Summary: A less cost-effective opportunity that is more scalable can be better than a more cost-effective but less scalable opportunity.
That is, in the current effective altruism movement with lots of funding, to maximize the total effectiveness of the entire EA portfolio, scalability should be prioritized on the margin and cost-effectiveness should become more of a bar to meet than something to maximize.
This is what motivates a lot of the current focus on highly scalable projects (megaprojects).
This implies two things:
(1) When looking for new opportunities, a less cost-effective (in terms of social good per dollar spent) opportunity that is more scalable (in terms of total dollars that can be spent to achieve the target cost-effectiveness) can sometimes be more exciting and more helpful to the overall EA portfolio than a more cost-effective but less scalable opportunity.
(2) Cost-effectiveness still matters, but requires us either to threshold fund everything above a certain bar (e.g., everything that can be about as good as Against Malaria Foundation) or identify very scalable opportunities that can take billions of dollars on the margin at a higher bar.
My sense is that the earlier effective altruism movement of 2010-2014 spent all their time aiming to find opportunities that maximized cost-effectiveness per dollar without caring much about scalability (e.g., "how to do the most good with your limited money"), whereas if the above is right we need to shift to caring about scalability much more and use cost-effectiveness more as a threshold (e.g., identify very scalable opportunities that are as good as AMF or better).
Imagine that we had these five projects (and only these projects) in the EA portfolio:
Alpha: Spend $100,000 to produce 1000 units of impact (after which Alpha will be exhausted and will produce no more units of impact; you can't buy it twice)
Beta: Spend $100,000,000 to produce 200,000 units of impact (after which Beta will be exhausted and will produce no more units of impact; you can't buy it twice)
Gamma: Spend $1,000,000,000 to produce 300,000 units of impact (after which Gamma will be exhausted and will produce no more units of impact; you can't buy it twice)
GiveDeltaly: Spent any amount of money to produce a unit of impact for each $2000 spent (GiveDeltaly cannot be exhausted and you can buy it as many times as you want).
Research: Spend $200,000 to create a new opportunity with the same "spend X for Y" of Alpha, Beta, Gamma, or GiveDeltaly.
EA as of 2010-2014, with relatively fewer resources (we didn't have $100M to spend), would've been ecstatic about Alpha because it only costs $100 to buy one unit of impact, which is much better than Beta's $500 per unit, GiveDeltaly's $2000 per unit, or Gamma's $3333.33 per unit.
But "modern" EA, with lots of money and a shortage of opportunities to spend it on would gladly buy Alpha first but would be more excited by Beta because it allows us to deploy more of our portfolio at a better effectiveness.
Note though that no one in "modern EA" would be excited by Gamma - even though it's a huge megaproject and very scalable, it doesn't beat our baseline of GiveDeltaly.
...Now let's think of things as allocating an EA bank account and use Research. What should we use Research for? Early EA would want us to focus our research efforts on finding another opportunity like Alpha since it is very cost-effective! But modern EA would rather we look for opportunities like Beta - even though it is less effective than Alpha, it can use up 1000x more funds!
Like say we have an EA bank account with $2,000,000,000. If we followed modern EA advice and bought Alpha, bought Beta, bought Research and used it to find another Beta, and bought the second Beta, and then put the remainder into GiveDeltaly, we'd have 1,350,350 units of impact.
But if we followed Early EA advice and bought Alpha, bought Beta, bought Research and used it to find another Alpha, and bought the second Alpha, and then put the remainder into GiveDeltaly, we'd have 1,151,800 units of impact. Lower total impact even though we used research to find a more cost-effective intervention!
This implies the scalability of the projects we identify can matter just as much, if not more than, the cost-effectiveness of the project! I think this scalability mindset is often missed by people who focus mainly on cost-effectiveness and is the main reason IMO to think more about megaprojects.
But this does also imply that scalability isn't the only thing that matters - no one wants to spend a dollar on Gamma even though it is very scalable.
This post was originally this comment. I'm turning it into a top-level post and expanding upon it briefly.
This is just my personal opinion and not necessarily the opinion of anyone else at Rethink Priorities. This post was not seen by anyone else at Rethink Priorities prior to me posting.
On March 3 at 12:36PM CT I added a few edits to improve clarity, including adding a rephrasing suggested by Stefan Schubert.
I don't think we have properly internalized how much funding is currently available. Ben Todd in "Is effective altruism growing? An update on the stock of funding vs. people" quotes EA as having $46B and growing 37% per year, and this is now actually looking like it could be an underestimate. A $46B portfolio would be enough to launch two Manhattan Project-level initiatives at the level of spending of the original Manhattan Project (after adjusting for inflation)! ↩︎
Though I will stop short of saying that everything that should get funded does get funded, since there do appear to be some gaps that still need to be ironed out. ↩︎
It's not actually all that clear yet where we should set the bar. GiveWell is currently aiming for >=8x cash transfers (e.g., GiveDirectly). It makes sense our bar should be better than GiveDirectly since otherwise it does seem like we literally could spend billions of dollars on GiveDirectly if we wanted to. This bar is a little below the "Against Malaria Foundation or better" bar but the AMF bar is a bit easier to talk about and reason about. It's possible the actual bar could be even lower, given GiveWell has currently only identified $400 million in 8x or better opportunities and we have billions to give. I think this bar also holds even if you include animal welfare and longtermist opportunities - which GiveWell currently does not - since there are not yet multi-billion dollar opportunities in either of those areas. ↩︎
One personal hot take I am currently saving for those of you who read footnotes but that I'd like to think more about - I think this implies that longtermist funders who mainly want to improve the long-run future still should fund a ton of animal welfare and global health/development (GHD) stuff because doing so still meets any plausible bar that EA can set given the tremendous amount of capital we have. That is, there just aren't enough longtermist opportunities to meet all this funding. I'd understand longtermists passing on animal/GHD stuff if funding was more constrained or if we do identify longtermist stuff that is just massively scalable such that there's nothing left over for animal/GHD stuff - and maybe it is reasonable to wait a year or more and save money to see if that does become the case. ↩︎
Of course not in this example is the opportunity to save money for the future after we do more research. This likely could make the value of the portfolio higher, even though it would take longer to deploy. I leave this out now for simplicity. ↩︎