An ethical investment with a 28% annual rate of return that reduces domestic violence

So, charity update. As you’ll know I signed up with GiveDirectly to transfer my beer money to slightly more useful purposes. They’re the charity that Less sclerosis for me, more money for poor people. It’s so pareto optimal.

They’ve done a trial, and it was good news! Of course, they publish plans for all their trials in advance so that even if it wasn’t good news we would still know about it. Take note everyone who’s written a blog post and quietly binned it when the ONS didn’t back you up.

Most of you know I’m a simple kinda guy, so giving poor people money seems like a good idea to me. I see a problem: people lack money. I pretty quickly hone in on a solution. Of course, there are lots of solutions, that are neat, plausible and wrong so I’m happy to see my priors confirmed empirically. 

The full report into their trial recent in Western Kenya took place over 2011-2012 and had some remarkably positive effects. 

  • Business and agricultural income increased 28% of the average grant size, implying a 28% annual rate of return. 
  • Expenditures increased in nearly every category so poor people had more stuff.
  • But not nicotine, alcohol, or gambling. My beer money did not become theirs.
  • Food security improved substantially and children were 42% less likely to go entire days without eating.
  • Mental health improved substantially and it is likely recipients were less stressed. [1] 
  • Transfers did not affect the incidence of crime and conflict or lead to changes in local prices.
  • They found suggestive evidence that cash transfers reduce domestic violence and increase female empowerment.

So that is more investment, more consumption, better mental health, less domestic violence and no increase in other crimes. Seriously, once one starts to think about what giving poor people money can do, it is hard to think about anything else. So, what can I put your down for?

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[1] I’m currently giving £10 a month to Mind, the mental health charity, but I’ll have to work out whether I might be able to help with mental health problems more by just consolidating all my charity into giving money to poor people. The advantage of having an analytical, utilitarian streak is that you can be awesome at charitably giving, but only if you want to.

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