Shakeel Hashim

How flawed judgments limit the impact of charitable donations

People regularly scoff at the mistakes made by charities. We shake our heads at 

. But what about us, the donors — how can we improve the effectiveness of our choices?

We think we have a responsibility to make sure that when we are using our wealth to change the world, we're doing 

. But our brains aren’t perfect, and we often make mistakes without even realising it. So how can we overcome that?

To answer this question, there's a lot to learn from Nobel prize winning economist Daniel Kahneman. Throughout his career — most notably in his best-selling book 

 — he’s demonstrated that our brains aren’t always good at making the right choices. As he explains it, our brains often make decisions rapidly. That’s a very useful skill! But occasionally, when making those rapid judgments, our brains can easily make mistakes.

Try solving this puzzle without a pen and paper to see what we mean:

A bat and ball cost $1.10. The bat costs one dollar more than the ball. How much does the ball cost?

You probably immediately thought $0.10. But the actual answer is $0.05 (the bat costs $1.05, so together they’re $1.10).

Kahneman outlines all sorts of similar situations in 

, pointing out the many “cognitive biases” — systematic errors in our thinking — that we suffer from.

These biases can lead us to make bad or illogical decisions in all areas of life, without even realising it. But being aware of them can help us recognise them, so we can make an active decision to think "slow" and overcome them. As Kahneman explains, recognising biases is particularly important when the stakes are high — as is the case in philanthropic giving.

Understanding these biases can sometimes allow you to slow down your thinking, which is a very valuable skill when picking charities to support.

So let’s look at four mistakes people make in their judgments about the world — and in the process, help you to make better giving decisions.

1. We're bad at assessing the scale of problems

In the aftermath of the Exxon Valdez oil spill in the 1980s, an experiment was conducted that showed a key cognitive bias known as “scope neglect”. People were surveyed about their willingness to pay for nets that would save birds from drowning in oil ponds. Different groups were asked their willingness to pay to save 2,000, 20,000 or 200,000 birds.

You’d think that saving 200,000 birds would be worth much more than saving 2,000 birds. But in fact, on average people said they’d pay $80 to save 2,000 birds, $78 to save 20,000, and $88 to save 200,000. As Kahneman explains, “What the participants reacted to, in all three groups, was a prototype—the awful image of a helpless bird drowning, its feathers soaked in thick oil. The almost complete neglect of quantity in such emotional contexts has been confirmed many times”.

As this experiment demonstrates, we’re sometimes not very good at thinking about sums. We tend to only care about what the experience of an average person (or bird) experiencing a problem is, and ignore how many people (or birds) are 

This can be a real problem for philanthropic giving: it means we are much more responsive to highly emotive charitable appeals regardless of their potential scale, even if our money might do more good targeting less visceral problems that affect many more people. To get around this, many people assess giving opportunities by looking at their 

. Doing this helps us ensure that we’re giving our money to the most impactful causes.

2. We give too much weight to problems we know the most about.

One of the biases Kahneman talks about the most is the "availability bias". This is the idea that when we're trying to assess how frequent something is, we tend to make that judgment based just on how easily examples of it come to mind. Because the amount we 

 about something is often based on its novelty and excitement — as well as who we know and what we pay attention to (rather than how often the thing actually occurs) — this can lead to misconceptions in how prevalent that thing really is.

 where participants were asked whether more people died from tornadoes or asthma, more people picked tornadoes. In fact, asthma causes 20 times more deaths. But because asthma deaths aren't dramatic, they don't get much media coverage — unlike tornadoes, murders and freak accidents — so to most people, asthma seems like a less frequent killer.

The problem goes beyond the media, though. "Personal experiences, pictures, and vivid examples are more available than incidents that happened to others, or mere words, or statistics," Kahneman writes. In the case of philanthropy, that means we might prioritise causes we're personally affected by in the Western world, and neglect problems that we are less aware of, like malaria and vitamin deficiencies.

Once again, being aware of the bias — while not always a perfect solution — can help us become more effective givers. If you remind yourself to pay attention to statistics rather than anecdotes, you might find yourself making better decisions. More importantly, you should remind yourself that there are people (or animals) behind those statistics. If you want to help more people, it often pays to think outside the box, beyond what is happening close to you or what is getting the most attention in the news. (Our list of 

3. We're not good at judging things on their own.

When two things are presented side-by-side, we're good at spotting the differences between them. But when we're asked to evaluate something by itself, we often struggle to call to mind alternatives to compare it to — and this can result in some strange judgments about value. Kahneman highlights an 

People were asked how much they valued two different dictionaries:

Dictionary A was published in 1993, had 10,000 entries, and was in "like new" condition.

Dictionary B was published in 1993, had 20,000 entries, and its condition was "cover torn, otherwise like new".

When shown the dictionary descriptions one by one, they valued A more highly — B's value was presumably diminished by the torn cover. But when shown the two dictionary descriptions at once (known as a "joint evaluation"), people valued B more highly (because it has many more entries than A).

This is a common problem: when we’re asked to evaluate something by itself, we sometimes form quick judgments about what we think is the “right” amount for some value. But when we’re given two options and asked to 

 them, we put in more effort — and come to more logical conclusions.

This is a problem for philanthropy because we often consider donating in a single evaluation setting — we're making a decision whether or not to donate to Charity X, rather than thinking about whether we should donate to Charity X 

 Charity Y. This reliance on single evaluations might lead to bad decisions about where to donate.

Given that money is finite, and we only have so much to give, each time we’re donating we are implicitly 

 donating to all the other options out there. So to make sure that we’re giving effectively,  we should try to do joint evaluations whenever possible, reminding ourselves of the many alternative philanthropic opportunities that exist. Organisations like GiveWell have developed 

, which allow them to compare effectiveness across causes (e.g. comparing an increase in wages to a decrease in disease prevalence).

While the suggestions we've looked at might be handy, they're not foolproof. Kahneman has spent decades studying various cognitive biases, and is more aware of them than most people. And yet even he says "my intuitive thinking is just as prone to overconfidence, extreme predictions, and the planning fallacy as it was before I made a study of these issues." Overcoming the biases turns out to be really difficult.

But don't despair. When it comes to philanthropic giving, there's one easy solution: outsource your decision making to the experts. Some organisations, like GiveWell, Animal Charity Evaluators, or Founders Pledge, might be less bias-prone because they can spend more time evaluating charities, oftentimes in far more detail than a single person could reasonably do. They can dedicate time to do thorough research, which they use to develop models like cost-effectiveness analyses.

What's more, Kahneman says that "organisations are better than individuals when it comes to avoiding errors, because they naturally think more slowly and have the power to impose orderly procedures". If you want to make sure your money does as much good as possible, your intuitions may get in the way. That’s normal. But letting a dedicated and well-staffed organisation decide how to give might mean your donations are going to go even further than if you did all the research yourself.

: to start with, you could take a look at 

Read how the learnings from Daniel Kahneman's book Thinking Fast and Slow can be applied to charitiable giving to allow you to make a greater positive impact on the world.

While some things like income inequality or the mistreatment of non-human animals seem to be getting worse, there’s surprising data showing that some things are going much better than you might think.

Is the world getting worse or better?

It can be hard to look at the news these days without feeling sad. Pandemics, war, climate change — things can seem really bleak. If you feel that way, you're not alone: 

, only 6% of Americans and 4% of Brits thought the world was getting better.

While some things like income inequality or the mistreatment of non-human animals seem to be getting worse, there’s surprising data showing that some things are going much better than you might think. On many measures you can think of — poverty, health, safety — things are much, much better than they used to be. People are living longer, happier and healthier lives than ever before. We've made tremendous headway with improving people's lives even in the last two generations alone, and you can play a significant role in making sure we continue that progress. But to do so, we need to take a balanced view of if the world is getting better or worse.

Let’s start by seeing how it has gotten better.

As an example of the progress we’ve made, take poverty: since 1990, over one billion people have been lifted out of 

 even while the world's population has increased by 2.5 billion people.

Over the long term, things look even better. Just 200 years ago, around 90% of the population lived in extreme poverty. By 2018, it was around 10%.

The reduction in global poverty has enabled all sorts of other positive changes. Life expectancy has shot up all over the world, more than doubling in Africa since 1900.

The number of children who die is rapidly falling, too — the total number of deaths of under-5-year-olds was more than halved between 1990 and 2019, even after considering population growth.

And we're making really good progress on eliminating some of the most deadly parts of life, like 

. Malaria deaths in Africa alone were almost halved in just 15 years.

The improvements aren't just limited to health and poverty. 

 than ever before; and while 88% of people were illiterate in 1800, 86% of people were literate in 2015.

Even in cases where things may have been getting worse in the short-term, looking at long-term trends puts the badness in perspective. Take violent deaths caused by war: looking at the short-term trends, we see things worsened over the 2010s, and this might continue in the 2020s due to the ongoing war in Ukraine. But things were much worse in the 20th century:

Climate change is another example where, even though things are bad and progress is slow, we might be making a bit more progress than you’d realise. Yes, 

global CO2 emissions have been increasing

 too. But if we zoom in on some of the major polluters, we can see that advocates for reducing emissions are starting to achieve their goals: emissions are falling in the US, EU and UK.

Consumption-based CO2 has also decreased (albeit more slowly), even though populations have grown and GDP has risen.

The amount of energy generated by renewable sources is rapidly increasing, too. In fact, solar energy deployment has repeatedly 

But all this progress doesn't mean we can rest on our laurels.

For one thing, there are some important measures by which things are getting worse — and we need to do something about it. Take inequality, which has been getting much worse in many countries, most notably the 

. And even though we’ve reduced poverty globally, around 700 million people still live on less than $1.90 per day — and that's 700 million too many. Meanwhile, the majority of the world lives on less than $10 a day, which is still an awful lot less than people in rich countries are used to. There are proven ways to improve these people’s 

, such as cash transfers: we just need to give more money to do it.

What's more, although things have been getting better for humans, they've been getting much worse for non-human animals. 

. That means more non-human animals in captivity, many of whom are (and will be) living in awful conditions. If you care about the well-being of non-human animals, this is a very concerning trend — and it means there's room to do a lot more work 

Perhaps the most worrying trend of all is the significant increase in existential risk. As Oxford philosopher and Giving What We Can co-founder Toby Ord has written, "for the first time in humanity's long history, we have the capacity to destroy ourselves." We've invented incredibly powerful tools like nuclear weapons, biotechnology and artificial intelligence, all of which have the potential to 

. And we’ve damaged the environment to such an extent that climate change is likely to harm many people, and, in worst-case scenarios, could even lead to our extinction. That means that while most things have been getting better over time, the risk of human extinction or unrecoverable collapse of civilisation is increasing, not decreasing. Ord thinks that though our existential risk was around 1% throughout the twentieth century, the current risk of existential catastrophe within the next 100 years is 17%.

That's a really high number, and it's why Ord and many other activists 

donate to initiatives that can lower that existential risk

. We’ve made so much progress in the last century, and it would be a huge shame if future generations weren’t around to appreciate it.

We should be optimistic about how much better the world can be

When we put our minds to it, we really can make a difference. Happily, more and more people seem to be realising that: the amount of money committed to effective giving has 

 since 2015. We've achieved a lot in the last century, and there’s still so much we can do. As Open Philanthropy's Holden Karnofsky 

, for most of human history, our welfare was either fairly stagnant or worsening. The (relatively) recent big increase in welfare we've seen is only due to a phenomenal amount of effort and technological development. That progress should make us optimistic about what can be achieved when we put our minds to it — and help us imagine how much better the world can be for future generations, if we keep working to improve it.

Each of us has the power to help that process: by donating to one of the 

 we recommend, you can contribute to reducing poverty, fighting climate change, and safeguarding the long-term future. You can also take your impact even further by using your 

 to work directly on these sorts of problems. Through work like that, we can leave the world better than we found it — and ensure better lives for generations to come.

Factfulness: Ten Reasons We're Wrong About the World – and Why Things Are Better Than You Think

Shakeel Hashim is a news editor for The Economist. He previously worked as a growth manager at Protocol, a new tech site from the publisher of POLITICO. Shakeel graduated from the University of Oxford with a degree in Philosophy, Politics and Economics.

Shakeel Hashim

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How flawed judgments limit the impact of charitable donations

Is the world getting worse or better?