Posted by Michael Dickens on May 15, 2010
I just watched a TED talk about setting global priorities. The idea was, given $50 billion, how can we spend it such that we will help as many people as possible? The talk is based on the findings of the Copenhagen Consensus. In 2008, the Copenhagen Consensus published a list of global problems in order of priority — those at the top do the most good for the least effort, while those at the bottom do the least good for the most effort. Although the process has been criticized, the concept of prioritizing investments is a very important one.
This reminds me of something I undertook recently. I am often bombarded with charities and causes, and usually never donate to any of them. It’s not that I don’t want to help people; but I have a limited amount of money, and I wanted to make sure that my money was going to do as much good as possible. So one day I sat down and researched various charities to determine which one would be the best investment. I saw the TED talk today, and it reminded me of my list. While the Copenhagen Consensus’ list is more oriented towards government action, mine is more oriented to personal action. How can you as a citizen do as much good as possible?
This list is not by any means comprehensive. I just threw it together during lunch one day. But it still gives a pretty decent idea of how to prioritize.
(There are a few other causes that I left off of this list, either because they are not as important or because they are too difficult to examine.)
The first problem I looked at was global warming. The current biggest human contribution to CO2 emissions is electricity production, so I looked into what it would cost to build solar panels, and what the benefits would be. I found that in the US, per capita emissions is 19 metric tons per year. For you to build enough solar panels to supply your house with all the energy it will ever need costs on average $20,000, and reduces your emissions by 8 metric tons per year. (These figures aren’t necessarily true for you, but they are averages). That’s pretty expensive, and the benefits are relatively small (although very important in the long term).
Next I looked at microloans. The idea here is that you provide a small loan to a business owner in a third-world country. It stimulates the economy and helps lift people out of poverty. The cost of loans vary, but it is generally around $300. But since it is a loan, it’s not as if your money simply goes away. Unless the borrower defaults, you eventually get your money back. This is very helpful, and could cost you nothing more than the money you lose through inflation.
The third potential source of investment was Charity: Water (they have a colon in their name, don’t ask me why). In addition to having a very well-run campaign, Charity: Water is actually a really good cause. According to their website, $20 towards building a well can give one person clean water for 20 years. That’s only about a dollar per year. For just one dollar per year, about $70 per lifetime, you can provide someone with clean drinking water; this not only makes life much easier, but actually helps prevent millions of diseases per year.
The last investment on my list is the Central Asia Institute, which supports education programs in Pakistan and Afghanistan. One person’s school supplies costs $20, a teacher’s salary is $30 per year per student, and constructing a school building costs $30 per student. This is a total of $80 per student per year, estimated based on the numbers on the Central Asia Institute’s website. Although this is considerably more expensive than Charity: Water, it is still very cheap.
Given these choices, how should one invest? Global warming is very important, but it is not so immediately pressing. Additionally, I think much of the focus on global warming is due to the fact that it will affect the middle and upper class nearly as much as it will affect the lower class, whereas nearly all other major global problems primarily affect the lower class. Global warming could get really bad, but there are other immediate problems that are nearly as bad. This is why it is not a top priority.
The remaining three choices are all very different. Charity: Water provides the greatest immediate benefit for the smallest cost. Microloans are not quite so short-term, but are also renewable. Your money comes back to you. The benefits of the Central Asia Institute are more difficult to measure; it is more expensive than Charity: Water, and doesn’t save any lives, but education could have benefits of propagation. When people are educated, they see more freedom in their lives. They are now more equipped to help others. Education affects not just the person who is educated, but all the people who that person can now go on to help. This makes the benefits of education harder to measure.
To sum up, it looks like the best investment is Charity: Water, followed by the Central Asia Institute. Microloans, while not as important as the other two, can potentially cost you virtually nothing.
There are many serious problems not dealt with here; the Copenhagen Consensus found that malnutrition was the biggest problem, and none of these investments cover that. This list is far from complete, which is why I encourage that you make your own list. Write down all your favorite charities, do a little research, and figure out which one will end up doing the most good.