You have $1. Where to spend it?

Making government work better.
Feb. 14 2006 12:30 PM

Bang for Your Buck

You have $1. How should you spend it to do the most good?

The other night my wife and I had a big fight in the bathtub when a long-standing cause of trouble in our marriage bubbled to the surface: Once again, she said she wanted to buy an automated external defibrillator for her dental practice.

The idea is that somebody someday might have a heart attack in the office. Even though there is a defibrillator across the street in the fire station, time would be of the essence. The device would cost "only" $1,000.

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The problem is that this well-intended purchase makes no sense to me. In 20 years of practice, my wife has never lost a patient to a heart attack, so I can't see spending $1,000 to avert a one-in-a-zillion chance of death for some stranger. Aged members of our own family do not have a defibrillator, after all, and one of them has actually had a heart attack. The same $1,000, meanwhile, would buy several mammograms for low-income women who couldn't otherwise afford them or might enable Doctors Without Borders to save somebody's life in a bloody region of Africa.

My wife vehemently disagrees with this line of reasoning, but getting in hot water with her brought up an important question that's been nagging at me since the end of December, when we hurriedly scribbled some checks to a few favorite charities in order to beat a tax deadline: What is the best way to spend $1 to make the world a better place?

This turns out to be a complicated question that naturally raises another: why the best way? Doing some good, after all, is vastly better than doing none, and figuring out the very best target is bound to be as costly and unsatisfying as most maximizing behaviors—especially if you're really dealing with a single dollar, a sum best spent on a cup of coffee for a homeless person. But the heated defibrillator debate suggests, to me at least, how much better most of us could do in this department. The money I give with the express intention of doing good, moreover, isn't all mine; by deducting charitable donations from my state and federal income taxes, I'm redirecting some of your money, too.

So, where should you give? Let's review some of the options:

The environment. The problem here is one of scale. Spending a buck to somehow ameliorate global warming, for instance, would seem silly. I once asked Robert N. Stavins, director of the environmental economics program at Harvard, about purchasing carbon offsets to negate my output of greenhouse gases, and he argued that problems like global warming can only be resolved by concerted international action, so anything I could do privately is an exercise in futility, if not self-delusion. I disagree with him on this (see my earlier story on Terrapass and carbonfund.org), but unfortunately global warming is probably not the most cost-effective place to put your money (see Copenhagen Consensus below).

Religion. If crowds really have any wisdom, we have to consider putting our dollar in the collection plate. Religious organizations receive something like 60 percent of all the individual giving that occurs in this country, and that's not counting religious schools or faith-based social services. Unfortunately, it's unlikely that these donations do much to help the needy. Churches put most of their charitable receipts into ongoing operations—buildings, salaries, and the like—spending that essentially helps the giver by keeping his church going. "In this sense," writes Rob Reich, a Stanford political scientist who is writing a book on ethics, policy, and philanthropy, "religious groups look less like public charities and more like mutual benefit societies."

Politics. Giving $1 to my favorite political candidate would support Marx's critique of charity: We should be working for a more just society, not merely tossing crumbs to the poor. By replacing the current administration in Washington with more enlightened leadership, the vast resources of the federal government could be leveraged for positive change. My $1 today could lead to better environmental and educational policies in 2008. The problem is that my donation might just exacerbate an electoral spending arms race that benefits no one except consultants and TV stations. Pouring additional money into the system might worsen its corruption.

Education. Schools, particularly universities, are another major beneficiary of individual giving. Should my $1 go there? Unfortunately, there is not a lot of evidence that additional inputs of money will produce additional outputs of learning. Giving to your alma mater, moreover, strikes me as likely to fuel runaway costs, low productivity, and over-investment in gold-plated student centers. In some cases, such as Harvard, adding $1 to an already-bulging endowment in the face of so much global need is ludicrous. If I wanted to spend in this area and had enough money, I'd pay Catholic school tuition to liberate some poor kid stuck in an inner-city public school.

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