Then Robin Hanson of Overcoming Bias got up and just started Robin Hansonning at everybody. First he gave a long list of things that people could do to improve the effectiveness of their charitable donations. Then he declared that since almost no one does any of these, people don’t really care about charity, they’re just trying to look good. ...

I have never seen a group of distinguished Berkeley faculty gain so sudden and intuitive an appreciation for the Athenians who decided to put Socrates to death. ...

One of his claims that generated the most controversy was that instead of donating money to charity, you should invest the money at compound interest, then donate it to charity later after your investment has paid off – preferably just before you die, since donating money after death is legally complicated. His argument, nice and simple, was that the real rate of return on investment has been higher than the growth rate for 3000 years and this pattern shows no signs of changing. If you donate the money today, your donation grows with the growth rate, but if you invest it, it grows with the interest rate. He gave his classic example of Benjamin Franklin, who put his relatively meager earnings into a trust fund to be paid out two hundred years later; when they did, the money had grown to $7 million. He said that the reason people didn’t do this was that they wanted the social benefits of having given money away, which are unavailable if you wait until just before you die to do so.

And darn it, he was totally right. Not about the math – there are severe complications which I’ll bring up later – but about the psychology. On even the most cursory self-examination, my mind totally recoils at the thought of donating everything I’m going to donate to charity in a single lump sum just before I die. It just gibbers “But…but…you need to be a good person before then!” I’m not saying you can’t tear down Robin’s substantive argument in a bunch of good mathematical ways. I’m saying his ad hominem argument about my motivations seems to be true regardless.

Then he started talking about how you should only ever donate to one charity – the most effective. I’d heard this one before and even written essays speaking in favor of it, but it’s always been very hard for me and I’ve always chickened out. What Robin added was, once again, a psychological argument – that the reason this is so hard is that if charity is showing that you care, you want to show that you care about a lot of different things. Only donating to one charity robs you of opportunities to feel good when the many targets of your largesse come up and burdens you with scope insensitivity (my guess is that most people would feel more positive affect about someone who saved a thousand dogs and one cat than someone who saved two thousand dogs. The first person saved two things, the second person only saved one.) In retrospect this is absolutely true and my gibbering recoil at this problem isn’t just Yet Another Cognitive Bias but just good old self-interest.

via Investment and Inefficient Charity | Slate Star Codex.