Spending on yourself vs. charity

May 2013

When people first hear about the idea of effective altruism, especially from someone like Peter Singer, there’s one particular objection that is often raised. It goes something like this:

Peter Singer suggests that if I see a child drowning in a pond, I would probably jump in and save them even if I’m wearing $500 non-waterproof boots. He concludes that because of this, I should donate $500 to charity, where it can save a child’s life. But what happens if you take this to its logical conclusion? I would spend all my money on charity and live in a cardboard box! And you can’t expect me to do that! I guess I’m not going to listen to Peter Singer.

(I know this is a common objection because I used it to dismiss Peter Singer for two years before I realized that there might be a reason that he himself spent money on things like suits and a house. So if you are talking to someone about effective altruism, be aware of this!)

The problem with this objection is that it takes a very short-term view of optimizing the size of your donation, because it takes money to earn money. If you donate your entire income (and assets) to the Against Malaria Foundation this year and go live in a cardboard box, then your income will be much smaller next year, because nobody wants to hire people who live in cardboard boxes.

In fact, pretty much every donation that would otherwise be spent on solving a problem in your own life has some opportunity cost, even if the problem it’s solving doesn’t directly cost you very much time or money. This is because even for relatively small problems, if you don’t solve them, they will take up your attention while you worry about them. Attention can otherwise be spent on doing valuable things, which can be converted into money.

In fact, the rate can be quite high. For instance, I recently bought a second monitor. If I were carrying it on my back and saw a drowning child, I would jump into the pond, save the child, and fry the monitor. But then I would go buy another monitor, because I realized that if I’m switching back and forth between programming, documentation, and other windows all the time, the ones in the background consume nagging bits of attention and I get a lot worse at doing high-value tasks like programming. I calculate that given my hourly wage, if my second monitor makes me even 1% better at programming because I can keep track of more things, it will pay for itself in less than a year, so it’s a definite win.

Now, there’s definitely some inflection point of wealth at which you should stop spending money to solve your own problems, because they’re so minor it’s just not worth it. And I agree with Peter Singer that this point is lower than most people think it is (since day-to-day well-being stops rising with incomes over $75,000,1 we might infer that much of the money people spend on themselves doesn’t help at all with solving their own problems and could be redirected harmlessly). But I think this inflection point is also a fair amount higher than a naive reading of Singer’s diving-into-the-pond example would imply, and it’s important to make this clear when introducing this argument.

  1. Kahneman, Daniel, and Angus Deaton. 2010. “High Income Improves Evaluation of Life but Not Emotional Well-being.” Proceedings of the National Academy of Sciences 107 (38) (September 21): 16489–16493. doi:10.1073/pnas.1011492107

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“since happiness stops rising with incomes over $70,000” citation please?



Whoops, turns out it’s $75,000 (and applies to day-to-day “emotional well-being” and not “life assessment”, but I think the former is a more relevant metric for utilitarians). I’ve added the citation. Thanks for keeping me honest!

(Also, note that this is only an empirical claim; I’m not claiming happiness has to stop rising with income, only that it does in practice. If people spent more time figuring out how to spend money in ways that would actually affect their happiness, they would probably hit diminishing returns later on the well-being scale. On the other hand, they’d also require less money to achieve that point on the well-being scale, so it’s unclear which direction the cutoff would move in.)