The views expressed here are my own, not those of my employers.
Summary
- The Life You Can Save (TLYCS) suggests people earning 40 to 80 k$/year donate just 1 % of their net income, which I think is too low.
- Would it even be good if some people in extreme poverty wanted to sign the 🔸10% Pledge, and donated to the most cost-effective animal welfare interventions?
Recommendations from The Life You Can Save
TLYCS has a calculator to suggest the amount of annual donations based on the country of residence and annual pre-tax income. For people living in the United States earning:
- Less than 40 k$/year, they “recommend giving whatever you feel you can afford without undue hardship”.
- 40 to 80 k$/year, they “recommend” annual donations equal to 1 % of the annual pre-tax income.
TLYCS also emphasises the idea of striving towards one’s personal best in terms of effective donations. Which amount of annual donations should be recommended to increase annual donations to their ideal level is an empirical question. I do not have an answer for this, and here I mostly wanted to start a discussion. However, I think the above recommendations are not sufficiently ambitious. A pre-tax income of 40 k$/year in New York for someone single would be a post-tax income of 31.3 k$/year, which is:
- 31.0 (= 31.3/1.01) times the maximum annual consumption of someone in extreme poverty of 1.01 k$/year (= 2.15*1.28*365.25).
- More than what 95 % of the population earns.
1 % of the above post-tax income would be 0.857 $/d (= 0.01*31.3*10^3/365.25), which is 39.1 % (= 0.857/2.19) of the cost of the classic McDonald’s burger, or 68.6 % (= 0.857/((1 + 1.5)/2)) of the cost of a beer.
I believe the ideal donations as a fraction of post-tax income increase with post-tax income, and personally currently donate everything above a target level of savings. At the same time, I like that the 🔸10% Pledge from Giving What We Can (GWWC) involves donating at least 10 % of post-tax income regardless of how much one earns. Besides the reasons given by GWWC:
- Life satisfaction increases roughly logarithmically with real gross domestic product (real GDP), which suggests welfare may increase logarithmically with post-tax income. If so, decreasing post-tax income by 10 % would cause the same reduction in welfare regardless of the starting income. In practice, it is unclear to me whether there would be such a reduction in the context of donations.
- If people with modest incomes donate at least 10 %, people with higher incomes will arguably be more motivated to do so.
Donations of people in extreme poverty
Would it even be good if some people in extreme poverty wanted to sign the 🔸10% Pledge? It might help with spreading significant giving among people with higher incomes, who would have a hard time arguing they are not wealthy enough.
I guess some people in extreme poverty already donate at least 10 % of their net income via tithing. Yet, it is unclear to me if this giving is more/less cost-effective than their own marginal personal consumption, so I do not know whether it is beneficial/harmful. Would it be better if they donated to the most cost-effective animal welfare interventions? From the most to least relevant:
- I would argue the best animal welfare interventions are way more cost-effective than the marginal personal consumption of people in extreme poverty:
- I estimated corporate campaigns for chicken welfare, such as the ones supported by The Humane League (THL), are 1.51 k times as cost-effective as GiveWell’s top charities (at the margin).
- My understanding is that GiveWell’s top charities are 10 times as cost-effective as GiveDirectly (at the margin), which provides cash transfer to people in extreme poverty. According to GiveWell, “a program must be estimated at 10 times as cost-effective as unconditional cash transfers [to people in extreme poverty] to receive our funding recommendation”.
- The 2 points above suggest corporate campaigns for chicken welfare are 15.1 k (= 1.51*10^3*10) times as cost-effective as the marginal personal consumption of people in extreme poverty.
- Supporting beings who are worse off is usually considered morally virtuous, and I expect that would apply. I believe factory-farmed animals have negative welfare, whereas I would say people in extreme poverty have positive welfare.
- Supporting cost-effective global health and development interventions, such as the ones supported by GiveWell, could be uncharitably seen as self-serving.
To minimise fixed transaction costs, the donations could be made less frequently (up to once in a lifetime) or together with other people.
Acknowledgements
Thanks to Anonymous Person for feedback on the draft, and originally raising to my attention that TLYCS suggests people not earning a very high income donate a very small fraction of their income.
I've never lived in New York on $40,000/year, but I imagine that I would be constantly stressed and unable to think of other people's needs. That might be more than what 95% of the human population earns, but expenses are also higher for people in New York than for 99% (a guess) of the human population.
Assuming no sort of family/support network, that would be really hard. What sort of housing/medicine/food/clothing/lifestyle can a person afford in New York on 40k per year?[1] $40,000/year in Oklahoma City might be fairly comfortable, and in Chengdu or Chennai or Cairo it might be a very comfortable lifestyle, but in New York it would be... quite a bit less comfortable. It might not even be a living wage.[2]
I'm guessing that many of the people who are able to donate 10% (or more) while having good salaries would find it really hard to keep doing that if they lived at that standard (the standard of living that a 40,000 USD pre-tax income in New York City allows). Is it possible, and would some do it? Yes, there are some paragons of virtue who would be able to make that work. But for most of us, I think that would be too challenging.
In this scenario, if we aren't crashing on a friend's/relative's sofa, and we can't afford university education or similar training, and we don't know about the local networks (like Buy Nothing Facebook groups or Freecycle communities)
Although depending on the sacrifices you are willing to make, you would probably live on it. There are certainly people in New York City that survive on that amount or less per year.
New York might be too challenging on that salary, but I lived in Lyon (France's 2nd biggest city) on less than that (36k a year) and donated a third of my earnings to animal welfare charities.
Now I don't spend much, the situation would be different in the US (higher welfare expenses), and I dont have kids. But I expect most people in France with this salary to be able to give 10% of their income without sacrificing their wellbeing.
A somewhat meandering follow-up: I have an idea that isn't fully clear in my head, but I want to share the rough idea of it. I think that one of the difficulties is that when we use our own life examples there are often many hidden benefits that don't get calculated clearly/directly into the income. Some things can be roughly calculated if we put some effort (health insurance, the quality of housing, how stably is the job, the length of commute), and some things are really really hard to put a price on (having a family support network, local knowledge of which shops sell cheap vegetables that are still good quality, speaking the local language well-enough to make friends).
Maybe an economist would think of these as "investments in human capital." If a person has these things, it is really easy to forget how hard it is to exist without them. I think of the cliché of a millionaire pretending to slum around as a homeless person. But to be serious: if a person has a university education, and a strong professional network, healthy emotional relationships with family, and good physical health, and professional stability, and a well-funded retirement account, it can be really hard to imagine life without those things. If a person hasn't had all these "investments in human capital" then it is really really challenging to make a good life situation for yourself. When I think about a person living in an expensive city on $15,000 or $20,000 per year, I wonder how much has been invested in these people so that they are able to live so frugally. How different does it look if a person lacks that investment?
Could I live on 40k in NYC if I had all of the above-listed "investments?" Probably, yeah. Could I do it if I had none of them? I bet that I wouldn't be able to.
I think that you are asking the wrong question. The role of organizations such as ours is not to set the most ambitious standard, but rather to influence as many people as we can to give to the nonprofits we recommend.
Your article presents a critique of the go-to-market approach of The Life You Can Save, and then a comparison to the go-to-market approach of Giving What We Can, which you state you prefer as it is more ambitious. Let’s explore this a bit…
The Life You Can Save is actually 2 things:
1. A book in which Peter Singer presents an argument that in order to live an ethical life we have a moral obligation to help those suffering and dying unnecessarily from the effects of extreme poverty
2. An organization that has been working to influence as many people as possible to help those living in extreme poverty for the past 10+ years, and has raised more than $100M for effective nonprofits working to lift people out of poverty.
When it comes to recommendations for the level of giving, I would argue that Peter sets the most ambitious target of anyone when he argues that “in order to be good people, we must give until if we gave more, we would be sacrificing something nearly as important as the bad things our donations can prevent.” One important point here is that in the book The Life You Can Save he is arguing the case for giving to help those suffering from the effects of extreme poverty only, and not including giving to fight climate change, animal welfare or other causes that donors may hold dear. The book is a call to action written to raise awareness and compel everyone living with enough financial means to buy things that are not necessities, that not only do we have the ability but the obligation to end extreme poverty. Peter sets this moral ambition, but recognizes himself that this standard may not be attainable for many and may actually deter some to give, and thus he writes: “I propose a much easier target: roughly 5% of annual income for those who are financially comfortable, with less for those below that level, and significantly more for the very rich. My hope is that people will be convinced that they can and should give at these levels. I believe that doing so would be a first step toward restoring the ethical importance of giving as an essential component of a well-lived life. And if it is widely adopted, we’ll have more than enough money to end extreme poverty.”
Now, as an organization working to raise funding for our recommended nonprofits we need to decide how we ‘go-to-market’, meaning how we craft a strategy and business plan to achieve our objectives. Our mission is to lift people out of poverty by changing the way people think about and donate to charity. There are several considerations for why take the approach we do:
All of these factors have influenced our approach to messaging and donor engagement. We are working every day to continue to find the most successful tactics in influencing donors to join us on our mission and achieve our vision of a world with no global poverty.
Giving What We Can bases their ‘go-to-market’ approach around their 10% pledge, and we are so inspired by the work the team there does, and by the approximately 9,000 people who have taken the pledge. We do not disagree that their pledge is more ambitious than our recommendation at certain income thresholds, by design, and we hope that they continue to have success in not only inspiring people to sign the pledge, but to stick to it and move money to effective nonprofits. It would be worthwhile to note that they also have stated in their recommendation “if 10% doesn’t yet seem achievable, consider starting with a
Trial Pledge (where you choose a custom amount of 1% or more and your own time commitment), or donate to effective charities without taking a pledge" in order to be more inclusive of donors who may not yet be ready to commit to a 10% giving threshold.
I hope this helps you better understand the reasoning behind our approach.
The problem(s) we are collectively working to resolve (The Life You Can Save with extreme poverty, and Giving What We Can across multiple cause areas) are massive, and include trying to influence everyone in the more affluent parts of the world, and as such we believe solving these problems will require many varied approaches across many organizations targeting different and diverse audiences. It’s best we find ways to work together, learn from each other and support each other, versus pushing a singular approach into the market.
Just a note: In a recent update we removed the The Life You Can Save pledge from our website for internal business reasons. Some of our supporters have specifically asked for the calculator to be available to them and so we have allowed access to the pledge through direct link only. It is no longer accessible through our website navigation.
Thank you,
Jessica, co-CEO The Life You Can Save
Thanks, Jessica. I generally agree with this.
I think it's valuable to have a variety of entry points into effective giving, and agree that a more modest ask is going to be more effective for a large number of donors. I think it is helpful to have a variety of options when pointing people toward effective giving. There's a lot of room between TLYCS'[1] approach (which recommended 1% at $80K USD and may be more non-specific now that the pledge has been removed from navigation) and GWWC at 10%, and I think there's merit to the view that TLYCS' approach is suboptimally ambitious for some donor candidates. But: that merely suggests more space for more good orgs in this area rather than a criticism of either TLYCS or GWWC!
Also, there are two points of potential disagreement here. One could disagree with a strategy of asking for "roughly 5% of annual income for those who are financially comfortable, with less for those below that level, and significantly more for the very rich." I personally think there is great value in a good org that does that, although I'd like to see other orgs that target higher and lower commitment points as well.
The other point of disagreement, which I have somewhat more sympathy with, is that the calculator didn't do a great job operationalizing that sentence. Some of these problems reflect inherent limitations to a one-question calculator that spits out a single number rather than a range. The implied threshold for "financially comfortable" in USD is roughly three times the median US full-time salary. While everyone's financial circumstances are different, I'd submit that this is a rather conservative way to operationalize financially comfortable. Likewise, one might think the steep downslope below $81K is a whole lot of "less" given that $81K is still above the median.
In this comment, "TLYCS" means the organization, not the book.
I appreciate the answer and a gree with most of it. I think it's a bit rough on Vasco though to say he's straight up "asking the wrong question". It might be possible to both encourage more people to give, while you also set an ambitious standard (maybe not as your headline ask)
There's people out there who might want to move closer to Singers challenge "in order to be good people, we must give until if we gave more, we would be sacrificing something nearly as important as the bad things our donations can prevent.” and I think it would be helpful if some big orgs at least might be willing to suggest what that might look like (again not as a headline, and maybe not even from your org)
I strongly agree with this "It’s best we find ways to work together, learn from each other and support each other, versus pushing a singular approach into the market." I suspect Vasco might as well
This has also simulated some interesting and potentially helpful discussion.
When I think of organizations that have pulled something close to that off, I think of very personal high-touch organizations, rather than ones with a few-to-many communication strategy. For instance, some nuns and monks (or equivalents) in various faith traditions live very simply for various reasons -- one of which is often to devote more resources to caring for the poor. That's not a level of commitment that an organization can hope to inspire very much through a website, video, or other low-cost-per-recipient forms of communication.
Thanks, Nick!
Yes, I agree. At the same time, I guess having a single lower bound for the recommended donations as a fraction of net income for all income levels would help with coordination, and spreading giving norms. Then it would be possible to say "we have all these people of donate at least x %, so maybe you should consider donating at least x % too". Still, the optimum lower bound is probably below 10 %. Then I would say the upper bound should increase with net income.
[authenticity validated per Vasco's comment below, so deleted request for verification here]
Thanks, Jason. The above reply is legit. I shared a draft of the post with TLYCS before publishing it, and Jessica replied with something very similar to the above.
Thanks for sharing your thoughts, Jessica!
To clarify, I agree the goal is not setting the most ambitious target. I was not that clear, but I meant to allude to that in the post:
I have one clarifying question. You say your goal is i) "to influence as many people as we can to give to the nonprofits we recommend". Is your goal closer to any of the following?
I believe the optimum stragegies under ii) and iii) have a greater focus on larger donors and more ambitious asks than the optimum strategy under i).
To clarify, I never intended a harsh tone, I was merely stating that I thought the comparison was missing a significant aspect of why we take the approach we do, and could also be read to be critical of the people behind the effort into the accomplishments of the organization to date (least of all me to be clear).
To your follow-up question, we try to do both across our online and managed donor segments.
Thanks. Clarification on my side too. In the reply just above, I said "I was that clear", but I forgot one word. It was supposed to be "I was not that clear" (corrected).
Incidentally, the formula seems to be:
first $40K: undefined
$40-80K: 1% of total income (including the first $40K)
$80-$200K: 1% of first $80K, then 5% of remainder up to $200K
$200-320K: $9,760 (as calculated above) then 10% of remainder up to $320K
$320-$480K: $21,670 (as calculated above) then 15% of remainder up to $500K
$480K-$?: $45,760 (as calculated above) then 20% of remainder
[didn't input higher numbers, except that inputting a gazillion spits back a 50% recommendation]
[This crosses 10% just above $500K]
My initial reaction was that one could make a smoother curve for the marginal contribution rate. But playing with the numbers, the rise in total percentage recommended looks fairly smooth and continuous (albeit less so around the $80K boundary). So maybe the increase in legibility for a bracketed system outweighs a theoretically smoother formula. But I'd at least consider something like a 3% bracket from ~$60-$100K if I were reworking this (without a desire to change overall recommendations very much).
I believe the values come from the 10th anniversary edition of the TLYCS book. They should be in the FAQ on the website and I'm surprised they're not.
The website links to the FAQ for info about the calculation method, but I didn't see the info there.
The 10th ed. was copyrighted in 2019, and US wage levels rose about 18% from 2019 to 2022 alone. So these cutoffs were even less demanding in 2019 than they are today; the 81K cutoff for asking more than 1.00% might be close to 100K in mid-2024 wages.
Thanks for the valuable context, Jason and MHR!
I second that the recommendations could be more ambitious but mostly the calculator feels way too simple because life situations can vary so vastly between people within a country and income group.
In the calculator, I fall below their 1% recommendation while living in Finland, but I believe I could donate 25% "without undue hardship". On the one hand, this is unrealistic or at least not financially smart in the long run for many with higher living costs. On the other hand, I have friends who I think would be fine donating an even larger share if they had the income I have.
So, the calculator is, in my opinion too simple to give any meaningful recommendation.
Thanks so much for this super interesting post and discussion. I love that its Vasco raising this discussion as I think he has some personal integrity here "I personally currently donate everything above a target level of savings." - he's an example of someone who doesn't necessarily earn a huge amount, and donates a lot (seen on previous posts/comments).
Here are some cold takes
1) When it comes to giving, I find less well off people giving small amounts humbling and powerful. I ascribe to something like "widows mite" theory. Jesus sees a poor women offer a tiny amount of money, and after people laugh at her seemingly meagre offering, he says "The plain truth is that this widow has given by far the largest offering today. All these others made offerings that they’ll never miss; she gave extravagantly what she couldn’t afford—she gave her all!”"
Of course she hasn't done "more good" from a utilitarian standpoint than the billionaire giving billions, but (the way I see it) she gave the morally larger offering, given her situation. I also think (like Vasco) when less well-off people give, it can really convict those of us who have more to give more as well.
2) As much as I love this post and we have a beautiful bent here towards numbers, personally I don't think an empirical approach is going to necessarily lead us to clear answers here because there are many ways to think about how we give and so many subjective value issues around our lifestyle and savings. This is how I think about it...
1) How much do I earn?
2) How much do I use to live day to day?
3) How much do I save?
On a really basic level Giving = Earning - (Spending + Saving). Most people don't have that much control about how much they earn, so how much they give comes down to their lifestyle and savings norms (assuming they are optimising somewhat for giving). So then there are different ways of approaching the equation
I LOVE Vascoes approach of setting a celing for his Spending+Saving total - then giving the rest. For me this is a super noble approach and makes logical sense. Even if we end up failing at meeting this noble goal, we'll at least notice the almost inevitable "lifestyle creep" and check it as much as we an. I also like his suggestion above of increasing percentage giving with higher incomes, which allows people to drastically increase their daily use and savings while also giving a lot more. Our approach is less numerical - its basically to live simply, not save much and give the rest (not much at all on our income) away. I think its usually good practise to be honest with ourselves about our approach to giving, and make active decisions about lifestyle and savings.
I really like that Giving what We can suggests a lower percentage for people who earn less and I understand why they picked a number as it is concrete and challenging (1%). I also agree with Vasco they could perhaps be more ambitious. I've got mixed feelings about a calculator - maybe it is the optimal approach for some, but I feel like some people on 70k a year can give 30k just fine and this should be encouraged, applauded and even normalised. Maybe a diverse range of giving approaches could be discussed? Especially among EAs I think we could aim to do better than 1% at that salary range, and I've met many wonderful people that do.
3) These thoughts are coloured by my Ugandan experience. My colleagues give a huge amount to friends, family and church despite not earning very much. Our nurses start on $140 a month and live in 1-2 room apartments with power but no running water. I want to do a proper survey, but I suspect our nurses give betwen 10% and 30% of their income to support their relatives education and basic needs. This isn't the "most effective" use of money, but there's decent evidence sponsoring individuals education and basic needs works and I believe this support is far more cost effective than most NGOs here. We even support some kids with school fees here because it is both a bit effective and an important social norm/glue - its just "what you do" here if you have more than enough.
On this backdrop I find the "life is hard for people earning 40k in New York" thing a little hard to stomach, although I get its a different thing (point 4).
4) "Yes, there are some paragons of virtue who would be able to make that work." - Although I understand the sentiment, but I don't think people need to necessarily be a "paragon of vitrue" to live simply in shared housing (or with family), wear second hand clothes and not eat out that much - basically eschewing a few social norms in order to free up the money donate 10% or more. Students often have great lives living pretty simply, but then rapidly increase spending after getting jobs because they can, while not necessarily getting a whole lot happier. I think people might be "constantly stressed" and feel pressed for cash in America at low and middle incomes because that is the cultural norm around lifestyle, not because life is genuinely impossible or even that hard to manage at lower incomes. Almost 90% of teens in America have IPhones that cost almost $1000 dollars, when a $250 phone would do almost exactly the same thing, with slightly worse photos. This obviously includes the majority of kids who's parents have low incomes or no income. What kind of norm does that set?
Looking back at the comment some of these observations might seam a bit "soapboxy" or even harsh, am not judging anyone here at all - the struggles at low income to make ends meet are real all around the world as is the struggle to meet cultural expectations.
Thanks for the thoughtful comments and kind words, Nick!
I think I may have given the impression I donate a lot because I have a ceiling for my savings, and low spending. However, since the ceiling is high relative to my cumulative net income, I have not donated that much, 16.5 % of my net salary earnings.
Thanks! Just to clarify, I only have a ceiling for my savings (6 times the global real GDP per capita, which is 72.9 k€ in Portugal), although my spending has been quite low thanks to lots of family support (crucially, free housing), and generally having a simple lifestyle (e.g. I have not left Portugal in the last 4.5 years).
There's also the consistency angle here. If I'm a well-to-do American who donates 10%, it seems wildly inconsistent for me to call on similarly situated people making $40K a year (much less those in extreme poverty!) to do the same. I don't see a plausible model of shared sacrifice that would make those consistent.
I'm aware that GWWC has a flat 10% pledge, but as far as I know it was originated by middle-class people who didn't specifically have people significantly less well off than they in mind. Whatever the relevant merits of a flat vs. graduated pledge, TLYCS has opted for the latter ~ and its recommendations will be viewed in that light. With a flat pledge ask, there's at least some implied understanding that you're making a moral claim under most, average, or ordinary circumstances.
That is not to necessarily endorse TYLCS' very gently upsloping curve.
Maybe we should base the norm/standard on something like disposable income rather than income? The suggestions for how much to donate based on income can serve as rough guidance, but probably shouldn't be interpreted very strictly, since the same income in different places ends up looking very different.
Thanks for the interesting question, Joseph. I agree the optimal donations as a fraction of net income depends on circumstances. However, I would say it mostly depends on the number of dependents and net household income, not on the disposable income. To give an extreme example, a millionaire can have very little disposable income by living in a super expensive house, but in this case I would argue it would be better (from an altruistic perspective) to move to a cheaper house to donate more.
I agree, what you write makes sense. I suppose that like so many financial things, it depends a lot on the details of how we define "disposable" (or "reasonable" or "acceptable"). I strongly endorse the general principle of people donating money if it causes only minor decrease in their quality of life, such as shifting from a super expensive house to a very comfortable house.
Most people without children who rent could probably spend much less money on rent by finding lower quality housing, sharing rooms, etc. There are certain lower limits that people aren't willing to go below (most of us probably wouldn't want to live in an apartment with concrete floors, no shower, and lots of cockroaches, even if that allowed us to donate extra money). But there is probably plenty of realistic conceptual space between the millionaire who spends lots of money on an expensive house and the impoverished person living with multiple roommates in low-quality housing.
There are also certain limits required by law (e.g., the implied warranty of habitability) or by market conditions (e.g., even if you were willing to live in $100/mo housing, no one may be interested in selling it in your area). I think that's something the purchasing power parity calculations can miss in this context.
The TLYCS calculator / pledge is specifically recommending an amount toward "organizations effectively helping people in extreme poverty." The resultant amounts are easier to work with for people who also want to donate to non-effective or non-poverty organizations (e.g., because they object to the1 idea of free-riding on others in their community by not giving in addition to receiving).
So one's reaction to the size of the recommendation will be influenced, to some extent, by whether this sum is assumed to be all of the donor's philanthropy or perhaps a third of it.
I do think that calling US people to at least the US average -- which IIRC is about 2-3 percent and not that correlated with income? -- would be hard to criticize as too demanding for the vast majority of US incomes. Maybe a higher number would be as well, but this one has the virtue of feeling more "objective" than made up out of thin air.