Well written. I agree with most of the points. A minor quibble: I’m not sure I’d consider the wages in the nonprofit sector/EA to be ‘structurally suppressed’. There are other considerations (both good and bad) limiting wages, particularly:
Donors may be repelled by high salaries (but this is less likely to be true in EA imho)
There is a case (and several good academic papers arguing this, e.g., Steinberg, 2008; Delfgauw and Dur, 2002 ) that a lower salary can screen for more cause-motivated employees; where performance and outcomes can not be as easily monitored and incentivized, intrinsic motivation is important. This is not to say that I think a higher salary will attract less-motivated employees, but these can be hard to distinguish from others. In net the gain from higher salary may not be as strong in the nonprofit/EA sector.
You note:
The Centre for Effective Altruism is hiring a new CEO. Should it restrict its search to candidates willing to show their commitment by pledging everything they earn above a modest amount to effective charities? (Purely hypothetical question, I have no reason to think CEA is doing this).
As we discussed in the doc, I suggest there is a middle ground: Give preference to hiring people who have committed to donate at least a certain share of their income (and have demonstrably fulfilled this pledge).
Re: “structurally suppressed”, any thoughts on alternative phrasing that’d better capture the wage gap dynamic? “systematically lower?” Happy to make an edit…
I’m fully in agreement that lower salaries screen for more cause-motivated people. I just think we can find better screens that correlate less with things that we don’t care about, like privilege.
I agree that higher salaries are a turnoff to donors, and I suspect even EA donors. Various forms of overhead aversion are strong even among people who totally get that it’s rational to trade money for impact. I once heard a talk by a researcher who studies overhead aversion (Ayelet or Uri Gneezy I believe) where they opened by saying they intellectually understand that a nonprofit CEO might be more productive if they fly first class so they’re rested for a big meeting, but they’d be pissed if they donated to that charity and then walked by that CEO on their way to coach. I think that’s just human nature (and suggests a particular need for EA donors can look past that mindset).
Agree that the right compensation strategy probably involves looking for a middle ground. I’ve started a separate thread to operationalize that discussion.
Well written. I agree with most of the points. A minor quibble: I’m not sure I’d consider the wages in the nonprofit sector/EA to be ‘structurally suppressed’. There are other considerations (both good and bad) limiting wages, particularly:
Donors may be repelled by high salaries (but this is less likely to be true in EA imho)
There is a case (and several good academic papers arguing this, e.g., Steinberg, 2008; Delfgauw and Dur, 2002 ) that a lower salary can screen for more cause-motivated employees; where performance and outcomes can not be as easily monitored and incentivized, intrinsic motivation is important. This is not to say that I think a higher salary will attract less-motivated employees, but these can be hard to distinguish from others. In net the gain from higher salary may not be as strong in the nonprofit/EA sector.
You note:
As we discussed in the doc, I suggest there is a middle ground: Give preference to hiring people who have committed to donate at least a certain share of their income (and have demonstrably fulfilled this pledge).
Thanks David!
Re: “structurally suppressed”, any thoughts on alternative phrasing that’d better capture the wage gap dynamic? “systematically lower?” Happy to make an edit…
I’m fully in agreement that lower salaries screen for more cause-motivated people. I just think we can find better screens that correlate less with things that we don’t care about, like privilege.
I agree that higher salaries are a turnoff to donors, and I suspect even EA donors. Various forms of overhead aversion are strong even among people who totally get that it’s rational to trade money for impact. I once heard a talk by a researcher who studies overhead aversion (Ayelet or Uri Gneezy I believe) where they opened by saying they intellectually understand that a nonprofit CEO might be more productive if they fly first class so they’re rested for a big meeting, but they’d be pissed if they donated to that charity and then walked by that CEO on their way to coach. I think that’s just human nature (and suggests a particular need for EA donors can look past that mindset).
Agree that the right compensation strategy probably involves looking for a middle ground. I’ve started a separate thread to operationalize that discussion.