The hidden zero problem: Effective altruism and barriers to marginal impact

Abstract

In this chapter, Mark Budolfson and Dean Spears analyse the marginal effect of philanthropic donations. The core of their analysis is the observation that marginal good done per dollar donated is a product (in the mathematical sense) of several factors: change in good done per change in activity level of the charity in question, change in activity per change in the charity’s budget size, and change in budget size per change in the individual’s donation to the charity in question. They then discuss the “hidden zero problem” that some of the terms in the equation (in particular, the last term) might be “hidden zeros” that prevent donations from doing any good—or worse, imply that they do harm—even if the charity is at the top of effective altruism rankings based on the other factors.