There are many charities that provide goods or services that their donors can use, think of the Wikimedia Foundation or the Free Software Foundation or even the Singularity Institute (which operates Less Wrong). You can donate to these charities for non-altruistic motives other than mere signalling or good feelings, and these motives will likely have diminishing returns, naturally resulting in risk aversion. (Or you may reason that since your small donation isn’t going to make a difference, you can as well freeload, but that is the same argument against voting).
But let’s assume that we are considering only “save the starving children” type of charities, where the set of donors and the set of beneficiaries don’t overlap, and your donations can only buy welfare (measured in QUALYs or some other metric) for distant individuals you don’t personally know. Are you not risk averse?
Consider the following scenario: There are two possible charities. For every 100,000 euros of donations, charity A saves the lives of 50 children (that is, allows them to reach adulthood in a condition that enables them to provide for themselves). Charity B either saves 101 children per 100,000 euros or fails, completely wasting all the donated money, with a 50-50 chance. You have got 100 euros to donate. How do you split them?
There are many charities that provide goods or services that their donors can use, think of the Wikimedia Foundation or the Free Software Foundation or even the Singularity Institute (which operates Less Wrong). You can donate to these charities for non-altruistic motives other than mere signalling or good feelings, and these motives will likely have diminishing returns, naturally resulting in risk aversion. (Or you may reason that since your small donation isn’t going to make a difference, you can as well freeload, but that is the same argument against voting).
But let’s assume that we are considering only “save the starving children” type of charities, where the set of donors and the set of beneficiaries don’t overlap, and your donations can only buy welfare (measured in QUALYs or some other metric) for distant individuals you don’t personally know. Are you not risk averse?
Consider the following scenario: There are two possible charities. For every 100,000 euros of donations, charity A saves the lives of 50 children (that is, allows them to reach adulthood in a condition that enables them to provide for themselves). Charity B either saves 101 children per 100,000 euros or fails, completely wasting all the donated money, with a 50-50 chance. You have got 100 euros to donate. How do you split them?
I would give only to B. I try to be risk-neutral in my giving.