You don’t hear so much about effective altruism now that one of its most famous exponents, Sam Bankman-Fried, was found guilty of stealing $8 billion from customers of his cryptocurrency exchange. (This spring, at age 32, he was sentenced to 25 years in prison.)
But if you read this newsletter, you might be the kind of person who can’t help but be intrigued by effective altruism. (I am!) Its stated goal is wonderfully rational in a way that appeals to the economist in each of us: To “help others as much as we can with the resources available to us” based on three criteria: “importance, neglectedness and tractability.” That’s from the website of Open Philanthropy, which is funded mainly by the Facebook co-founder Dustin Moskovitz and Cari Tuna, a former Wall Street Journal reporter and Moskovitz’s wife.
Effective altruism is a new movement inspired by philosophers (including Peter Singer and William MacAskill) and embraced by Silicon Valley engineers who pride themselves on taking a logical, data-driven approach to life. Its emphasis on issues it describes as important, neglected and tractable has led to a focus on global health and development along with animal welfare and threats to humanity such as bioterrorism and nuclear war.
Last week I talked with people who believe in effective altruism and others who don’t. I found myself dragged into deep questions. Should we give until we’re as poor as the poorest among us — and if not, why not? Are all people on the planet equally deserving of our help? What do we owe to future generations? Is it egotistical or merely sensible to demand proof that our money is being put to good use?
MacKenzie Scott and Melinda French Gates, two of this generation’s most high-profile philanthropists, aren’t effective altruists, but they do care about doing good in cost-effective ways. I’m interested in how they try to achieve that without adopting the E.A. framework of benefit-cost analysis, expected value, optimization and so on.
These deep questions are equally relevant to those of us who don’t have billions of dollars to ladle out, but still have something to give to charity. If you aren’t wrestling with how much you give and to whom, you’re not doing the job right. (And giving is a job.)
I’ll start with Leif Wenar, a philosophy professor at Stanford who wrote a harshly critical article about E.A. that was published in Wired magazine in March. He called it a “ruinous philosophy” that pitches itself as hyper-rational but can be less effective than billed and even inadvertently harmful. For example, he cited a New York Times story from 2015 that reported that some people in Zambia, many of them facing hunger, were using malaria bed nets they had been given to catch fish, thus not protecting their families from malaria, depleting fish stocks and getting insecticides in the water. Wenar said that’s an example of how effective altruists don’t always see the knock-on effects of their interventions.
“If I were young right now I think I might have joined E.A. myself,” Wenar told me when I called him for an interview. “You have all these morally motivated, smart young people. If they’re in a STEM field, this seems so right to them. I see why they do it.”
The problem is that “E.A. grew up in an environment that doesn’t have much feedback from reality,” Wenar told me. Believers in E.A. may be masters of tools such as optimization, but they will still fail if they can’t get their hands on good information about how the interventions work, he said.
Wenar referred me to Kate Barron-Alicante, another skeptic, who runs Capital J Collective, a consultancy on social-change financial strategies, and used to work for Oxfam, the anti-poverty charity, and also has a background in wealth management. She said effective altruism strikes her as “neo-colonial” in the sense that it puts the donors squarely in charge, with recipients required to report to them frequently on the metrics they demand. She said E.A. donors don’t reflect on how the way they made their fortunes in the first place might contribute to the problems they observe. And she said she doesn’t like that a lot of E.A. money is going into inculcating E.A. principles through university courses and the like.
Effective altruism’s dispassionate calculation of benefits and costs can take it to weird places. Let’s say that the human population could grow to trillions or quadrillions in the distant future, and we put some value on each of those future lives. The potential numbers are so large that they swamp every other consideration. Some effective altruists focus single-mindedly on preventing the extinction of the species so that those unborn generations have the opportunity to exist. Bettering the lives of living human beings pales in significance.
Alexander Berger, the chief executive and a co-founder of Open Philanthropy, admitted to me that this strain of speculation that borders on science fiction “strikes a lot of people as being really off.” He added: “Most philosophies can be taken to extremes and often don’t look good at the extremes.” In contrast, he said, “the core, boring version of E.A., that most people should give more to more effective charities, is sort of inarguable.”
As for those malaria bed nets, Open Philanthropy sent me a fact sheet saying that the Against Malaria Foundation has found correct usage rates of 60 percent to 80 percent — not perfect, but better than nothing. The foundation is supported by GiveWell, which in turn receives some of its funding from Open Philanthropy. GiveWell has also acknowledged that in some cases malaria bed nets might possibly delay the development of immunity in children.
GiveWell calculates that the malaria bed nets are highly effective on the whole, costing “approximately $3,000 to $8,000 to avert a death in locations where GiveWell supports campaigns.” That’s a trivial cost in the scheme of things: The U.S. Environmental Protection Agency puts the “value of a statistical life” in the United States at $7.4 million, in 2006 dollars.
Another question to ask is whether lives saved is the right criterion for charities. Sometimes yes. But there are plenty of donor-supported organizations that do important work that doesn’t involve saving lives. (When’s the last time the Metropolitan Opera saved a life?) “To suggest that somehow there is one superior way to identify philanthropic goals oversimplifies a lot,” Phil Buchanan, the founding chief executive of the Center for Effective Philanthropy, which advises charitable foundations, told me.
“Some of the data that E.A. has brought to bear is helpful in challenging people about what good they can do,” Buchanan said. “But I want to resist the temptation to say there’s a formula. That’s not going to persuade folks. People have to make these judgments for themselves. For some people, faith will enter into it.”
That brings me back to MacKenzie Scott and Melinda French Gates, two women divorced from mega-billionaires who are making their own judgments about where to put the billions at their disposal. Scott has made unrestricted donations to long-established organizations that tend to be ignored by the Silicon Valley types who embrace effective altruism: historically Black colleges and universities, United Way and Goodwill Industries, for example. She vows to keep going “until the safe is empty.”
Gates is investing in women and families around the world, including reproductive rights in the United States. She wrote in a recent guest essay for The Times that “decades of research” shows that “investing in women and girls benefits everyone.” That’s a utilitarian argument, but unlike the E.A. thought process, it doesn’t seem to be based on a strict calculation of comparing the benefits and costs against those of the entire range of potential recipients.
Berger, the Open Philanthropy chief executive, said E.A. is based on “rigorous academic evidence,” and that choosing how to give based on personal interest or experience “leaves way too much on the table” — namely causes that are important but remote from donors’ lives. I get that. But I also see the logic of Scott and Gates. I think the right approach to giving combines the rigor of an economist with the humility to realize that science will never provide all the answers to moral questions.
Elsewhere: House Rich, Cash Poor
Most American homeowners have enjoyed a big increase in the value of their homes, but they can’t easily convert their housing wealth into spending money because interest rates are high. That makes them house rich and (relatively) cash poor.
Homeowners aggressively tapped the wealth in their houses in 2021 and early 2022, when mortgage rates were at rock bottom. But the extraction stopped when mortgage rates rose. Cash-out refinancings — in which the borrower raises spending money in the process of switching to a new loan — fell 72 percent in the third quarter of 2022 from the same period a year earlier, and an additional 44 percent in the same quarter of 2023, according to data from TransUnion.
Now is a bad time to do a cash-out refinancing, Selma Hepp, the chief economist for CoreLogic, told me. It would take a “significant” decline in mortgage rates before tapping into home equity would become a good deal for many people again — and there’s no guarantee that home values would remain high in such an environment, Lotfi Karoui, the chief strategist and head of credit, mortgages and structured products research at Goldman Sachs, told me.
How about you? Please write to me at coy-newsletters@nytimes.com if you feel house rich, cash poor.
Quote of the Day
“Industrial firms may be said to ‘own’ their markets in much the way that academics from various universities can be said to own their particular sub-disciplines.”
— Harrison White, “Markets from Networks: Socioeconomic Models of Production” (2002). White died on May 19 at age 94.
