The role of economics in ethics

Economics doesn’t have a reputation for being a particularly ethical profession, but the new book by William MacAskill might help change that. Many of the concepts laid out in Doing Good Better--such as counterfactuals, diminishing marginal utility, and fat tail distributions--will be familiar to economists. What is unusual is to see these tools used to develop a practical guide on how to live an ethical life. MacAskill doesn’t tell you what choices to make; instead he sets out a simple framework for how to think through decisions like whether to be a vegetarian, what job to take, whether to buy fair trade coffee, and where to donate. He also provides a lot of useful numbers for thinking through these decisions.

As an example, MacAskill discusses the choice of career. We might naively think that we should adopt a career that directly helps people, like being a doctor. But MacAskill urges the reader to think through the counterfactual: what would happen if we did not become a doctor? In many countries the number of doctors is highly regulated. What do we think would happen to the average quality of medical care if we did not become a doctor but another person filled the slot in medical school instead? Are there other careers where our marginal impact might be higher? It’s a difficult question but making a career choice is a big decision that deserves some careful, structured thought.

I like to think I approach ethical decisions reasonably logically, but there were a number of cases where this book made me question what I am doing. For example, I am a vegetarian who eats eggs. MacAskill argues, however, that eating eggs may cause more animal suffering than eating beef. If we are making a commitment such as being a vegetarian, isn’t it worth investigating a bit more thoroughly what the consequences are? (The discussion about vegetarianism is also a good example of how ethical decisions are not zero/one, or right versus wrong, but more on a continuum.) 

I appreciate how Peter Singer, this book, and Effective Altruism have directly taken on the all-too-common view that we have a stronger duty to fix the problems closest to us compared to those of people who live far away. Will MacAskill nicely brings together the concept of diminishing marginal utility and results from happiness research to suggest that $100 in a poor county could generate 100 times more utility than $100 in the US. You can quibble with the exact numbers but the basic idea has to be right.

Daron Acemoglu and Angus Deaton have recently hit out at Effective Altruism in a reply to Peter Singer’s article in the Boston Review. They mainly use their articles to argue for more focus on institutions (Acemoglu) and to attack governmental aid policies that support dictators (Deaton). This book shows how narrow and misguided their view of Effective Altruism is in comparison to the reality. For example, MacAskill discusses the benefits of investing in actions with low probabilities of high rewards, such as efforts to change institutions. (As an aside, if we want to move the discussion on institutions forward we need to go beyond showing they matter to testing practical options for change.)

While Effective Altruism is about a lot more than aid, there is a thought-provoking point on aid. Small pox eradication has saved between 60 and 120 million lives. If it were the only achievement of all aid ever given to developing countries, we would have spent $40,000 for every life saved from aid, making it highly cost-effective (compared, for example, with the FDA's cost-effectiveness threshold of $7.9 million per life saved). Deaton argues that this fails to take into account the cost of aid in propping up regimes who suppress human rights in developing countries. MacAskill and others would clearly want to take into account any negative general equilibrium effects of aid. I agree with those who stress the importance of human rights and democratic freedoms—the poor deserve these as much as the rich do. I have been shocked by the West’s unwillingness to protest the overthrow of democratically elected governments around the world, including in Bangladesh and Thailand.  But it is a big jump to go from caring about democracy to saying that all support to the poor in all developing countries simply props up bad regimes. There are democracies among poor countries and there are better and worse ways to support the poor even in less-than-perfect democracies.

Deaton’s argument that providing succor to the poor in less-than-perfect regimes is dangerous because it provides credibility to these regimes, reminds me vividly of the arguments communists made against social democracy in Europe from Marx in the 1840s to my college days in the 1980s. Pensions, unemployment insurance, public education, and welfare would sap the poor’s willingness to rebel and create regime change and thus should be opposed. I didn’t buy it in college and I don’t buy it now. To be concrete, one of the recommendations in Doing Good Better is GiveDirectly, which gives money directly to poor families in Kenya: a democracy, although far from a perfect one. If $100 is 100 times more valuable to a Kenyan than to an America, I would want pretty strong evidence that this giving made the Kenyan regime less democratic before thinking such giving was a net negative. It seems just as plausible to me that giving a poor Kenyan $100 puts them in a better, rather than worse, position to lobby for improved government.

There is one part of MacAskill's book where I have a different perspective from him: that effective altruists might do more good "earning to give" in a high-paid job than working for a development agency or NGO. I worry that he underestimates the change in preferences someone working in banking may undergo. I also feel that development NGOs and agencies could be more effective if a higher proportion of their staff were quantitative-minded people who carefully think through counterfactuals and trade-offs in the way effective altruists do. In other words, unlike the doctor case, its not clear to me that if effective altruists stop pursuing these types of jobs that these positions will be filled with people who are just as effective.

A fundamental position of Effective Altruism is that we have a moral obligation to not just do good, but to think more carefully about how to do good more effectively. To me, being an Effective Altruist is the logical consequence of being an economist who thinks about effectiveness and wants to be ethical. (In a previous blog I discuss some ways in which Effective Altruists have raised important and interesting technical challenges about some economics methodologies).

In the interests of full disclosure, the first chapter of Doing Good Better has a description of how the recent wave of randomized evaluations in development economics started in which I feature (too prominently).