In 2023, the top 20 donors to GiveWell gave more than the other 31,890 donors combined. These donors gave at least $1 million each with a mean of $5.87 million.
With stats like these, I mostly view the 10% pledge as a social commitment device rather than a sensible rule for how much to donate. One can think of the 10% pledge as requiring people to give up a constant amount of personal utility under logarithmic utility of consumption. But this doesn't make sense; one should obviously give up more utility if beneficiaries gain more per unit you sacrifice. [1][2]
Is there something better that captures the extreme variance in salary these days, eg with junior AI engineers earning >$1M/year? I propose a power law where someone with income Y should donate everything except a consumption budget . Then the donation rate is calculated as .
With parameters somewhat arbitrarily set such that the median American household (income $75K) donates 10% and someone with $10M income donates 60%, we get and γ ≈ 0.83, meaning that every 1% increase in income allows you a 0.83% increase in consumption. We get the following table, which seems pretty reasonable:[3]
| Income | Donation Rate | Donation $ | Consumption $ |
|---|---|---|---|
| ≤$39.3K | 0% | 0 | ≤$39.3k |
| $50K | 3.7% | $1,872 | $48,128 |
| $75K | 10.0% | $7,500 | $67,500 |
| $100K | 14.2% | $14,190 | $85,810 |
| $150K | 19.8% | $29,651 | $120,349 |
| $200K | 23.5% | $47,006 | $152,994 |
| $500K | 34.3% | $171,406 | $328,594 |
| $1M | 41.4% | $414,135 | $585,865 |
| $5M | 55.1% | $2.76M | $2.24M |
| $10M | 60.0% | $6M | $4M |
| $100M | 72.7% | $72.7M | $27.3M |
The difference between $10-100M earners donating 10% vs 60-70% is immense. If the 2023 numbers were from high earners donating 10%, this tiny group going up to 65% would 3.75x total donations; if they were at 65% already, going down to 10% would basically halve GiveWell's revenue.
There's another interpretation of this power law. In economics, different goods have different income elasticities of expenditure, with necessities having γ 0, "normal" goods γ < 1 and "luxury" goods γ > 1. We can interpret the policy of γ = 0.83 for aggregate consumption as asking people to forego none of their necessities, some near-luxury γ 0.83 goods, and a large proportion of luxury γ > 1 goods as their income increases. For some concrete examples, I had Claude generate this table from the empirical literature:
Category Elasticity Range Source Housing (renters) 0.2–0.4 0.19–0.5 RAND/HUD, NBER Food at home (groceries) 0.3–0.4 0.2–0.5 Various US studies Tobacco 0.4 0.3–0.5 Wikipedia Housing (owners) 0.5–0.7 0.36–0.87 Mayo review, Harmon 1988 Food away from home 0.7–0.9 0.5–1.1 USDA ERS Clothing & footwear 0.8–1.0 0.7–1.1 USDA ERS cross-country; US footwear study Gasoline 0.8–1.0 0.66–1.26 Wikipedia summary of studies Transportation 0.95–1.0 0.8–1.1 USDA ERS high-income Education 1.0–1.1 0.9–1.2 USDA ERS Healthcare/Medical 1.2–1.4 1.0–1.6 USDA ERS (US = 1.21) Recreation/Entertainment 1.4–1.5 1.2–1.8 USDA ERS high-income Air travel/Tourism 1.2–2.1 0.6–2.5 Meta-analyses Interpretation
The rough correspondence suggests γ = 0.83 is asking for sacrifice at the "nice-to-have, not need-to-have" margin, which seems ethically defensible.
- ^
Utility of consumption is probably sublogarithmic at the high end, but we'll disregard this.
- ^
The other extreme would be everyone donating all their income down to a flat rate, equal to the consensus selfish:altruistic utility ratio. One of many issues is that this removes all selfish incentive to earn more.
- ^
I forgot to account for taxes because I wrote this up in about an hour, but it shouldn't be too far off
Your table is very similar to the one Peter Singer presents close to the end of The Life You Can Save. I do like the mathematically clarity of your approach, and we now have an intuitive explanation for where the numbers come from - very nice!
Honestly, now that I write this it seems strange that there is no Pledge that matches this way of thinking? Your suggestion could be a nice complement to the existing 10% and Further Pledge and it now seems a little strange that I have not heard about people actively donating according to Singer's table. Maybe it is just a lot harder to explain than the other pledges, and this kind of defeats the point of a public pledge?
In case someone else wonders what the donation rate would look like for other choices of γ:
I think a pledge which puts the bar for zero donations at
the US-median income[edit: oops, I got that wrong and it is not the median income value. I still think that my point is directionally right] is a little strange – even in the US, many pledgers would never reach non-zero pledged donations and this seems off for a pledge that has income-sensitivity as a central property. Intuitively, a softer rule like "in any case, aim for 1% donations unless you really need all income" or a different reference for the zero-donations bar would be more wholesome.I absolutely love this @Thomas Kwa. Something along these lines of thinking has been a deep part of my Christian tradition, from the parable of the widow's mite
"Just then he looked up and saw the rich people dropping offerings in the collection plate. Then he saw a poor widow put in two pennies. He said, “The plain truth is that this widow has given by far the largest offering today. All these others made offerings that they’ll never miss; she gave extravagantly what she couldn’t afford—she gave her all!”
Obviously this is a bit more "deontological" and "heart focused" reasoning but agrees in practise with your comment "one should obviously give up more utility if beneficiaries gain more per unit you sacrifice"
I used to argue that someone who earns 100k and gives 10% has in a non-utilitarian sense might have given "more" than someone who earns $200,000 and gives half away. But I think I almost like your "sliding scale" more as there's some nuance there.
Mostly like the post, but;
strikes me as missing the fact that small donors can spend much more cognition evaluating per unit dollar and are less heavily optimized against, so there are many high EV opportunities which can ~only be picked up by small-scale donors. Especially within-network donations to support projects that are too early stage or speculative to pass grantmaker bars.
Really enjoyed this post thanks. I agree that "the 10% pledge as a social commitment device rather than a sensible rule for how much to donate". It's memorable and simple which is part of its effectiveness, but I like the analysis into the logic and maths of giving which will appeal to whose brain operates that way.