Emotion & Logic in Philanthropy

Why do you give? Why do you take your hard-earned cash, your limited free time and give it away? Why do you work on Cause X instead of Cause Y? Why do you decide to give it to Nonprofit A that focuses on your chosen cause and not Nonprofit B that works on the same cause?

Conventional wisdom is that donors respond to emotional appeals because they give out of empathy. But a new paradigm is emerging. A donor mentality that is driven more by logic and research studies. Empathy will always be at the heart of why donors give. But will the choices they make about who they give to begin to be framed by an analysis of goals and effective methods for achieving those goals? I think so.

A recent study out of Wharton called “Sympathy and callousness: The impact of deliberative thought on donations to identifiable and statistical victims” looks at this issue (hat tip to Katya Andresen):

When donating to charitable causes, people do not value lives consistently. Money is often concentrated on a single victim even though more people would be helped, if resources were dispersed or spent protecting future victims. We examine the impact of deliberating about donation decisions on generosity. In a series of field experiments, we show that teaching or priming people to recognize the discrepancy in giving toward identifiable and statistical victims has perverse effects: individuals give less to identifiable victims but do not increase giving to statistical victims, resulting in an overall reduction in caring and giving. Thus, it appears that, when thinking deliberatively, people discount sympathy towards identifiable victims but fail to generate sympathy toward statistical victims.

The study quotes Mother Theresa: ‘‘If I look at the mass, I will never act. If I look at the one, I will.’’

Here’s the thing. Most investors, both professionals and amateurs, let emotion drive their decision making process. But there is still far more logic that goes into the process of investing than currently is used in giving. I don’t think emotion will ever be taken out of the act of giving (nor should it). But I do think there is a “logic gap” in how philanthropy is practiced and I think this gap is just beginning to be filled.

The high tech philanthropists are especially noted for their interest in “logical giving”. One reason may be the way that computing changes the way people think about numbers. A recent Wired Magazine article looks at Bill Gates, the way he processes large numbers, and how it affects his philanthropy:

Bill Gates is an improbable humanitarian. He built a reputation as a nightmare boss at Microsoft, a totalitarian who screeched at employees he thought were stupid. He bludgeoned competitors with his illegal monopoly. And he’s a nerd’s nerd — someone who seems perennially uncomfortable around people and only at ease dealing with the intricacies of software code.

And that is precisely why he’s now saving the world.

…The guy is practically a social cripple, and at times he has seemed to lack human empathy. But he’s also a geek, and geeks are incredibly good at thinking concretely about giant numbers. Their imagination can scale up and down the powers of 10 — mega, giga, tera, peta — because their jobs demand it.

So maybe that’s why he is able to truly understand mass disease in Africa. We look at the huge numbers and go numb. Gates looks at them and runs the moral algorithm: Preventable death = bad; preventable death x 1 million people = 1 million times as bad.
We tend to think that the way to address disease and death is to have more empathy. But maybe that’s precisely wrong. Perhaps we should avoid leaders who "feel your pain," because their feelings will crap out at, you know, eight people.

What we need are more Bill Gateses — people with Aspergian focus, with a direct sensual ability to understand what a million means. They’ve got to be able to envision every angel on the head of a pin. Because when it comes to stopping the mass tragedies of today’s world, we’re going to need every one of them.

You can read the whole article (which talks about the Wharton study) here.