Ineffective Altruism: Giving Less When Donations Do More Good

Abstract

Despite well-meaning intentions, people rarely allocate their charitable donations in the most cost-effective way possible. The manner in which cost-effectiveness information is presented can be a contributing factor. In four studies (N = 2,725), when we inform participants of the cost of a unit of impact (e.g. the cost of a mosquito net), they perversely donate less when the cost is cheaper. This result arises because people want their donation to have a tangible impact, and when the cost of such an impact is lower, people can achieve it with a smaller donation. A remedy for this inefficiency is to express cost-effectiveness in terms of “units per dollar amount” (e.g. 5 nets provided per $10 donated), thus leaving the cost of providing one tangible item unstated and rendering it less salient as a target donation amount. Across Studies 2 and 3, we demonstrate both the inefficient use of cost-effectiveness information and the effectiveness of this remedy using incentive-compatible donations decisions about providing meals, oral rehydration therapy, deworming medication, and measles vaccines.

Keywords: donations, framing effect, judgment and decision making, targeting, efficiency