Thereās some tradeoff curve between cost-effectiveness and scale. When EA was more funding constrained, a $1M grant with 10X ROI looked better than a $1B grant with 5x ROI, but now the reverse is true.
Yeah, thatās a good question. Itās underspecified, and depends on what your baseline is.
We might say āfor $1 donated, how much can we increase consumptionā. Or āfor $1 donated, how much utility do we create?ā The point isnāt really that itās 10x or 5x, just that one opportunity is roughly 2x better than the other.
So if we are giving to, e.g., encourage policies that increase incomes for average Americans, we need to increase them by $100 for every $1 we spend to get as much benefit as just giving that $1 directly to GiveDirectly recipients.
Thatās not exactly āReturn on Investmentā, but itās a convenient shorthand.
So itās like a benefit to cost ratio. So I can see with diminishing returns to more money, the benefit to cost ratio could be half. So with $1 million in the early days of EA, we could have $10 million of impact. But now that we have $1 billion, we can have $5 billion of impact. It seems like the latter scenario is still much better. Am I missing something?
No, I meant an intervention that could produce 10x ROI on $1M looked better than an intervention that could produce 5x ROI on $1B, and now the opposite is true (or should be).
Could you explain what you mean by 10X ROI?
Yeah, thatās a good question. Itās underspecified, and depends on what your baseline is.
We might say āfor $1 donated, how much can we increase consumptionā. Or āfor $1 donated, how much utility do we create?ā The point isnāt really that itās 10x or 5x, just that one opportunity is roughly 2x better than the other.
https://āāwww.openphilanthropy.org/āāblog/āāgivewells-top-charities-are-increasingly-hard-beat
Thatās not exactly āReturn on Investmentā, but itās a convenient shorthand.
So itās like a benefit to cost ratio. So I can see with diminishing returns to more money, the benefit to cost ratio could be half. So with $1 million in the early days of EA, we could have $10 million of impact. But now that we have $1 billion, we can have $5 billion of impact. It seems like the latter scenario is still much better. Am I missing something?
Uhh, Iām not sure if Iām misunderstanding or you are. My original point in the post was supposed to be that the current scenario is indeed better.
Ok, so we agree that having $1 billion is better despite diminishing returns. So I still donāt understand this statement:
Are you saying that in 2011, we would have preferred $1M over $1B? Or does ālook betterā just refer to the benefit to cost ratio?
I think I see the confusion.
No, I meant an intervention that could produce 10x ROI on $1M looked better than an intervention that could produce 5x ROI on $1B, and now the opposite is true (or should be).