why the “more money equals more stuff done” equation which seems to hold in the rest of our economy fails for charities
Why isn’t there an equal presumption that “more people willing to try things equals more stuff done”? EtGers and org-starters are complementary goods. The point isn’t that EtG is not going to do anything, just that there might be other things that did even more.
Thanks Ben, maybe I should be more clear. The naïve argument for earning to give is something like: “I donated $100,000 last year; based on my skill set I would probably earn $50,000 working at a charity; therefore earning to give is twice as good.”
My presumption is that you think this argument gets something wrong, and I’m trying to figure out what it is.
(As Owen mentioned elsewhere: if you are talking about truly marginal EtGers then the argument doesn’t have much force, so I am perhaps unfairly putting words into your mouth by assuming you mean that people like me are incorrectly following arguments like the above.)
“I donated $100,000 last year; based on my skill set I would probably earn $50,000 working at a charity; therefore earning to give is twice as good.”
The naive argument definitely works if $50,000 will reliably hire someone as good as you would be at the job, where that someone would otherwise have been doing activities of little altruistic value.
That’s a bit of an odd situation. Say your programming skills are worth $200k on the open market, and a charity needs skills like those. Why can they successfully hire a programmer for $50k? They need some combination of a supply of candidates who are eager to work for them for non-monetary reasons and lowered standards. Sort of like how lots of people want to be musicians, so average musician wages are very low.
Basically the naive argument assumes that there is a large population ready to donate their time at discount rates and high productivity but not to earn and donate with comparable willingness/productivity. Earning to give then exploits the opportunity for cut-rate hiring created by others’ unreasonable enthusiasm for direct work.
And that’s true for many positions, especially for people who have particular advantages in earning income. But it will break down for less popular positions, which offer less non-monetary compensation: they may be higher risk, weirder, have poorer exit options, involve fewer warm fuzzies, require years of onerous preparation getting a PhD or proceeding on the tenure track, etc.
In some cases there are also other pressures to keep wages low and rely on employees voluntarily taking low wages, e.g. if you have several employees already doing that then hiring new ones at market wages can create workplace jealousy (which is a big deal, believed to be a major contributor to wage stickiness and unemployment).
Thanks Carl. Here’s a specific example: ACE spends about $100,000 per year on its five staff members. I don’t think all five are full-time paid, but still this implies a pretty low average salary.
While ACE probably has some need for software skills, my guess is that my labor would be significantly less valuable than the staff they currently have on board with backgrounds in statistics etc.
Does this imply that earning to give is a good career route for me? Or is there something I’m not thinking of?
I think the counterfactual shouldn’t be seen as being an employee, it should be seen as being a leader—that’s what’s wrong—that leaders aren’t really easily replacable. Starting a new charity or project that wouldn’t have happened otherwise should perhaps be the counterfactual. Now we can start talking about the relative scarcity of funds against ideas against quality execution and see where the gap is and send marginal EA talent in that direction? Doesn’t make that much sense to put your career into executing someone else’s plan that would have been done anyway so its a bit of a straw man against ETG?
Oh, yeah, that assumes that the marginal person who was hired by the charity (a) existed and (b) their salary was a good proxy for their value created. Those seem pretty shaky, since more people means more ability to raise funds from outside EA and my impression is that people working for nonprofits don’t pay super much attention to salary as a signal.
The argument you give proves far too much; for instance, it suggests that Holden and Elie should go back to finance.
Why isn’t there an equal presumption that “more people willing to try things equals more stuff done”? EtGers and org-starters are complementary goods. The point isn’t that EtG is not going to do anything, just that there might be other things that did even more.
Thanks Ben, maybe I should be more clear. The naïve argument for earning to give is something like: “I donated $100,000 last year; based on my skill set I would probably earn $50,000 working at a charity; therefore earning to give is twice as good.”
My presumption is that you think this argument gets something wrong, and I’m trying to figure out what it is.
(As Owen mentioned elsewhere: if you are talking about truly marginal EtGers then the argument doesn’t have much force, so I am perhaps unfairly putting words into your mouth by assuming you mean that people like me are incorrectly following arguments like the above.)
“I donated $100,000 last year; based on my skill set I would probably earn $50,000 working at a charity; therefore earning to give is twice as good.”
The naive argument definitely works if $50,000 will reliably hire someone as good as you would be at the job, where that someone would otherwise have been doing activities of little altruistic value.
That’s a bit of an odd situation. Say your programming skills are worth $200k on the open market, and a charity needs skills like those. Why can they successfully hire a programmer for $50k? They need some combination of a supply of candidates who are eager to work for them for non-monetary reasons and lowered standards. Sort of like how lots of people want to be musicians, so average musician wages are very low.
Basically the naive argument assumes that there is a large population ready to donate their time at discount rates and high productivity but not to earn and donate with comparable willingness/productivity. Earning to give then exploits the opportunity for cut-rate hiring created by others’ unreasonable enthusiasm for direct work.
And that’s true for many positions, especially for people who have particular advantages in earning income. But it will break down for less popular positions, which offer less non-monetary compensation: they may be higher risk, weirder, have poorer exit options, involve fewer warm fuzzies, require years of onerous preparation getting a PhD or proceeding on the tenure track, etc.
In some cases there are also other pressures to keep wages low and rely on employees voluntarily taking low wages, e.g. if you have several employees already doing that then hiring new ones at market wages can create workplace jealousy (which is a big deal, believed to be a major contributor to wage stickiness and unemployment).
Thanks Carl. Here’s a specific example: ACE spends about $100,000 per year on its five staff members. I don’t think all five are full-time paid, but still this implies a pretty low average salary.
While ACE probably has some need for software skills, my guess is that my labor would be significantly less valuable than the staff they currently have on board with backgrounds in statistics etc.
Does this imply that earning to give is a good career route for me? Or is there something I’m not thinking of?
I think the counterfactual shouldn’t be seen as being an employee, it should be seen as being a leader—that’s what’s wrong—that leaders aren’t really easily replacable. Starting a new charity or project that wouldn’t have happened otherwise should perhaps be the counterfactual. Now we can start talking about the relative scarcity of funds against ideas against quality execution and see where the gap is and send marginal EA talent in that direction? Doesn’t make that much sense to put your career into executing someone else’s plan that would have been done anyway so its a bit of a straw man against ETG?
Oh, yeah, that assumes that the marginal person who was hired by the charity (a) existed and (b) their salary was a good proxy for their value created. Those seem pretty shaky, since more people means more ability to raise funds from outside EA and my impression is that people working for nonprofits don’t pay super much attention to salary as a signal.
The argument you give proves far too much; for instance, it suggests that Holden and Elie should go back to finance.