Cash transfers

An important use of cash transfers, pioneered by GiveDirectly and championed by GiveWell, is as a benchmark for comparing the value of different causes and for deciding whether to fund certain charities. Cash transfers are especially attractive as a benchmark because (1) they are "massively scalable" [2] and (2) their cost-effectiveness can be straightforwardly expressed as a multipliermultiplier, given plausible assumptions about the relationship between money and wellbeing. Specifically, if a doubling of income confers roughly the same benefit to people regardless of income level—as life satisfaction surveys appear to suggest—, then the average citizen of a rich nation can expect to accomplish about 100 times as much by making a cash transfer to someone living in extreme poverty than by donating that money locally or keeping it to herself. This is because people in extreme poverty earn about 100 times less than people in rich countries on average do, so a donation that can double the comparatively rich person's income can double the income of about 100 extremely poor people.[3][4]

An important use of cash transfers, pioneered by GiveDirectly and championed by GiveWell, is as a benchmark for comparing the value of different causes and for deciding whether to fund certain charities. Cash transfers are especially attractive as a benchmark because (1) they are arbitrarily scalable "massively scalable" [2]and (2) their cost-effectiveness can be straightforwardly expressed as a multiplier given plausible assumptions about the relationship between money and wellbeing. Specifically, if a doubling of income confers roughly the same benefit to people regardless of income level—as life satisfaction surveys appear to suggest—, then the average citizen of a rich nation can expect to accomplish about 100 times as much by making a cash transfer to someone living in extreme poverty than by donating that money locally or keeping it to herself. This is because people in extreme poverty earn about 100 times less than people in rich countries on average do, so a donation that can double the comparatively rich person's income can double the income of about 100 extremely poor people.[2]3][3]4]

  1. ^

    GiveWell (2012) Cash transfers, GiveWell, December (updated November 2018).

  2. ^

    Future Fund (2022) Massively scalable projects, Future Fund, February 25.

  3. ^

    Karnofsky, Holden (2015) Good ventures and giving now vs. later, The GiveWell Blog, November 25.

  4. ^

    Berger, Alexander (2019) Givewell’s top charities are (increasingly) hard to beat, Open Philanthropy, July 9.

GiveWell (2012) Cash transfers, GiveWell, December (updated November 2018).

  1. ^

    GiveWell (2012) Cash transfers, GiveWell, December.December (updated November 2018).

  2. ^

    Karnofsky, Holden (2015) Good ventures and giving now vs. later, The GiveWell Blog, November 25.

  3. ^

    Berger, Alexander (2019) Givewell’s top charities are (increasingly) hard to beat, Open Philanthropy, July 9.

An important use of cash transfers, pioneered by GiveDirectly and championed by GiveWell, is as a benchmark for comparing the value of different causes and for deciding whether to fund certain charities. Cash transfers are especially attractive as a benchmark because (1) they are arbitrarily scalable and (2) their cost-effectiveness can be straightforwardly expressed as a multiplier given plausible assumptions about the relationship between money and wellbeing. Specifically, if a doubling of income confers roughly the same benefit to people regardless of income level—as life satisfaction surveys appear to suggest—, then the average citizen of a rich nation can expect to accomplish about 100 times as much by making a cash transfer to someone living in extreme poverty than by donating that money locally or keeping the moneyit to herself. This is because people in extreme poverty earn about 100 times less than people in rich countries on average do, so a donation that can double the comparatively rich person's income can double the income of about 100 extremely poor people.[2][3]

Cash transfers as a benchmark

An important use of cash transfers, pioneered by GiveDirectly and championed by GiveWell, is as a benchmark for comparing the value of different causes and for deciding whether to fund certain charities. Cash transfers are especially attractive as a benchmark because (1) they are arbitrarily scalable and (2) their cost-effectiveness can be straightforwardly expressed as a multiplier given plausible assumptions about the relationship between money and wellbeing. Specifically, if a doubling of income confers roughly the same benefit to people regardless of income level—as life satisfaction surveys appear to suggest—, then the average citizen of a rich nation can expect to accomplish about 100 times as much by making a cash transfer to someone living in extreme poverty than by donating that money locally or keeping the money to herself. This is because people in extreme poverty earn about 100 times less than people in rich countries on average do, so a donation that can double the comparatively rich person's income can double the income of about 100 extremely poor people.[2][3]

  1. ^

    GiveWell (2012) Cash transfers, GiveWell, December.

  2. ^

    Karnofsky, Holden (2015) Good ventures and giving now vs. later, The GiveWell Blog, November 25.

  3. ^

    Berger, Alexander (2019) Givewell’s top charities are (increasingly) hard to beat, Open Philanthropy, July 9.

GiveWell considers cash transfers to have the strongest track record of any non-health intervention, and estimates cash transfer programs to be in the same range of cost-effectiveness as their other priority programs (GiveWell 2018).programs.[1] As they acknowledge, this assessment is highly sensitive to certain empirical and moral assumptions, particularly concerning the investment returns to cash transfers and the relative value of averting child mortality vis-à-vis improving adult income.

BibliographyFurther reading

GiveWell (2012) Cash transfers, GiveWell, December.

  1. ^

    GiveWell (2012) Cash transfers, GiveWell, December.