Doing Good Better

When giving to charity you should give where you expect your impact to be greatest.

With so many ways to give to charity and so many problems that require attention, how do you decide where to give?

The answer lies in plugging in this simple formula: How many people will benefit from your charitable donation, and by how much?

No one has unlimited resources, and so if you donate to one person’s cause, someone else always loses out. Knowing this, you need to make a choice that maximizes your donation’s effect.

It was this thinking that made Dr. James Orbinski’s time with the Red Cross during the Rwandan genocide manageable. Orbinski had too many patients to manage, and had to prioritize between them.

So, he developed a system: he wrote the numbers “1,” “2” or “3” on his patients’ foreheads. “1” meant “treat immediately,” “2” meant “treat within 24 hours” and “3” meant “irretrievable.” Using this system, Orbinski was able to save more people by making the best use of his limited resources, even though it meant he had to leave some patients to die.

Sometimes a charitable deed will be the best choice because it has a chance of making a huge impact, even if this chance is slim. To determine whether this is the right course of action, you need to first compare choices’ expected value.

You calculate expected value by multiplying an outcome’s value by its probability. For example, if your donation has a 50 percent chance of saving 3,000 lives, its expected value is 1,500 lives saved.

If the accident management planners at the Fukushima Power Plant had used the concept of expected value, they could have avoided the tragic disaster of 2011.

The plant had a very low probability of a huge catastrophe – so low that the planners neglected the danger entirely. However, the expected damage was huge. In the aftermath of the 2011 accident, around 1,600 people died.