Why You Shouldn’t Donate to Disaster Relief

An aerial view of Japanese Ground Self-Defense Force personnel and disaster relief crews searching Sukuiso, Japan for victims of a 9.0-magnitude earthquake and subsequent tsunami. (U.S. Navy photo by Mass Communication Specialist 3rd Class Dylan McCord/Released)

An aerial view of Japanese Ground Self-Defense Force personnel and disaster relief crews searching Sukuiso, Japan for victims of a 9.0-magnitude earthquake and subsequent tsunami. (U.S. Navy photo by Mass Communication Specialist 3rd Class Dylan McCord/Released)

Which is more valuable: water or diamonds?

I imagine this question has divided my readership into two camps. Team Water will say: Obviously water is more valuable. If we didn’t have water, we’d all be dead. If we didn’t have diamonds, we’d just have slightly less attractive jewelry. No big loss. In contrast, Team Diamonds will say: Obviously diamonds are more valuable. If you think water is more valuable, then how about we make a little trade? I’ll give you a gallon of water and you give me a twenty-karat diamond. Sound fair?

So which team is right? They both are, depending on what exactly we mean. Drinkable water is in one sense extremely valuable because it’s necessary for us to keep living. This makes the average value of drinkable water high. But we’ve already got a lot of water, so the value of an additional gallon of water (in developed countries) is very low. If I, a citizen of a developed Western nation, have one additional gallon of water, that means I may simply have a slightly deeper bath one evening. This is why the cost of a gallon of water from the tap in New York City, where I’m writing these lines, is just $0.015—less than two cents.

In contrast, even though the average value of diamonds is much lower than that of water, the value of an additional (or “marginal”) diamond is much higher. The reason, simply, is that there aren’t that many diamonds available on the market: they are therefore scarce in the way that water isn’t. If I had no possessions at all, and couldn’t sell what I gained, I’d rather have a gallon of water than a 20-karat diamond. In contrast, given the easy access to water that I currently have, I’d prefer the diamond if given the choice.

This “water and diamonds” paradox shows the importance of what economists call thinking at the margin: assessing the value of an additional this—what is known in economics as its marginal utility—rather than thinking about the average value of that thing.

We think on the margin all the time. Suppose you receive a new sweater for Christmas. How good is that sweater? The answer depends on how many sweaters you already have. If it’s winter, you’re homeless, and you have no warm clothes, that sweater might prevent you from getting hypothermia, so an additional sweater would be extremely valuable. If you’ve got a place to live but are low on sweaters, that extra cable-knit might give you something new to wear on a cold day and would therefore still be pretty valuable. If you already have too many sweaters, though, one more might just be a nuisance—one extra thing to pack when you move—and therefore be bad overall.

The value of a new sweater decreases the more sweaters you already have. The value can even become negative if you already have lots of sweaters. In fact, it’s true of most good things (though not all of them all the time), that their value diminishes as their quantity increases. The first slice of cake is delicious, but by the third, you’re feeling a little sick. Having one copy of this book might provide you with an interesting and entertaining experience, but having a second might just provide you with a makeshift doorstop. This is what economists call the law of diminishing returns.

The law of diminishing returns also explains why in general, it makes less sense to donate to disaster relief than it does to donate to the best charities that fight poverty. Every day, people die from easily preventable diseases like AIDS, malaria, or tuberculosis. This is a disaster far beyond that of Haiti, or Tōhoku, or Sichuan. Every day, eighteen thousand children—more than the number of people who perished in Tōhoku—die from preventable causes. For every death the Japanese earthquake caused, aid organizations receive $330,000 in donations. In contrast, for every person who dies from poverty-related causes worldwide, only $15,000 on average is spent in foreign aid and philanthropy. Partly for this reason, experts from the World Health Organization and World Bank concluded that “emergency health interventions are more costly and less effective than time-tested health activities.”

Natural disasters get far more funding than ongoing causes of death and suffering such as disease; for that reason, disaster relief usually isn’t the most effective use of funds. But our response to natural disasters is one of the clearest cases of how, when it comes to charity, most people follow their gut and respond to new events rather than ongoing problems. When a disaster strikes, the emotional centers of our brain flare up: we think—emergency!

We forget there is an emergency happening all the time, because we’ve grown accustomed to everyday emergencies like disease and poverty and oppression. Because disasters are new and dramatic events, they inspire deeper and more urgent emotions, causing our subconscious to mistakenly assess them as more important or worthy of attention.

Ironically, the law of diminishing returns suggests that, if you feel a strong emotional reaction to a story and want to help, you should probably resist this inclination because there are probably many others like you who are also donating. By all means, you should harness the emotion you feel when a natural disaster strikes, but remind yourself that a similar disaster is happening all the time—and then consider donating to wherever your money will help the most rather than what is getting the most attention.

William MacAskill is Associate Professor of Philosophy at Oxford University, cofounder of 80,000 HoursGiving What We Can and the effective altruism movement, and author of Doing Good Better, out on the 28th July. Why You Shouldn’t Donate to Disaster Relief