Doing Good Better: Effective Altruism and a Radical New Way to Make a Difference

by William MacAskill

Because transferring cash is such a simple idea, and because the evidence in favour of cash transfers is so robust, we could think of them as the ‘index fund’ of giving. Money invested in an index fund grows (or shrinks) at the same rate as the stock market; investing in an index fund is the lowest-fee way to invest in stocks and shares. Actively managed mutual funds, in contrast, take higher management fees, and it’s only worth investing in one if that fund manages to beat the market by a big enough margin that the additional returns on investment are greater than the additional management costs. In the same way, one might think, it’s only worth donating to charitable programmes rather than simply transferring cash directly to the poor if the other programmes provide a benefit great enough to outweigh the additional costs incurred in implementing them. In other words, we should only assume we’re in a better position to help the poor than they are to help themselves if we have some particularly compelling reason for thinking so.