The GiveWell Blog

Reinventing the wheel

| by Holden

I think the following comment, from Andrea, is broadly representative of a common criticism we receive.

One thing Givewell is missing, and has been criticized for in the past, is that people are already working on these issues, and that one small organization like Givewell can’t solve this “problem” where all others have failed. For example, Holden’s point that he thinks global health is a cause ripe for funding has obviously already been discovered by none other than Bill Gates, employs many staff who research causes in the way Givewell proposes, but along the well-tested model Sean describes. Again, this points to the naive quality of the entire Givewell enterprise.

We believe that GiveWell has something unique to offer – but this something is not our analytical abilities, or our research process, or our “focus on results.” We believe that many grantmakers, including the Gates Foundation, may be conducting more thorough research and analysis than we can; we have believed this since the very beginning of our project; and to my knowledge, we haven’t implied otherwise at any point. (If you believe there are instances where we – GiveWell, not others writing about GiveWell – have implied otherwise, please point me to them.)

We don’t think we’re inventing the wheel; but we’re reinventing it, out of necessity, because no one else will share their blueprint. Back in August of 2006, when we were first putting serious effort into figuring out where to give, we started by calling foundations and asking them to share their research; as detailed in Appendix D of our business plan from March 2007, the consistent answer we got was that specific information on grantee results – beyond the highly general, selected parts that foundations choose to share – is confidential.

We believe that information about how to help people should never be secret. GiveWell’s uniqueness is not in its ability to conduct thorough research, but in its willingness to share it.

Microloans vs. payday loans

(updated on: ) | by Elie

Phil Cubeta’s recent post about payday loans got me thinking about our choice to grant a microfinance organization in our Global Poverty cause.

We decided to grant Opportunity International for two reasons:

  • The belief that there is likely a significant shortage of access to credit in the developing world.
  • The very fact that someone repays a loan with interest likely demonstrates that the loan is used for something that is likely life-improving.

But, doesn’t the same analysis apply to payday loans? I’d bet that there’s a similar lack of credit for very small loans for borrowers with questionable credit-worthiness. And the very fact that lenders run this business likely indicates that borrowers are consistently paying back their loans, even at exorbitant interest rates (400-1000% annualized, according to the Center for Public Policy Research). The same logic that says microfinance is helping people would seem to imply that payday loans are as well.

On the other hand, it’s also possible that many borrowers are only able to repay their loans by taking out another loan – that what we’re witnessing is not a group of people getting back on their feet, but a group of people getting caught in a cycle of debt. Note that this could be numerically consistent with very high (~95%) repayment rates, the statistics commonly cited by microfinance organizations to illustrate their effectiveness in helping people – someone who borrows to pay off another loan 19 times, before finally defaulting, has a 95% repayment rate.

We’re left with two plausible yet conflicting hypotheses about the way in which the practice of making small loans at relatively high interest rates affects those in need. In one case, those in need access much needed credit (albeit at high interests rate) which allows them to weather a difficult financial period and potentially pull themselves out of poverty. In the other, those in need borrow and ultimately find themselves in a debt trap, borrowing more to repay previous loans.

We’ve generally been very frustrated with how little information we’ve been able to get on microfinance operations – who is borrowing, what they’re using the loans for, what their standard of living is, and what happens to that standard of living over time. Without this kind of information, we’re still only guessing at whether microfinance organizations and payday loan operations are helping people pull themselves out of poverty, or simply helping them get caught in cycles of debt.

Quick update

(updated on: ) | by Holden

I’m going out of town for the next week and will have only sporadic internet access. A few odds and ends:

Flip-flopping

| by Holden

A little over a year ago, we ballparked the cost to save a life from malaria at $200. Now we think it’s closer to $1000. Last August, I wrote that K-12 education is my favorite cause. A week ago, I owned up to moving it to the bottom of my list, and far preferring global health (even if it’s 4x as costly as I originally guessed). And that’s not even mentioning our December Board meeting, where I walked in with three suggestions as to how we should grant and was convinced to change my mind on two of them.

If you like a man who knows where he stands, I’m not your type. I’m a newcomer to all of the many areas we’re studying, and I have a lot to learn. You’re going to see me change my mind again and again, sometimes going in a circle to come back to what seemed all along like common sense (though with updated information and reasoning behind it). Then again, the history of most areas of human knowledge can be described the same way. That’s what you can expect when you (a) have a lot to learn; (b) are willing to learn it.

The reason I’ve been flip-flopping so violently, and will probably continue to do so, is the same reason this project is worthwhile: there is not enough information out there, nor are there the right kind of information aggregators, for a donor to become well-informed in a reasonable period of time. Currently, the only option I know of for an individual donor is to, in effect, take wild guesses about whom to help, how to help them, and which organization to work with in order to do so. Because of this, GiveWell doesn’t need to provide infallible analysis in order to provide a valuable service; instead, we’re working to make our guesses better and better informed. We’re sharing our progress in real-time because we want as many donors as possible to be able to see what we’re finding and improve on their own guesses. We don’t guarantee that our recommendations will stay the same over time; but probabilistically speaking, they will be better and better.

I’m aware that I often sound authoritative and 100% confident, even when I’m not (this is an idiosyncrasy I’ve had all my life, and I am working on it). But if you look past the tone, you’ll see a flip-flopper; and given the high-complexity, low-information work we’re doing, you shouldn’t expect any less.

Don’t take our breadth away

(updated on: ) | by Holden

For our first round of grantmaking, we chose to investigate five broad causes, two in the developing world (saving lives and fighting poverty) and three in the developed world (early childhood care; K-12 education; employment assistance).

This decision – doing five causes, instead of narrowing our scope from the outset – had serious costs. Even with all the time we’ve spent – far more than a typical donor can – we still feel that our understanding of each cause is very far from thorough. Trying to deal with all five causes at once has been logistically tough, and we even missed the deadline we set for ourselves for giving out our grants (we awarded only three grants at our December 2007 meeting, and will be awarding the remaining two within the next few weeks). In other words, we absolutely bit off more than we could chew.

Yet as we look to next year, I find myself wanting to bite off even more – to go broader, not narrower. Part of the reason is that doing five causes has allowed us to provide information to a broader set of potential donors; while we didn’t analyze these causes as deeply as I would have liked, I still feel that we have found is more than what existing donor resources offer, and far more than we could find when we were casual donors ourselves.

Doing five causes also had another benefit: while we didn’t become experts in any one cause, we learned enough about each to radically change the way we think about them – and prioritize them. Last August, I wrote that K-12 education was the cause that excited me most; yet having learned more about a donor’s options in each cause – and how much each costs, how reliable each seems, etc. – I’m now most excited about global health, and I’d rank K-12 education last out of our five causes. In a nutshell, though I most want to help Americans take advantage of all the opportunities America offers, I now believe that the developing world’s needs are so much more drastic that I’d rather help them. My new view is still open to revision, but it’s better informed than the one I came in with. And I wonder whether I’d be even more excited about something else, if we’d gotten a chance to look into charities that focus on abandoned children, or on disease research, or on the environment.

It may be more typical for a grantmaker to start its work by picking an area that it can really become an expert in. Donors are often told to start their search by volunteering, so they can see their area of interest up close. But if you care both about how you impact lives and how many lives you impact, I’d argue that your most important decision is the top-level, bird’s-eye one – whom you help, and how. I feel there’s more to be gained by learning a little about all your options than by getting it perfectly right within a predefined scope. Our approach is often frustrating in its lack of depth, but our goal isn’t to become the best at understanding any one area; it’s to give as well as possible.

Rethinking bednets

(updated on: ) | by Elie

We granted Population Services International in our Saving Lives in Africa cause, focusing largely on their condom and bednet distribution and promotion programs. Soon after we cut the check, I got into a conversation with someone who questioned whether bednets are effective at all. He pointed me to a paper, “Combating malaria morbidity and mortality by reducing transmission,” which questions whether bednets are likely to have a long-term impact on malaria mortality.

Bednets reduce the number of bites that people receive from malaria-carrying mosquitoes, which in turn reduces incidence of malaria. This has two effects: (a) it reduces malaria mortality; but (b) it also reduces acquired immunity to malaria. The authors of this paper found, empirically, that areas that had lower rates of bites had similar rates of malaria mortality but a different age distribution of deaths. In places with high bite-rates, malaria mortality was restricted to children; in places with low bite-rates, adults died as well. The authors hypothesize that bednet programs may only shift the age at which people die from malaria, and have no impact on the total number of deaths from malaria.

This doesn’t mean bednets are useless. First of all, the analysis in the paper isn’t general enough to cover every case – there could be population configurations such that protecting people during their weakest years is a net benefit. There could be regions with high enough bite-rates that nets merely reduce the number of bites without affecting immunity. Also, even if total morbidity and mortality don’t change, there is definitely value in people living longer before they die. But, if it’s true that reducing mosquito bites can matter much less over the long term than over the short term, this is important when weighing the value of bednets. This paper really highlights what systematic analysis and measuring can do – and what you can miss by skimping on them.

At the moment, we’re still working on our education cause; bednets are something we’re thinking about, not devoting our time to. But if we revisit the cause of aid to Africa next year, we plan to incorporate this research into our analysis, and possibly change our recommendations. We don’t expect our decisions to be perfect; they’re merely our “best bet” given what we know. Enabling anyone to provide feedback on our grant decisions, which refines (or contradicts) our previous understanding, is precisely why we think a public discussion of what charities do and how well it works is necessary.