Judgment and decision making donors vastly underestimate differences in charities ’ effectiveness

Abstract

Some charities are much more cost-effective than others, meaning that they can save more lives with the same amount of money. Yet most donations do not go to the most effective charities. One reason for this could be that people underestimate how much more effective the most effective charities are compared with the average charity. We studied this hypothesis in six studies with different samples, finding that lay people indeed believe that the difference in effectiveness between charities is much smaller than it actually is. We also found that informing people about the large difference between charities’ effectiveness can increase effective giving. – AI-generated abstract.