Thanks for your question! As a first pass, your assumption is correct in that, since our 1x benchmark is against GW charities (and charities of similar expected cost-effectiveness), an adjusted ROI of 6x is in expectation ~60x cash. That being said, we think the real number is likely lower than that, which is why we hold our EG grantees to a bar of at least 2x (and higher for more established efforts). Specifically, we think a 2x multiplier bar seems justified because (i) “meta” funding opportunities that are more distant from impact seem more likely to overestimate cost-effectiveness by failing to adequately account for additional efforts required by other actors to achieve impact, and (ii) intuitively, we aren’t excited about supporting opportunities that could spend an additional $1 to generate only slightly more than that for high impact charities, even after a counterfactual adjustment. Supporting these opportunities would mean small errors in our calculations could result in negative impact, and risks falling into a meta-trap.
Hi Ezra,
Thanks for your question! As a first pass, your assumption is correct in that, since our 1x benchmark is against GW charities (and charities of similar expected cost-effectiveness), an adjusted ROI of 6x is in expectation ~60x cash. That being said, we think the real number is likely lower than that, which is why we hold our EG grantees to a bar of at least 2x (and higher for more established efforts). Specifically, we think a 2x multiplier bar seems justified because (i) “meta” funding opportunities that are more distant from impact seem more likely to overestimate cost-effectiveness by failing to adequately account for additional efforts required by other actors to achieve impact, and (ii) intuitively, we aren’t excited about supporting opportunities that could spend an additional $1 to generate only slightly more than that for high impact charities, even after a counterfactual adjustment. Supporting these opportunities would mean small errors in our calculations could result in negative impact, and risks falling into a meta-trap.