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Kindly comments on Open Thread, September 15-30, 2012 - Less Wrong
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It seems true that when investing, you're trying to get the highest return possible, in terms of a single value measured in currency.
I've never understood why it should also necessarily be true with charity. It seems often to be an unexamined assumption, and may be reinforced by using terminology like "utilons" that appears to be begging the question.
Someone who donates both to the mosquito nets effort in Africa, and to the society which helps stray dogs and cats in Michigan, is not necessarily being irrational. They just may be perceiving the two benefits to lie on incomparable axes. They may be caring about helping Africans and helping stray dogs simultaneously, in different ways that are not exchangable to each other. The familiar objection is: "Sure they are exchangable; everything is exchangable into utilons; if you don't see a clear rate of exchange for your own preferences, that just means you still ought to estimate one given your imperfect knowledge, and act on it". But I don't see why that should be true.
Certainly most of our spending is done on axes that are incomparable to one another. We have needs along those axes that we do not normally consolidate to one "most efficient" axis, even after the minimal requirements are met. Investing is the activity that's the odd one out, here - and one of the reasons it is is precisely that we don't care much which of the companies we invest in brings us profit. It seems odd that charity should so unequivocally stand along with investing as an exception.
If charitable giving is not an exceptional way for us to spend money, the idea of a single currency becomes difficult to support, because if charity must be so streamlined, why not all other activity? In other words, sure, you can criticize someone for helping stray dogs by saying their money could be saving lives in Africa instead; but is that very different from criticizing them for buying a large color TV, when their money could be saving lives in Africa instead?
Charity falls in the same category as investing to the extent that you care about the effectiveness of the different charities (as opposed to feeling good about yourself, for example). Here's why.
For the sake of simplicity, suppose that you have $2000 to give to charity, and $1000 can either save a child in Africa or a dog in Michigan. For now, we assume that you care about the number of children and dogs saved.
If the charities currently have enough money to save 999 dogs and 999 children, then preferring an even split to a $2000/$0 split means preferring 1000 dogs and 1000 children saved, to 1001 dogs and 999 children. Nothing wrong with this, by itself.
However, we aren't precisely certain about these numbers; and if the charities have enough money to save 1000 dogs and 998 children, then preferring an even split to a $0/$2000 split reveals exactly the opposite preference. This is a problem.
In general, as long as our uncertainty about how much the charities are doing is much greater than the impact of our own donations, a similar thing happens. It's easy to have enough information to prefer a $2000/$0 split or a $0/$2000 split above all: for instance, if you think it's best to have 1000 children and 1000 dogs saved, and currently there's money to save about 500+/-100 children and 1500+/-100 dogs, you should definitely donate all your money to the children charity.
But having enough information to definitely prefer an even split is nearly impossible. The best we can do is consider the case where the difference is probably small, so you shouldn't really care one way or the other. This is probably rare, though, and even that doesn't argue in favor of an even split.
Now, obviously our assumption that we only care about the totals is unrealistic. But then, the usual argument runs, maybe we should figure out how much we care about the totals, and efficiently distribute that portion of our money (most likely, only to one charity). After that, the remaining money can go to making yourself feel good about yourself, or to signaling that you care about dogs, or whatever.
Notably, argument says nothing about color TVs, because you're certain of the exact impact: you definitely go from 0 color TVs to 1. If we had that much information about the impact of charity, maybe even splits would more often be a good idea.