Flow-through effects

As mentioned previously, we believe that further economic development, and general human empowerment, is likely to be substantially net positive, and that it is likely to lead to improvement on many dimensions in unexpected ways. This post elaborates on the reasons we hold this view and the implications of it.

We haven’t done nearly as much empirical research on whether this view is appropriate as we would ideally like to, and in the future we may approach it with a more concerted research effort. For now, we’d point to the following as broad defenses of this view:

  • Since the Industrial Revolution, it appears that quality of life has improved in nearly every measurable way. A simple illustration of this idea comes from a brief recent post we made showing broadly rising per-capita income and falling infant mortality in the developing world. A more thorough discussion is available in chapter 2 of From Poverty to Prosperity by Arnold Kling and Nick Schultz, from which we’ve excerpted the key tables. (Note that this chapter isn’t our “primary source” for this claim; we have picked up various perspectives on this question from GapMinder, general discussions, etc. and point to this chapter merely as a relatively accessible summary.) The Better Angels of Our Nature, a relatively recent book by Steven Pinker, provides a deeper and narrower investigation of the effect of these changes on violence.
  • The developed world appears to be better off than the developing world on nearly every metric we can think of, such as life expectancy and reported happiness, nutritional status (particularly for children), civil rights and human rights, and education (including for women and girls in particular).
  • In the past, there have been many concerns about new technology making the world worse in some way, but these generally don’t seem to have panned out. For example, sulfur dioxide emissions, which cause acid rain, spiked during the mid 20th century in the U.S. but now are at much lower levels, along with most other pollutants in the U.S. Persistent worries about the mass unemployment effects of automation also appear not to have panned out, though they continue to be raised.

    We don’t believe that avoidance of modernity-related problems can be taken for granted. In many cases it may take place because of concerted efforts to improve regulation and societal norms, and such concerted efforts may be needed to deal with various issues today. However, we also think it’s worth noting that concerted efforts to make the world a broadly better place seem to have become more common and more viable as economic development has progressed. Environmentalism, multiple civil rights movements, and large-scale foreign aid are examples of positive social changes that have emerged in the last two centuries and appear stronger in the developed world than in the developing world today. We’d guess that increased wealth and improved technology often improves people’s ability to coordinate around, and concentrate on, movements whose effects go beyond their personal lives.

  • One of the most compelling cases for a way in which development and technology can cause harm revolves around “global catastrophic risks” such as climate change and nuclear war. However, from where we sit today, improved technology and economic development seem at least as likely to play a major role in mitigating these risks (via e.g. cleaner energy sources and more efficient overall economic activity to mitigate climate change, and greater economic interdependence and more effective security to mitigate military threats) as to worsen them. We will write further on this point in the future. It may be true that we would be safer from global catastrophic risks if we had never had any economic/technological development, but a faster rate seems safer than a slower rate from here.

We wish to note that we do not embrace the explanations for improvement sometimes associated with observations such as the ones above, explanations that often focus on the role of free markets to the exclusion of other institutions. We believe much of the improvement we describe may be attributable to the actions of governments, activist movements, and voluntary altruism (including philanthropy) as well as economic exchange. We believe that the exact dynamics by which the world has improved aren’t fully clear. My own take is that the concept of broad market efficiency is important here: as people become wealthier, better informed about each others’ activities, and generally gain more abilities and options, they become more empowered and motivated to tackle problems that they previously wouldn’t have been able to work on (or would have viewed as less pressing than other problems). To give a simple example, whatever good GiveWell does will be creditable partly to the huge number of other world improvements that have (a) given us the wealth and security to start a new venture; (b) given us education and tools to do our investigations; (c) addressed other problems that might have occupied our attention instead; (d) produced technology to run our lives and organization efficiently and find our audience (who themselves have similarly benefited).

If our overall view on this topic is broadly correct, it has some important implications.

First, it implies that a substantial part of the good that one does may be indirect: the people that one helps directly (by e.g. funding distribution of bednets) become more empowered to contribute to society, and this in turn may empower others, etc. If one believes that, on average, people tend to accomplish good when they become more empowered, it’s conceivable that the indirect benefits of one’s giving swamp the first-order effects.

If true, this is yet another source of noise (beyond the many we’ve identified) in formal cost-effectiveness estimates, and another reason not to take these estimates literally. It also implies that helping people who are well-positioned to contribute to society and/or help others is particularly valuable, relative to e.g. simple reduction of suffering for people who are not well-positioned to help others.

Second, it implies that helping to address any problem is a possible path to addressing many other problems. For example, if one’s only goal is to improve women’s education, it’s conceivable that the best option for doing so is to fund distribution of bednets (and if one’s only goal is malaria control, it’s conceivable that the best option is to fund women’s education).

Thus, even if one is convinced that a particular issue is the “most important” one to work on, this doesn’t by itself establish that one should directly fund or work directly on this issue. The nature of one’s practical opportunities matters greatly. If issue X appears to be of paramount importance, but issue Y has far more appealing giving opportunities for reasons related to room for more funding, one should consider donating toward issue Y.

Of course, a strong project aimed at the “right” problem is likely to have more impact than a strong project aimed at the “wrong” problem, but this isn’t always the choice that a donor faces (particularly a low-information individual donor). The details of what opportunities one has on each front are crucial.

So far, GiveWell has focused on the “easiest” interventions to have confidence in, figuring that being confident of accomplishing some substantial good is better than giving in an uninformed way, even if the latter is aiming at a cause that seems more important than global health. Going forward, we expect to be able to assess other ways of giving, from funding political advocacy to funding scientific research. But we expect to continue to put a substantial weight not just on the importance of an issue but on its tractability and its room for more funding.

Comments

Flow-through effects — 19 Comments

  1. One claim you seem to be making is:
    (1) Once you factor in flow-through effects, you should give relatively less weight to the importance of a problem (and relatively more weight to tractability and room for more funding) when you are deciding whether to focus on that problem or another problem.

    One observation you seem to be offering as evidence for this claim is:
    (2) Making progress on one problem often indirectly leads to progress on other problems.

    It is not totally straightforward to me how (2) is supposed to support (1). It seems to me that, other things being equal, if solving problem X would directly benefit people alive today 10 times as much as solving problem Y, I should expect 10 times larger flow-through effects from solving problem X. So when I account for progress on other problems, it doesn’t necessarily change my bottom line on X vs. Y.

    As you point out, certain types of people may be better-positioned to help others, and helping them may foreseeably lead to greater flow-through effects per unit of good accomplished directly (i.e., have a higher “flow-through ratio”). So if problem Y primarily affected people who were a stronger position to contribute to society or help others, addressing problem Y could be more promising than it appears at first. But this doesn’t seem to mean that we should give less weight to problem size, in comparison with tractability and room for more funding. Instead, it seems to mean that we need to give more weight to the flow-through ratio.

    One way I might (very crudely) try to put it is that we need to move from the conceptual equation:
    promisingness of cause/opportunity = tractability * RFMF * problem size * other stuff
    to the equation:
    promisingness of cause/opportunity = tractability * RFMF * problem size * flow-through ratio * other stuff
    But that this doesn’t change how much weight we’re giving to problem size in comparison with tractability and RFMF.

    I do agree with your point that flow-through effects are hard to predict, and that this increases the size of one’s Bayesian adjustment to cost-effectiveness estimates. This may be a way in which RFMF should get more weight, once one accounts for flow-through effects.

  2. I greatly appreciate you articulating the points in this post. I find this topic important and fascinating, and value your contributions to understanding it.

  3. > Second, it implies that helping to address any problem is a possible path to addressing many other problems. For example, if one?s only goal is to improve women?s education, it?s conceivable that the best option for doing so is to fund distribution of bednets (and if one?s only goal is malaria control, it?s conceivable that the best option is to fund women?s education).

    This does seem to be conceivable to me, but I have somewhat different intuitions about how often this is likely to be a practical issue for causes that GiveWell and GiveWell supporters take seriously. I get the idea that I could be in one of the following situations:

    (A) There is no RFMF for intervention X addressing problem Y. If I don?t fund it, Rich Person Z will. If I do fund it, Rich Person Z will instead spend the money on something worthless.

    (B) Intervention X just doesn’t help address problem Y, or exacerbates it.

    I agree that, in these cases, funding bednets is a better way to address problem Y than funding intervention X, even if problem Y is extremely narrow (in the sense that all small share of all efforts directly address problem Y). But it seems that, in practice, interventions are more likely to help address the problems they are directed at than they are to exacerbate them, and it can be hard to estimate RFMF dynamics. In light of this, it seems unlikely that you’ll find that funding bednets is a more effective way of addressing publication bias than, say, funding a random cluster of the proposals that people worried about the issue have thrown at you in conversations. And I have similar intuitions for asteroid tracking, geo-engineering research, pre-registration for RCTs, and disease surveillance.

    I think that the more broadly you define problem Y, the more likely it is that the situation you describe will obtain. If you define Y as “global catastrophic risk,” I am skeptical but see where you are coming from. If you define Y as “the future doesn’t go as well as it could have,” I find it plausible that the situation you describe could obtain in practice, but that seems like a different issue from what you’re describing in the quoted passage.

    I get the sense that we may not on the same page on this issue. If this is the case, I would appreciate it if you could explain your reasoning in greater depth.

  4. Just to be clear, I agree with most of the big-picture claims of this post, including that flow-through effects are highly important and should be taken into account, and that taking them into account makes many causes/opportunities look more comparable than they can seem at first. The main considerations that I think support this connection are:
    (1) The broad market efficiency idea described above.
    (2) Lots of activities can contribute to general human empowerment
    (3) The amount of general human empowerment contributed per unit effort seems to vary less than the amount of immediate good accomplished per unit effort. One reason this seems to be true is that that people who contribute the most to general human empowerment are often the hardest to help.

  5. I completely agree that the indirect effects of interventions can be larger than the direct effects and that this is an important thing to think about. I have a few concerns with the argument in the post though. In increasing importance:

    1) You focus on indirect financial effects rather than other indirect effects. This is probably a useful way to look at it, but note that your argument for the causal benefits of wealth creation is not that strong. Basically there is correlation between wealth and good things in people’s lives, but this doesn’t show the causality. I’m pretty sure there is two-way causality, but I believe this because of general life experience, not from this correlation information.

    2) It is generally believed that there are very steeply decreasing marginal benefits of consumption (logarithmic, or more steeply diminishing than that). Thus even exponential economic boosts would be believed to have only linear benefits, which you will want to take into account.

    See e.g.
    http://www.economist.com/blogs/graphicdetail/2013/05/daily-chart-0

    3) Attempts to increase growth in poor countries have been the main failure story in the history of aid, whereas attempts to increase health have been massively successful.

    4) Even if wealth creation has caused much of the increase in wellbeing, if exogenous wealth creation would cause a similar increase in poor countries, and if this will also hold true beyond the current levels of wealth in rich countries, it still doesn’t follow that these effects will be large compared to the direct effects of interventions. They could be tiny. e.g. there is $70 tr world GDP, which implies a stock of value of something like $1,400 tr. Doubling this won’t produce close to double the current value due to the diminishing returns, so it seems prima facie like very large amounts of untargetted wealth creation are needed to improve wellbeing much, and that this may be very expensive compared to other ways of increasing wellbeing. I’m not sure if this is right, but I’m just trying to point out that showing economics flow-through effects are good is a long way short of showing that they are large relative to other effects.

  6. Thanks for the thoughtful comments.

    Nick, here’s an attempt at clarification on the point you’re questioning:

    Imagine that you have two problems, Problem X and Problem Y. Problem X is much more tractable to us – we have a 10% chance of solving it if we try – but less impactful in itself (solving the problem would directly save 1000 lives). Problem Y is less tractable – we have an 0.1% chance of solving it if we try – but more impactful (solving the problem would directly save a million lives). Finally, imagine that each life saved represents a person who has a 1% chance of attempting to solve one of the two problems (conditional on the problem’s still being a problem) and similar odds to us of solving each problem conditional on attempting to solve it.

    Looking only at direct effects, we’d estimate 100 expected-lives-saved for working on Problem X, vs. a thousand expected-lives-saved for working on Problem Y – working on Problem Y is better by a factor of 10. Incorporating indirect effects, however – the fact that solving Problem X would itself lead to an ~1% chance of solving Problem Y – working on Problem X is better by about a factor of 10.

    This phenomenon becomes more pronounced if we start to incorporate the possibility that the people we’re empowering may be better positioned to solve other problems than we are.

    While this is obviously a very simplified example, I think it illustrates that working on the problem you’re best positioned to solve can be better than working on another problem, no matter how much more important the other problem is, when flow-through effects are accounted for.

    As far as how often this sort of thing is likely to obtain in practice, I agree with you that it depends on how broadly one defines “problems” and that it’s unlikely to obtain for the types of problems you listed, which are both narrow and (related to the fact that we’re interested in them) seem to pass a reasonable threshold of likely/intuitive tractability. As a side note, I think it is more likely to be an issue for “how should I use my talent?” than “how should I use my dollars?” because differences in tractability are so much more pronounced.

    Toby, I agree that marginal value of wealth to utility is diminishing at an individual level, and I agree with not wanting to focus myopically on the role of financial wealth. I tried to make this post about the broad concept of “development and empowerment.”

    I also agree that this post is far from a conclusive argument about the causal effects, or the magnitude of effects, of development. I definitely believe that $1 added to U.S. per-capita GDP does far less good than $1 added to a developing country’s per-capita GDP, which in turn does less good than $1 given to an effective developing-world health charity. This post should be read as an argument that the comparison is muddier than it appears at first glance, not that there are no such differences.

    I don’t know that I agree that “Attempts to increase growth in poor countries have been the main failure story in the history of aid.” I’d say the evidence is inconclusive, taking into account that countries with more obstacles to growth tend to attract more aid. I certainly agree that the evidence for the success of health interventions is stronger than evidence for the success of other interventions. That’s a reason that I tend to prefer health interventions, especially since I think health improvements are roughly likely to flow through to greater prospects for economic development as income improvements are to flow through to greater health.

  7. Holden, your example seems to be an edge case that turns on a crucial and highly unusual detail. In your example, solving Y is enough to solve the only other available problem 1000 times over, resulting in the flow-through effects being significantly out of proportion with the size of first-order effects. In the real world, there are enough problems out there that, by and large and other things being equal (especially how well-positioned the people affected by the problem are to contribute to society), flow-through effects are roughly proportional to first-order effects. Because of this, I don’t feel that this example illustrates how the possibility you describe could come up in practice.

  8. After further consideration, I decided that your example may apply in cases where success is relatively on/off, and extremely world-changing, and that these are important cases to think about. But I don’t see other areas where it applies.

  9. Nick, I think you’re right that the model I outlined only applies in the sort of cases you’re describing, and this didn’t occur to me at the time that I posted it. I think my intuition about tractability is also incorporating the possibility of empowering people who are better-positioned to address certain problems than we are (as I briefly mentioned in my comment).

  10. Holden, maybe your intuition is that if we give more weight to what is tractable *relative to our evidence and our position*, then we work with our comparative advantage, and if we work with our comparative advantage, then our actions will have larger flow-through effects. This isn’t quite the same as giving more weight to tractability and less to problem size, but it is related. I find this challenging to think about.

  11. Nick, I think what you’re saying is what I’m trying to get at. Tractability is in some sense always relative to evidence & position.

  12. Buddhist monk Matthieu Ricard writes in Happiness: A Guide to Developing Life’s Most Important Skillabout the case of the “happy poor”:

    “One study undertaken by Robert Biswas-Diener among the homeless and slum dwellers of Calcutta found that in many spheres–family life, friendship, morality, food, and joyfulness–their satisfaction level was barely lower than that of university students. Conversely, those who live on the streets or in the shelters of San Francisco, and who are generally without social and emotional attachments claim to be far more unhappy.” (from Chapter 15 of Happiness: A Guide to Developing Life’s Most Important Skill by Matthieu Ricard)

    R. Biswas-Diener and E. Diener, “Making the Best of a Bad Situation: Satisfaction in the Slums of Calcutta,” in Social Indicators Research, 2002.

    I can also provide here an excerpt from that chapter of Ricard’s book including anecdotes and a discussion of policies within the nation of Bhutan.

    I think about these cases in comparison to GiveWell’s page about life for people in developing countries. GiveWell cites results from a Gallup World Poll showing lower levels of life satisfaction for lower levels of income.

    Ricard states that:

    “Sociologists attempt to explain this phenomenon by the fact that many of the of the Calcutta poor have abandoned hope of improving their social and financial status and are therefore not anxious on that score. Furthermore, they are far more easily satisfied when they obtain anything, such as food and the like.” (from Chapter 15 of Happiness: A Guide to Developing Life’s Most Important Skill by Matthieu Ricard)

    GiveWell states on that page:

    “One argument for why health goals are not ranked higher than they are, argued by Deaton (2008), is that Africans report being more satisfied with their health than we might expect because they are more used to being sick.”

    This is consistent with what Kremer and Miguel found in terms of when the treatment for parasitic worms was available at cost people generally didn’t buy it (The Illusion of Sustainability)

    And is also consistent with what Daniel G. Colley said when seeking to persuade Elie Hassenfeld to support the Schistosomiasis Control Initiative.

    Certainly over time people get acclimated and accustomed.

    I would assume that malaria has been endemic in various regions for millions of years, and the parents, grandparents, and ancestors of Against Malaria Foundation net recipients suffered from it as do their descendants.

    On the one hand I think that the Internet, technology, and the global financial system can be forces for cultural and political homogenization. On the other hand, I think the systems, and ways of doing things that have existed for thousands of years keep going on the way they have been. Nothing may happen which disrupts them, and they also serve multiple purposes, some of which may not be readily discernible, or readily measurable.

    One question is: how much should GiveWell seek to learn about different cultures in the course of doing its work?

    People who are working in the field will need to have knowledge of the local culture in order to carry out their job, and in many instances the people who are working in the field may also be native to the area.

    Of course there is no requirement for donors either small or large to learn about a local culture, but I think such studies can be interesting.

    After making a donation to the Against Malaria Foundation I saw that the last distribution had occurred in Malawi. I took some time and read the Wikipedia article on Malawi, and so I learned a little bit about the country.

    I also read the report from one of the site visits to Malawi. I went through the one where Holden and Natalie visited a school outside of Lilongwe. They observed an administration of praziquantel as part of the Schistosomiasis Control Initiative. I also looked at the photos. I don’t see the video referred to in the document on the GiveWell site (referring text: “We have a video of this part of the process”), but it seems that everything went more or less smoothly. Holden interviewed Alan Fenwick, talked about various things that he saw there, and how the administration of the praziquantel went.

    However, Holden apparently didn’t know what language was being spoken, or what the holiday is that was in effect. (referring text: page 4: “It was in another language and I only got part of it translated”), (referring text: page 5, footnote 6: “Alan Fenwick comments: “(there was a holiday this week – this was a special day)”” )

    Official language is Chichewa, so perhaps that was spoken.

    I don’t know what holiday it was. I can’t think of any major Christian holiday that occurs in mid-October in the U.S., but maybe it was a national holiday of some kind.

    These particular facts are by no means critical, and I mention them just as examples of things that, if feasible, could be asked during a site visit or researched prior to one.

    I have only gone over three site visit reports (the one mentioned above, and the two most recent ones). I think that the one for GiveDirectly, consistent with GiveDirectly’s mission, went into more of the daily life of the recipients.

    So I’m not sure how people would feel about the general question of how much GiveWell should study different cultures, or national politics under the constraints of limited time and resources.

    However, I think in a site visit report some brief introductory material about the country as a whole, and then a few sentences as well about the region that is being visited could be appropriate. One might talk about the climate, terrain, and what the professions are of the people who are being visited. If there are opportunities for cultural exchanges, or brief descriptions of art, music, religious practices etc. then this may also be feasible. External links could be provided for GiveWell followers who would like to learn more or for people who have experience in anthropology, or academic subjects relevant to the study of culture.

    At the same time although national aggregate data could be included I wonder how accurate it is in really telling what life is like for a group of people. A measurement such as GDP per capita for a country or a region is one piece of data, and such measurements are informative, but there can be many forces that exist in people’s lives other than economic ones.

  13. David, thanks for the thoughtful comment.

    Two reasons that we haven’t put a lot of time into learning about local cultures are that

    • Even understanding one culture well would be a major undertaking. I fear that superficial investigation – learning a few facts, getting some generalizations from people who communicate well with us – might leave us with a more distorted view than doing no investigation and simply going with the assumption that certain things (such as health, wealth and choice) are likely to be beneficial to all people.
    • There is a lot of diversity. Even within a country, people in different regions may speak different local languages and have extremely different cultures. Focusing on the specific cultural aspects of the regions we visited would likely not leave us with good generalizations for the many regions affected by the sorts of large-scale interventions we’ve focused on.
  14. Why “flow-through effects”? This term seems to be catching on among effective altruists, but it doesn’t seem to be used by anyone else, and its meaning isn’t apparent from its constituent words. What are the effects flowing through?

    Why not side effects, unintended consequences, externalities, indirect consequences, etc.? I think it would be good to use commonly understood words in public communications.

  15. Patrick, I concede that the term isn’t ideal and would be fine with an alternative, though I don’t really find any of the terms you list more self-explanatory than this one. The idea is that the good you do “flows through” from the direct beneficiaries to other beneficiaries.

  16. Thanks. That makes sense.

    I think more people would understand “indirect consequences” than “flow-through effects,” but maybe the former doesn’t capture what you’re trying to express.

  17. To my ear, “indirect consequences” sounds more likely to be negative than positive; it sounds like “unintended consequences” which usually refers to negative/offsetting rather than positive/amplifying effects.

  18. Ryan, flow-through effects would include things like compounding economic growth over time, which isn’t an externality. Also, I think many “direct” benefits of philanthropy would technically be considered externalities (i.e., benefits that aren’t captured by the value creator). The concepts don’t seem to me to be the same.