Lehua closed down her fundraising startup after reading our blog: plan change story

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Learning about ‘counterfactual analysis’ threw some puts on sunglasses cold water on Lehua’s startup idea.

Lehua Gray’s story is an interesting ‘significant plan change’ because she increased her social impact simply by realising what she was doing was not accomplishing anything when the true counterfactual was taken into account.

Lehua is an entrepreneur in Texas who studied environmental sciences but afterwards taught herself coding. In late 2014, along with two co-founders she had just met at the eBay Hackathon, she founded a company that offered charities an innovative fundraising platform and took a cut of the money raised. Her role in the startup was a combination of coding, UX and sales.

The team’s hope was to make the viral nature of the ‘ice-bucket challenge’ replicable. In their platform, someone would donate money to a charity, but it would only actually be delivered if, say, 3 friends who they nominated matched their donation. They might also be offered the option to do a public challenge on social media that would spread the fundraiser instead of donating the full amount, as in the ‘ice-bucket challenge’.

Over a period of 9 months they had built this platform and were improving it while some charities tested it out.

However, in the first half of 2015 Lehua started following me on Facebook and so started regularly encountering and reading new 80,000 Hours’ blog posts about how to have more social impact.

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Working at effective altruist organisations: good or bad for career capital?

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Working in effective altruism directly is a good way to build career capital in some respects, and a bad way in others. How about on balance?

Many people in our community are interested in working at “effective altruist” (EA) organisations, which I define as organisations whose leaders aim to do the most good on the basis of evidence and reason, and explicity identify as part of the effective altruism movement (see a list).

These jobs are often seen as higher-impact and more fulfilling than alternatives, but there’s a common worry: they’ll provide worse career capital, putting you in a worse position in the long-term.

I argued here that career capital might not be a strong enough consideration to outweigh the additional impact.

In this post, I’ll explore whether the career capital you get from working at EA orgs really is worse than the alternatives. I’ll outline arguments give for and against, arguing the career capital is better than is often assumed.

Arguments against working in effective altruist organisations for career capital
Less prestige

The jobs are less prestigious – few people have heard of organisations like GiveWell or the Center for Effective Altruism – and so these jobs don’t provide as impressive general-purpose credentials as working at a brand name employer like Google or McKinsey.

Less concrete career progression

The jobs don’t come with an obvious career path.

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Take the growth approach to evaluating startup non-profits, not the marginal approach

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In its first 2 years, Google made no revenue. Did this indicate it was a bad idea to invest or work there?

We spent the summer in Y Combinator, and one of the main things we learned about is how Y Combinator identifies the best startups. What we learned made me worry that many in the effective altruism community are taking the wrong approach to evaluating startup non-profits.

In summary, I’ll argue:

  1. There’s two broad approaches to assessing projects – the marginal cost-effectiveness approach and the growth approach.
  2. The community today often wrongly applies the marginal approach to fast growing startups.
  3. This means we’re supporting the wrong projects and not investing enough in growth.

At the end I’ll give some guidelines on how to use the growth approach to evaluate non-profits.

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Stop assuming ‘declining returns’ in small charities

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Amazon is one of the world’s largest companies and is still achieving lower marginal costs as it gets larger. Organisations with just a few people will frequently do much better as they get larger.

We often hear people in our community state, as if obvious, that becoming the 5th employee of an organisation creates less impact than becoming the 4th employee. Similarly, later donations are thought to create less impact than earlier donations. This sentiment was widespread in recent discussion about whether to donate to Giving What We Can, discussions on the EA forum about where to donate, and in discussions I’ve had with people about where to work.

The reason stated is “diminishing marginal returns”. The first staff members take the best opportunities, so the extra opportunities available at the margin are worse, so each extra staff member has less impact.

The problem is, assuming diminishing returns to small organisations contradicts basic economic theory.

According to economics, as an organisation scales up, there’s two opposing forces:

  1. Economies of scale.
  2. Diminishing returns.

Economies of scale are a force for increasing returns, and they win out while still at a small scale, so the impact of the 5th staff member can easily be greater than the 4th.

Economies of scale are caused by:

  1. Gains from specialisation. In a one person organisation,

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Are our most engaged readers overweighting career capital?

We’ve spoken a lot about the importance of building career capital. But now, it seems like some of our most engaged readers are putting more weight than we think they should career capital, and not enough on short-run impact.

A situation many people face is something like the following:

  1. The interesting project: Do something where there’s a small chance you really excel, achieve something exceptional and have a big impact.
  2. The safe project: Do something that offers a clear path to good options in the future.

The first option is usually something like doing a for-good startup, capitalising on a side project, or taking an unusual job with a mentor. The second is usually something like doing consulting, working at a prestigious large firm or doing graduate study.

The debate usually boils down to the following: the first path has a higher impact, but the second offers better career capital. Then people reason that since career capital is more important than impact early in their career, they should go with the second option.

That’s often going to be the right answer, but here’s a couple of reasons it might be a mistake.

You might be biased

There’s several biases that push in favour of the safe project.

  1. Ambiguity aversion. Usually it’s relatively clear what the safe project involves and what concrete next steps it’ll lead to (e.g.

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Why even our readers should save enough to live for 6-24 months

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Your ‘personal runway’ is how many months you can easily live if you stopped working. It’s a product of the cash and sellable assets you have on hand, your living expenses, and your ability to draw on your friends and family in times of need.

For instance, if you have $10,000 of savings and live on $1,000 per month, your personal runway is 10 months. If you could quickly and comfortably move back in with your parents or stay on a friend’s couch, cutting your living expenses by $500 a month, then your personal runway is 20 months. If you have non-work income, that boosts your runway further. If you’re lucky enough to have a family who would support you indefinitely in a productive lifestyle, then your runway is indefinitely long.

I think most people we advise should aim to have at least 6 – 12 months’ personal runway, and up to 12 – 24 could be good for flexibility.

I’ve noticed some people in the community who don’t have much runway and don’t appear to be saving, because they are donating a lot of income or doing very low wage work. Unless you have family or friends who’ll support you, you should cut back on donations and save until you’ve got enough runway.

Some more detail follows.

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Common investing mistakes in the effective altruism community

TRADE_L1_Pillar_headline_Graphs_o_tcm5044-9478Many in our community are investing money to donate later, as well as saving for retirement and emergencies. Here’s some mistakes I’m concerned they’re making when investing.

I’m not a qualified financial advisor, and this should not be taken as investment advice. For speed, I’m also not referencing all my claims and this piece isn’t as thoroughly researched as normal – I just want to get the ideas out there. Please do your own research before making any investments. This post is based on personal interests of mine, and was not written in work time.

This post is aimed at people who already understand the basics of personal finance and investing. Some starting points for an introduction are here and here.

In summary:

  1. Don’t expect to earn 7-10% returns from US equities. It’s more likely to be 1-7%. Adjust your assumptions about retirement savings and giving now vs. giving later calculations accordingly.
  2. The baseline portfolio is the global market portfolio, roughly 40% international stocks (half US, a quarter emerging and a quarter other developed markets), 20% corporate bonds, 30% international government bonds, and 15% real assets. If you don’t think you can beat the market, this is much closer to what you should invest in than 100% US equities.
  3. Divide your savings into a personal component and an altruistic component. Make sure you’re saving enough in the personal component to cover emergencies and your retirement.

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The return to coding bootcamps may not remain so high forever

We have been positive about learning to code as a way to gain useful skills for earning to give or doing directly valuable work, and promoted software engineering as a career path.

We are not the only ones who have noticed that this is a pretty great opportunity. From the LinkedIn blog:

Technical talent is in high demand. As of publishing this post, a LinkedIn job search for “Software Engineers” in the US reveals more than 100,000 open jobs. Adding a couple more tech-related roles (“User Designer,” “Data Scientist”) increases the total to more than 200,000 job openings. Job seekers looking to meet job requirements can enroll in a Master’s degree program, but that comes with a 2-year opportunity cost. Now, a shorter path is emerging: fully immersive coding bootcamps.

Coding bootcamps typically last 6-12 weeks and require participants to show up to a class in person. Bootcamps are a relatively new model, but they’re a growing trend that could help close the skills gap. Tapping into the Economic Graph, we compiled aggregated data on over 150 bootcamp programs and more than 25,000 LinkedIn members who have indicated they are attending or have attended bootcamps to identify emerging trends.

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Will effective altruism destroy the arts? No.

158300A recent article on the Washington Post expressed concern that the growth of effective altruism could seriously reduce funding for the arts. It even mentions that the Bonfils-Stanton Foundation recently decided to focus 100% on funding the arts and culture, in part because “philanthropy, directly or indirectly influenced by the effective altruist approach, is increasingly focused on problems perceived as more pressing”.

This was astonishing to me.

Here’s why effective altruism is not going to destroy the arts.

1) Only a couple of percent of American philanthropy is influenced by effective altruism, and it’s not taking funding from the arts.

Explicitly “effective altruist” giving is well under $100m per year, only 0.03% of the total Americans give to charity each year.

If we look more broadly to giving that has an effective altruist style, even if it doesn’t explicitly use the label, the Gates Foundation is the largest proponent. But the Gates Foundation spends about $4bn per year, only 1% of the total Americans give to charity each year.

It seems hard to claim that more than a couple of percent of American philanthropy is even remotely influenced by effective altruism. One study found that only 3% of American donors give based on the relative performance of the nonprofits they donate to. Only 4% of total American giving even goes to international causes,

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What are the 10 most harmful jobs?

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Maybe you could earn a lot of money advertising cigarettes. But even if you would give it to charity, you shouldn’t do it.

We spend most of our time discussing the most helpful careers that you should take.

We just created a three minute career recommender to highlight some of the options with the largest positive social impact for you.

As most of the people we talk to are deciding between reasonable to excellent options, this seems like the right focus.

But which careers are the worst?

Here we try to guess which mainstream jobs are most likely to do significant harm. As almost no one we know is considering careers of this kind we have limited our investment in this research; it’s an initial exploration of the topic, based on general knowledge and a review of the key figures.

Here are the criteria:

  • The job has to be legal. Needless to say, organised crime is a harmful career!
  • More than one in a million people has to work in the job in the OECD, so it can’t be incredibly obscure or specific.
  • It can’t be harmful only if you’re particularly incompetent (for example, being a bad teacher), deliberately trying to do a bad job, or violating the profession’s code of ethics.

It’s easy to think of jobs that are useless and just transfer money from one person to another.

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Try the new 80,000 Hours ‘Career Recommender’ – it could change your life

We just added a new and very cool feature to our website: the ‘career recommender’.

It takes about 3 minutes to use and might end up significantly changing the course of your career.

Our goal is to ask you just a questions and then tell you in what careers you can have the greatest social impact.

If that sounds ambitious, that’s because it is! But the thousand of people who have already used it during testing it have found it surprisingly useful.

It should at least throw up options you should seriously consider before you do something else. So:

  1. Use the Career Recommender.
  2. Once you’re done, it can email you your suggestions so you can read more about them later.
  3. Share it on social media and perhaps change the lives of your friends and family for the better.
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Would you get these results? Try it and find out!

We expect the career recommender to remain a core part of our career guide in the future. It’s already useful, but it will become much more so over time as our research expands and we:

  • ‘Review’ and rate a wider range of paths, especially those in which people can achieve great things without having to have far above average quantitative or language skills.
  • Change the questions to more precisely measure people’s skills.
  • Check that it gives good answers for any possible set of inputs.

Stay informed of significant updates by signing up to our twice monthly research newsletter.

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Is wealth inequality so extreme that it’s OK to be a ruthless trader?

U.S._Distribution_of_Wealth,_2007Wealth inequality globally is incredibly high. Perversely, this can be an argument in favour of working in finance.

Many people are concerned that ‘earning to give’ in the financial industry is overall harmful for the world, even if you give away most of your income to outstanding charities.

To figure out if this is true, we have been researching the size of the harms, and benefits, caused by finance. (Though please note 80,000 Hours is not just about earning to give and in fact we think it’s the best path for only a small share of our readers.)

One of the concerns we’ve investigated is that certain parts of quantitative finance are a socially-useless competition between traders that only changes who gets some amount of income, not that someone gets it. I think this is the case, but the incredible amount of inequality in the world makes this argument against working in finance fairly weak.

If you are working in ‘low-latency arbitrage’, make a random clever trade on a stock exchange and beat some other trader to a profit by 1 millisecond, whose pocket is this money coming from? A poor African farmer? No, they have no wealth to take. A middle class American family? It’s possible, but most of their wealth, if they have any, is probably in their house or bank account.

We don’t have perfect figures here, but looking at reasonable estimates,

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Systemic change becomes non-systemic change and vice versa

As you might have heard, there is an active debate among the 80,000 Hours community about the effectiveness of attempts to change societal systems – such as laws, institutions or social norms – versus so-called “non-systemic” approaches, such as funding health treatments directly, or becoming a teacher.

Sometimes these debates become quite heated.

To put my cards on the table, I lean towards systemic change being a more promising approach, at least given my skills. Hence, I’ve studied public policy and worked in a Government think tank myself. I also see one of the major long-run impacts of 80,000 Hours to be changing social norms about how people think about how they spend their working life.

But I find it hard to get too passionate with those who lean the other way. One reason for this was well explained in a comment by my friend Catriona Mackay:

I think that people on the whole are biased towards against non-systemic change (i.e if you did a survey asking whether it’s best to treat the causes or the symptoms of poverty, almost everyone would answer ’causes’, even if there were strong evidence that both were effective in terms of increasing net well-being), and so it’s likely that non-systemic causes are more underfunded, so I can contribute more.

On the other hand, I think that scaling up proven health solutions and cash grants and so on are also ways of contributing to systemic/revolutionary change.

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Get the chance to save the world with this one weird trick

one-weird-trick2When I was an undergraduate I came to fully understand the depth of the world’s problems: tens of billions of animals were suffering in factory farms, humanity faced the risk of catastrophic nuclear war, billions continue to live in horrendous poverty, and that was just the start. I wanted to solve these problems, but when I tried to take concrete steps I mostly felt powerless and frustrated.

I was right to feel powerless. As an undergraduate there was relatively little I could do to directly solve anything.

I had no income to give; no insights that hadn’t been had; and no platform from which to ask people to change their behaviour. I really didn’t want the world to be incinerated in a nuclear apocalypse, but – fortunately – nuclear security policy isn’t set by random Australian undergraduates who happen to think they know what’s best.

Luckily for most of us, this powerlessness need only be a temporary, if unpleasant, condition.

If you are a high school student or undergraduate frustrated about your limited influence in the world, there’s one thing you need to be working to get.

With it comes the ability to change things.

Some younger people manage to get a lot of it very quickly, but the majority of us will have the most of it between 40 and 60, so you need to keep a long-term view.

A lot of our advice for young people is geared towards helping them accumulate more of it.

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What people miss about career capital: exceptional achievements

Pooja Chandrashekar is a good demonstration that sometimes the best way to show people you can achieve amazing things is just to achieve amazing things. (Photo by J. Lawler Duggan/For The Washington Post)

When we talk about “career capital” it seems people first imagine “brand name” jobs e.g. working at Google, McKinsey, or getting a credential like a law degree or graduate study at a prestigious university. And it’s true these paths all boost your career capital. But I think there’s another important component of career capital that’s often neglected.

A big part of having really strong career capital is having eye-catching, valuable achievements. Eye-catching achievements make you stand out, another form of credential. Standing out helps you to meet successful people, building your connections. The process of getting exceptional achievements usually involves pushing yourself too, so it correlates with learning strong skills. Overall, striving for eye-catching achievements seems at least as important as gaining prestige or conventional credentials – so if you only focus on the latter you could be making a mistake.

One example to illustrate (but of course not prove!) the point: Pooja Chandraskekar, who this year was one of the few students in the world to be admitted to all the Ivy League Universities. Among much else, she developed a mobile app that predicts whether a person has Parkinson’s disease with 96% accuracy. She needed these achievements to make her stand out among all the other people who have “ticked the boxes” of good grades,

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Effective altruists love systemic change

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Effective altruists are out working every day to fix society’s systemic problems. It’s time to definitely rebut the claim that we don’t care about systemic change.

Yesterday we put to rest the idea that 80,000 Hours, and effective altruists more generally, are only enthusiastic about ‘earning to give’. While some people should earn to give, we expect the right share is under 20%, and think that ‘earning to give’ is now more popular among the people who follow our advice than it ideally would be.

Today I want to put to rest another common misunderstanding about effective altruism and 80,000 Hours: that we are against systemic change.1

Despite being the most widespread critique of effective altruism, the idea is bizarre on its face. We are pragmatists at heart, and always looking for any ways to more effectively make the world a better place.

Why couldn’t pursuing broad-scale legal, cultural or political changes be the most effective approach to making the world a better place? The answer is simply that they could!

So there is nothing in principle about the idea of maximising the social impact of your work that rules out, or even discourages, seeking systemic change.

What about in practice, though? Here are some systemic changes people who identify as effective altruists are working on today:

  • Most of the recent Open Philanthropy Project research and grants, on immigration reform, criminal justice reform, macroeconomics, and international development, are all clearly focussed on huge structural changes of various kinds.
  • The OpenBorders.info website also researches and promotes the option of dramatic increases in migration from poor to rich countries.
  • A new startup called EA Policy, recommended for support by my colleagues at EA Ventures, is trialling making submissions to open policy forums held by the US government over this summer.
  • Our colleagues at the Global Priorities Project research the most important policy priorities for governments, and how they can establish better cost-benefit and decision-making processes.
  • One of GiveWell’s main goals from the beginning, perhaps it’s primary goal, has been to change the cultural norms within non-profits, and the standards by which they are judged by donors. They wanted to make it necessary for charities to be transparent with donors, and run projects that actually helped recipients. They have already significantly changed the conversation around charitable giving.
  • Giving What We Can representatives have met with people in the UK government about options for improving aid effectiveness. One of the first things I wrote when employed by Giving What We Can was about appropriate use of discounts rates by governments thinking about health services. Until recently one Giving What We Can member, who we know well, was working at the UK’s aid agency DfID.
  • Some 80,000 Hours alumni, most of whom unfortunately would rather remain anonymous, are going into politics, think-tanks, setting up a labour mobility organisations or businesses that facilitate remittance flows.
  • Several organisations focussed on existential risk (FHI, CSER and FLI jump to mind) take a big interest in government policies, especially those around the regulation of new technologies, or institutions that can improve inter-state cooperation and preclude conflict.
  • 80,000 Hours alumni and effective altruist charities work on or donate to lobbying efforts on animal welfare, such as Humane Society US-FARM, or are activists working for dramatic society-wide changes in how humans view the moral importance of non-human animals.

It looks to me like it’s more accurate to say that effective altruists <3 systemic change.

We’re not done though.

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What’s the best way to spend $20,000 to help the common good?

I recently came across the following question posted by Paul Buchheit (the founder of Gmail):

Assume that I’m going to get rid of $20,000 and my only concern is the “common good”. Which of these is the best use of the money: give it to the Gates foundation, buy a hybrid car, invest it in a promising startup, invest it in the S&P500, give it to the US government, give it to a school, other?

Many of our users donate money as way to do good with their careers, and I liked this way of posing the question – it’s both broad and concrete. So I spent an hour writing out a rough answer.

I’ll take each option in turn and eliminate the worst ones, then compare a shortlist at the end.

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I want to make a difference. Should I become a philosopher?

To most people, this question sounds like a joke. I think that’s the wrong reaction. (Full career profile on philosophy PhDs here)

I think research into philosophy (certainly, at least, moral philosophy, and some other areas in political philosophy, epistemology and decision theory), is potentially extremely valuable. The impact of philosophy on the world seems to me to have been vast. Aristotle, Aquinas and Augustine shaped much of Christian ethics. Locke heavily influenced the American constitution. Peter Singer helped give rise to both the animal welfare movement and to the effective altruism community, and Nick Bostrom has catalyzed concern for existential risks, in particular risks from artificial intelligence. If you include aspects of the Bible (such as the Ten Commandments and the Golden Rule), the writings of Budda and the writings of Confucius as philosophy, as I think you should, then most people for most of civilization have had large chunks of their lives shaped by the philosophical views of the time…

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Donating to Giving What We Can is higher impact than donating to GiveWell recommended charities.

Giving What We Can is fundraising. When I last checked, they had only reached £70,000 of their £150,000 target.

Last year, more than $28m was donated to Give Directly, AMF, SCI and Deworm the World – the charities recommended by GiveWell and Giving What We Can.1 In contrast, Giving What We Can (GWWC) spent under $200,000. My claim in this post is that if you donate to these top recommended charities, you’ll have even more impact (at the margin) if you donate to Giving What We Can instead.

GWWC is closely affiliated with 80,000 Hours, so I’m likely to be biased in GWWC’s favour. However, I feel strongly enough that I think it’s worth writing on the topic anyway.

Here’s three reasons why to donate to GWWC.

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