6 points [-]

It's cool if you don't care about suffering per se and you do care about economic growth, but honestly I find it hard to even articulate a hypothesis on which

Let me help you with some hypotheses, all of them take place in the real world to some extent, but I have little idea which are important, and which aren't:

  • Governments have less incentive to run deworming campaigns on their own - they know failure will invite aid, and they can spend money they planned for deworming on shiny military hardware and/or Spanish real estate
  • Poor farmers at first have more money, but governments and their absentee landlords soon notice it, and raise taxes and rents, leaving them as miserable as before, all money ending up buying shiny military hardware and/or Spanish real estate
  • Governments become less accountable to taxpayers - and more corrupt - and more to foreign aid organizations - this aid usually comes with strings attached
  • Large inflow of foreign money makes exchange rates less beneficial to local exporters, and as these are usually struggling businesses barely making it, and also one of main drivers of sustainable economic growth, this disruption can be extremely bad
Comment author: Mass_Driver 07 December 2010 07:42:15AM 2 points [-]

Thanks, that's helpful. Feel free to poke me in 2-3 weeks when I've had time to digest this.

Comment author: multifoliaterose 06 December 2010 08:37:51PM 1 point [-]

Agree that the first two hypotheses are possibilities (but still think that the expected value is positive). The last two hypotheses don't seem relevant to the interventions under discussion.

Comment author: taw 06 December 2010 08:42:19PM 2 points [-]

The third had some decent support at least for mineral income. Countries with a lot of money from export of oil and similar goods tend to have low taxes and be most corrupt and least democratic, while countries with broad tax base tend to have less corruption and more democracy.

I'd expect similar effect for foreign aid if it became large enough. I don't have these studies bookmarked, in any case this was just a request for hypotheses.

Comment author: multifoliaterose 06 December 2010 08:45:05PM 1 point [-]

Sure, but Mass_Driver was discussing deworming initiatives specifically rather than aid in general!

Comment author: taw 06 December 2010 09:00:37PM 3 points [-]

Well, let's go back to efficient market hypothesis. If (deworming / your other favourite cause) is indeed such a great investment, why aren't affected people or their governments already buying it?

I can think of a few plausible hypotheses - the most obvious one would be coordination problems with various kinds of vaccinations, and other public or semi-public goods.

However, most analyses don't do that, they just implicitly assume that everyone in the affected country is a total idiot, while the enlightened donors will show them the light.

I'd expect people over there have much better idea of what they need, while donors acting mostly like total idiots in this context, who do things for warm fuzzy feeling, not guided by the kind of analysis they'd use if it affected them directly. Zero net effect of aid seems to confirms that all too well.

Comment author: multifoliaterose 06 December 2010 10:46:34PM *  3 points [-]

I'm sympathetic with your skeptical prior as to the value of outside interventions and with your frustration with the widespread naivete on these points.

In the case of the health interventions under discussion I think that the point is that the people who live in the affected areas are living on a dollar or less a day and can't afford the cost of procuring the relevant vaccinations, medications, etc.

In a libertarian spirit one can ask "Why not just give money to the poorest people and let them spend it in the way they deem most useful?" To this end you might be interested in Holden's posts:

  1. Why not just give out cash?

  2. Philanthropy Vouchers

  3. Should I give out cash in Mumbai?

Comment author: taw 07 December 2010 12:05:44PM 3 points [-]

In the case of the health interventions under discussion I think that the point is that the people who live in the affected areas are living on a dollar or less a day and can't afford the cost of procuring the relevant vaccinations, medications, etc.

We are quickly running out of people that poor:

World poverty is falling. Between 1970 and 2006, the global poverty rate has been cut by nearly three quarters. The percentage of the world population living on less than $1 a day (in PPP-adjusted 2000 dollars) went from 26.8% in 1970 to 5.4% in 2006.

Of course we just readjust our definition of poverty line higher - $1.25/day is the minimum used these days, and $2/day and $3/day lines are becoming increasingly common.

If some people stay extremely poor in the middle of global convergence, we should probably focus on whatever is stopping them from participation in it - and these are highly location specific factors.

One common cause are wars and military occupation. For example which charity works best to end Israeli blockade of Gaza, or American occupation of Afghanistan? IHH Humanitarian Relief Foundation? Hamas itself? (good luck donating to them)? Wikileaks? Of course in all such conflicts money is very likely not to reach intended recipients.

That's very different from traditional charities. My best bet here is Wikileaks, they have quite some track record on both third world corruption and military atrocities, and money donated to Wikileaks is unlikely to end up funding more weaponry fueling the conflict.

In a libertarian spirit one can ask "Why not just give money to the poorest people and let them spend it in the way they deem most useful?" To this end you might be interested in Holden's posts:

I'm quite sympathetic towards give-out-cash and even more in microfinance. I'm not sympathetic towards how these programs often end up serving ideological agenda. Like microfinance world's ideological obsession about lending to women, while men universally do most of economic activity:

Because of all this received wisdom in the marketing narrative, arguably the day’s most surprising and controversial presentation was given by David McKenzie of the World Bank. McKenzie reported the results of a three year study of 600 microenterprises in Sri Lanka. The participants in the study were emblematic of the standard image of the micro-entrepreneur: small businesses (with no employees other than the owner) that have very little capital. The only difference is that half of the 600 microenterprises studied were run by men rather than women. Each of the microenterprises received a grant (not a loan) of $100 or $200, assigned randomly. After receiving the grant, the enterprises were tracked and surveyed quarterly for up to three years.

The results were unequivocal. Men achieved an average return on capital of 11 percent. Women achieved a return on capital that was a little worse than 0 percent.

I'd be surprised by the opposite result.

Anyway my rankings are:

  • Public goods (Wikileaks)
  • Microfinance (results might not be that awesome, but it more or less self-propagates)
  • Well targeted health interventions like Village Reach
  • Buying poor people booze (so they can spend their booze money on something else)
  • Traditional charities
Comment author: multifoliaterose 10 December 2010 09:21:52PM *  1 point [-]

Thanks for the interesting references! In particular, you've inspired me to look into Wikileaks (which I hadn't heard of before aside from the recent news).

Concerning microfinance; I myself currently know almost nothing about the topic; my knowledge comes almost exclusively from following the GiveWell blog. See

  1. Where We Stand On Microfinance (From a year ago, possibly dated.)

  2. Microfinance charity

It would be great if you looked at and critiqued some of their work. I think you might enjoy doing so. According to their page about their process

We believe that "Where should I give?" is one of the hardest questions there is, and there's no single field of knowledge or expertise that can take it on completely. Instead, we seek to put our thoughts in public as a starting point, and get as many perspectives from the outside as we can. If you have thoughts on our analysis, please don't hesitate to contact us.

My own experience has been that they take this statement to heart.

Comment author: taw 10 December 2010 11:04:18PM 3 points [-]

It might be my inner contrarian speaking.

From quite glance GiveWell seems to be using totally wrong margins.

They compare average microfinance with best health interventions.

Valid comparison would be either average microfinance with average health intervention, or marginal microfinance with marginal health intervention. "Best" is never a valid measure, let alone comparing best something with average something else.

Compare this situation:

  • Donors pay $1bln to fund amazingly efficient vaccination program
  • Government pays $10bln for random not too efficient health services

With:

  • Government pays $1bln to fund amazingly efficient vaccination program, and $9bln for random not too efficient health services
  • Donors pay $1bln for not too efficient health services

Donors will surely feel a lot more awesome in first scenario than in the second, but there's no difference between them at all. And unless the government is too stupid or too evil to fund this amazingly efficient vaccination program, if donors pulled out the result would be in either case:

  • Government pays $1bln to fund amazingly efficient vaccination program, and $9bln for random not too efficient health services

Of course this was based on optimistic assumption that configuration wouldn't be:

  • Donors pay $1bln to fund amazingly efficient vaccination program
  • Government pays $9bln for random not too efficient health services, and $1bln for bombs to bomb neighbouring country

In which case donations would have massive negative utility. That's fungibility of money. Analysis of net effect of donations isn't impossible, but they're not doing it, so they should stick with broad-based averages as the second best thing.

On the other hand what can have a lot of value is researching relative effectiveness of various interventions when we don't know yet which works better. This is true not just in case of poorest countries, but even more so for huge welfare programs ran in rich countries with nearly no research.

Now this might be wrong, but impression I'm getting is that microfinance attracts a lot more research than other types of interventions, which tend to be rather hostile even to the idea of randomly assigning people to control and intervention group as a rule.

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