How do we find new interventions that can beat the best? The main approach has been to seek leverage; interventions where you pay a dollar to move a larger amount of money/resources to a cause (e.g. advocacy interventions. effective giving campaigns). But people don’t often recognize market-based leverage; interventions where you pay a dollar to enable a market transaction whose value is much larger than that dollar. Two examples:
High-school educated workers in urban South Africa struggle to find their first job, because school performance is a very weak signal of ability, and businesses are reluctant to take chances because firing workers is costly. Harambee assesses job-seekers’ skills and gives them certification that they can show to employers as a credible signal. Getting the certification increases their chances of finding a job. Thus, Harambee increased their income without giving them any money, just by fixing an information problem in the labor market.
Rug manufacturers in Egypt would like to export their rugs for big profit. An unnamed German retailer would like to buy these rugs, since they are cheaper than alternatives. However, the global market is huge, and these two parties have no way of getting in touch with each other, or knowing that they are mutually interested in a sale. Aid to Artisans helps the local intermediary for the rug manufacturers get in touch with the German retailer, helps them travel to meet with the retailer to provide samples of their products, and arranges an initial large order. The rug manufacturers gain a reputation, and over the next four years, they get orders totalling $150,000. Thus, ATA increased the incomes of all the artisans without giving them any money, just by connecting them with buyers who wanted to give them money.
These interventions get their leverage from fixing market failures. Both of these examples are failures of information, which are both ubiquitous and cheap to fix. I suspect that it shouldn’t be too hard to find one where spending $1 generates more than $10 in income, which is roughly the bar for a GiveWell top charity.
I suspect that it shouldn’t be too hard to find one where spending $1 generates more than $10 in income, which is roughly the bar for a GiveWell top charity.
This seems wrong to me in that both of your examples are constituencies that are quite a bit better off than Give Directly recipients for which that would hold, i.e. the actual multiplier would need to be a lot higher or apply to constituencies as poor as GD-recipients.
Yeah, hence the caveat with roughly. I actually don’t think they’re much better off—the former group are unemployed and thus have basically no income! - but I feel pretty sanguine about generating $50 or $100 in income per $1 spent if your intervention operates at scale, just because the unit costs of solving an information friction seem trivially small. (Also, business operators are better off but the potential to multiply business income is way higher.)
The easiest way to get this would be through agricultural livelihood interventions. Farmers are the extreme poor, and they have tons of frictions to market transactions, so you are targeting the right population and also getting market-based leverage.
I am not an GHD expert but I would expect someone who has a high school diploma in the richest country in Africa to be a lot better off than the typical GD recipient which seems to be from the poorest strata of the poorest countries.
And so, yeah, I agree one would probably a 50-100x expected multiplier to make this work. I am not saying this is not possible, I just thought the bar stated here was significantly too optimistic.
I picked South Africa because Harambee works there, but the same issue—employers don’t know who is good to hire so job seekers struggle to find jobs—is true across Africa and for much poorer populations than high school educated workers.
But the point would have been better demonstrated with livelihood interventions for farmers.
How do we find new interventions that can beat the best? The main approach has been to seek leverage; interventions where you pay a dollar to move a larger amount of money/resources to a cause (e.g. advocacy interventions. effective giving campaigns). But people don’t often recognize market-based leverage; interventions where you pay a dollar to enable a market transaction whose value is much larger than that dollar. Two examples:
High-school educated workers in urban South Africa struggle to find their first job, because school performance is a very weak signal of ability, and businesses are reluctant to take chances because firing workers is costly. Harambee assesses job-seekers’ skills and gives them certification that they can show to employers as a credible signal. Getting the certification increases their chances of finding a job. Thus, Harambee increased their income without giving them any money, just by fixing an information problem in the labor market.
Rug manufacturers in Egypt would like to export their rugs for big profit. An unnamed German retailer would like to buy these rugs, since they are cheaper than alternatives. However, the global market is huge, and these two parties have no way of getting in touch with each other, or knowing that they are mutually interested in a sale. Aid to Artisans helps the local intermediary for the rug manufacturers get in touch with the German retailer, helps them travel to meet with the retailer to provide samples of their products, and arranges an initial large order. The rug manufacturers gain a reputation, and over the next four years, they get orders totalling $150,000. Thus, ATA increased the incomes of all the artisans without giving them any money, just by connecting them with buyers who wanted to give them money.
These interventions get their leverage from fixing market failures. Both of these examples are failures of information, which are both ubiquitous and cheap to fix. I suspect that it shouldn’t be too hard to find one where spending $1 generates more than $10 in income, which is roughly the bar for a GiveWell top charity.
This seems wrong to me in that both of your examples are constituencies that are quite a bit better off than Give Directly recipients for which that would hold, i.e. the actual multiplier would need to be a lot higher or apply to constituencies as poor as GD-recipients.
Yeah, hence the caveat with roughly. I actually don’t think they’re much better off—the former group are unemployed and thus have basically no income! - but I feel pretty sanguine about generating $50 or $100 in income per $1 spent if your intervention operates at scale, just because the unit costs of solving an information friction seem trivially small. (Also, business operators are better off but the potential to multiply business income is way higher.)
The easiest way to get this would be through agricultural livelihood interventions. Farmers are the extreme poor, and they have tons of frictions to market transactions, so you are targeting the right population and also getting market-based leverage.
I am not an GHD expert but I would expect someone who has a high school diploma in the richest country in Africa to be a lot better off than the typical GD recipient which seems to be from the poorest strata of the poorest countries.
And so, yeah, I agree one would probably a 50-100x expected multiplier to make this work. I am not saying this is not possible, I just thought the bar stated here was significantly too optimistic.
I picked South Africa because Harambee works there, but the same issue—employers don’t know who is good to hire so job seekers struggle to find jobs—is true across Africa and for much poorer populations than high school educated workers.
But the point would have been better demonstrated with livelihood interventions for farmers.
Thanks, and sorry if I was too nitpicky then.