Giving now vs. later

It has been observed that money spent helping the poor compounds over time in the same way that profit-oriented investments do (see Holden Karnofsky, or Giving What We Can). When I support the world’s poorest people I’m not just alleviating their suffering, I’m increasing the productivity of their lives. The recipients of aid go on to contribute to the world, and their contributions compound in turn.

Moreover, one can argue┬áthat the returns to aid are much higher than achievable financial returns. Equities make around 5% in real terms, while the world’s poorest earn returns upwards of 20%. And that’s not surprising—more people are interested in making money than are interested in improving the world, so we should expect it to be harder to find opportunities to make money than opportunities to improve the world.

So, the argument goes, altruists ought to donate as quickly as possible, doing good works that will compound out there in the world much faster than they will compound in their bank accounts. Make sense?

I think this argument is mistaken. Read the rest of this entry »