Some charities are much more cost-effective than other charities, which means that they can save many more lives with the
same amount of money. Yet most donations do not go to the most effective charities. Why is that? We hypothesized that part
of the reason is that people underestimate how much more effective the most effective ...
Some charities are much more cost-effective than other charities, which means that they can save many more lives with the
same amount of money. Yet most donations do not go to the most effective charities. Why is that? We hypothesized that part
of the reason is that people underestimate how much more effective the most effective charities are compared with the average
charity. Thus, they do not know how much more good they could do if they donated to the most effective charities. We studied
this hypothesis using samples of the general population, students, experts, and effective altruists in six studies. We found that
lay people estimated that among charities helping the global poor, the most effective charities are 1.5 times more effective than
the average charity (Studies 1 and 2). Effective altruists, in contrast, estimated the difference to be factor 30 (Study 3) and
experts estimated the factor to be 100 (Study 4). We found that participants donated more to the most effective charity, and less
to an average charity, when informed about the large difference in cost-effectiveness (Study 5). In conclusion, misconceptions
about the difference in effectiveness between charities is thus likely one reason, among many, why people donate ineffectively.
