expected value

When I tell people I used to work for UNICEF, some of them ask me whether it’s worthwhile giving money. Being somewhat cynical about development aid, it’s a hard question for me to answer, and usually I give some long-winded and vague response. I have written before about the problems of development, so I won’t revisit them now. Rather, recently I thought of what the proper response to that question is, or at least, the way I think about it now.

There’s no guarantee the money you give to charity will help. Sometimes it may hurt. But in general, and especially regarding the best organizations like MSF, Oxfam, UNICEF, etc, charity is at worst ineffective. It’s at worst a waste of money. But we gamble on things all the time. We gamble on a movie we haven’t seen, betting that we’ll enjoy it. Or going to a restaurant we’ve never been to, or try a dish we’ve never had. Gambling is simply part of life.

With something as complicated as development, you can’t expect a guarantee that it’ll help a child go to school, or give a sexually abused girl psychological counseling, or save someone’s life. The question is not whether charity will definitely help. The question is whether you’re willing to take the gamble that it might.

When I give money, or when I work for an organization like UNICEF, it’s not because I know it will help. There may be only a 10 or 20 percent chance that I will do any good, but when we’re talking about saving a life, or giving a child an opportunity to have a future, that’s a gamble I’m willing to take.

I was also thinking about this recently because it relates to life in general. Most of our decisions are gambles. The trips we take, the hotels we stay at, the bars we go to. We obviously have ways of calculating the odds, but in the end, it’s a roll of the dice. In probability, they talk about the “expected value”, where you calculate the risks and potential reward or loss, and then get the expected value of any endeavor.

A few of you will know what I’m talking about, but I suppose I decided the odds are low anything will happen or work out with the path I’ve set myself on. But even so, if it does, the rewards, the benefit could be so great that the expected value is still high, and the gamble is the right one.