This is an answer to a possible objection to cash-transfer charities like GiveDirectly. I remember reading about this on LessWrong a while ago, but I can't find the discussion now. I was planning on asking about this on an Open Thread, but I got curious, did my own research, and answered my own question, so now it gets its own Discussion post.

Cash-transfer charities do something very simple: they take money given by donors, find very poor people, and give them the money, in instalments. A prominent example is GiveWell's current top charity, GiveDirectly, which gives yearly gifts on the order of $1000 to very poor people in Kenya and Uganda. There is a lot of convincing research that cash-transfer charities are very effective at helping poor people.

There is a complicated debate about whether cash transfers are actually the very best way of helping poor people, or if there are in-kind charities that do the job a little better. This post is not about that. Instead, this post is just about a possible problem with the mechanics of cash transfers. The problem is this: say a donor in (say) the US gives money to GiveDirectly, and they send that money to a person in (say) Kenya. The recipient in Kenya now has a larger bank balance. But this doesn't actually create any wealth in Kenya; it just increases the amount of currency chasing the same pile of goods there. The person getting the transfer gains a positional advantage over her neighbors, but the total wealth there stays exactly the same, which of course is no good. What we as donors would really like to do is make sure that we are in some sense donating real wealth; that we are giving up a claim on some of the world's resources in such a way that other, poorer people then get to claim those resources themselves. But if just money, but no, like, actual stuff, is transferred, then giving to charity just amounts to a bookkeeping trick.

The way out of this, of course, is global trade. Dollars in the US aren't separate from dollars in Kenya; they both participate in the same global market. If global trade is efficient enough, then Kenya as a whole gains dollars relative to the US, and the buying power of their whole economy increases relative to the US economy. So Kenya does really get a bigger pile of goods for their higher number of dollars to chase, so I can transfer real, actual wealth just by changing numbers on a computer screen.

But again, this all depends on global trade, and in particular trade between the US and Kenya, being efficient. A way to measure this is correlation between the price of the same commodity in different countries. If the correlation is low, that suggests the two economies operate pretty much separately. But if the price correlation is high, that suggests that the two countries are both participating in the same market together, and transferring money reliably transfers wealth.

I decided to test this using the price of crude oil. Here's a graph of the price of crude oil in Kenya and in the United States, in inflation-adjusted US dollars, from January 2007 to January 2014. The red line is the US, the blue line is Kenya.

US data here: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=M

Kenya data here: http://www.petroleum.co.ke/index.php?option=com_content&view=article&id=50&Itemid=108

And the correlation is 0.93, according to Excel. So the economies seem tightly connected enough that transferring money does transfer real wealth, and you can be confident that your donation to GiveDirectly doesn't have perverse unintended consequences (or at least, not this kind).

A big caveat: I am no kind of economist; this is purely the result of back-of-the-envelope, common-sense layperson's thinking, and some numbers I found on the internet. Problems I could have include:

1. My intuition that commodity price correlation implies "connectedness" in the relevant way is just wrong.

2. In theory it's okay, but just one commodity doesn't give you the whole picture.

3. Crude oil is not a good index to use.

4. Something else?

Any criticism or other thoughts welcomed.

I'm starting a contest for the best essay describing why a rational person of a not particularly selfish nature might consider cryonics an exceptionally worthwhile place to allocate resources. There are three distinct questions relating to this, and you can pick any one of them to focus on, or answer all three.

Contest Summary:

• Essay Topic: Cryonics and Effective Altruism
• Answers at least one of the following questions:
  
  1. Why might a utilitarian seeking to do the most good consider contributing time and/or money towards cryonics (as opposed to other causes)?
  2. What is the most optimal way (or at least, some highly optimal, perhaps counterintuitive way) to contribute to cryonics?
  3. What reasons might a utilitarian have for actually signing up for cryonics services, as opposed to just making a charitable donation towards cryonics (or vice versa)?
• Length: 800-1200 words
• Target audience: Utilitarians, Consequentialists, Effective Altruists, etc.
• Prize: 1 BTC (around $350, at the moment)
• Deadline: Sunday 11/17/2013, at 8:00PM PST

To enter, post your essay as a comment in this thread. Feel free to edit your submission up until the deadline. If it is a repost of something old, a link to the original would be appreciated. I will judge the essays partly based on upvotes/downvotes, but also based on how well it meets the criteria and makes its points. Essays that do not directly answer any of the three questions will not be considered for the prize. If there are multiple entries that are too close to call, I will flip a coin to determine the winner.

Terminology clarification: I realise that for some individuals there is confusion about the term 'utilitarian' because historically it has been represented using very simple, humanly unrealistic utility functions such as pure hedonism. For the purposes of this contest, I mean to include anyone whose utility function is well defined and self-consistent -- it is not meant to imply a particular utility function. You may wish to clarify in your essay the kind of utilitarian you are describing.

Regarding the prize: If you win the contest and prefer to receive cash equivalent via paypal, this wll be an option, although I consider bitcoin to be more convenient (and there is no guarantee how many dollars it will come out to due to the volatility of bitcoin).

Several people have written articles on efficient charity -- throwawayaccount_1 has an excellent article hidden away in a comment, as does waitingforgodel. Multifoliaterose promises to write an article "at some point soon" ..., and louie has actually submitted an article to the main LW page.

What I'd like is for throwawayaccount_1, waitingforgodel and multifoliaterose to submit to the main LW articles page. People will read the articles, and hopefully vote more for better articles. Srticles not submitted to the main LW articles page are not eligible for the prize.

Note that it is hard for me to judge which article(s) will actually have the best effect in terms of causing people to make better decisions, so at least some empiricism is desirable. Yes, it isn't perfect, but if anyone has a better suggestion, I am all ears.

I have a friend who is currently in a lucrative management consultancy career, but is considering getting a job in eco-tourism because he "wants to make the world a better place" and we got into a debate about Efficient Charity, Roles vs. Goals, and Optimizing versus Acquiring Warm Fuzzies. 

I thought that there would be a good article here that I could send him to, but there isn't. So I've decided to ask people to write such an article. What I am looking for is an article that is less than 1800 words long, and explains the following ideas: 

1. Charity should be about actually trying to do as much expected good as possible for a given amount of resource (time, $), in a quantified sense. I.e. "5000 lives saved in expectation", not "we made a big difference". 
2. The norms and framing of our society regarding charity currently get it wrong, i.e. people send lots of $ to charities that do a lot less good than other charities. The "inefficiency" here is very large, i.e. GWWC estimates by a factor of 10,000 at least. Therefore most money donated to charity is almostly entirely wasted.
3. It is usually better to work a highly-paid job and donate because if you work for a charity you replace the person who would have been hired had you not applied
4. Our instincts will tend to tempt us to optimize for signalling, this is to be resisted unless (or to the extent that) it is what you actually want to do
5. Our motivational centre will tend to want to optimize for "Warm Fuzzies". These should be purchased separately from utilons. 

but without using any unexplained LW Jargon. (Utilons, Warm Fuzzies, optimizing). Linking to posts explaining jargon is NOT OK. I will judge the winner based upon these criteria and the score that the article gets on LW. I may present a small prize to the winner, if (s)he desires it! 

Happy Writing

Roko

EDIT: As well as saying that he will pay $100 to the winner, Jsalvatier makes two additional points that I feel should be included in the specification of the article:

6.  Your intuition about what counts as a cause worth giving money to is extremely bad. This is completely natural: everyone's intuition about this is bad. Why? Because your brain was not optimized by evolution to be good at thinking clearly about large problems involving millions of people and how to allocate resources. 

7. Not only is your intuition about this naturally very bad (as well as cultural memes surrounding how to donate to charity being utterly awful), you don't realize that your intuition is bad. This is a deceptively hard problem. 

And I would also like to add:

8. Explicitly make the point that our current norm of ranking charities based upon how much (or little) they spend on overheads is utterly insane. Yes, the entire world of charities is stupid with respect to the problem of how to prioritize their own efforts. 

9. Mention the point that other groups are slowly edging their way towards the same conclusion, e.g. Giving What We Can (GWWC), Copenhagen Consensus, GiveWell.