Heavy Tails and Altruism: When Your Intuition Fails You
By: Jan Michelfeit
Tags: Careers, Philanthropy, Charity, Effective Altruism, Giving

Take a moment to let these findings sink in. What decisions in your life can lead to ten times the difference or more? Which don’t? When do you need to try many options before you know what’s possible? What might you be underestimating?

Lessons for life and altruism

Heavy tails can sometimes be found in places where we have many options but where only a small fraction is substantially better than others. Here are some practical examples.

Lesson 1: Be deliberate in your altruism

If you have ever donated to a charity, think about where that money went for a moment. If the impact of charities followed a heavy-tailed distribution, it would mean a couple of things.

First, finding the top charities or interventions would make a tremendous difference. This, in turn, means that the effort that goes into discovering the best interventions is very valuable. Compare this to the traditional way we donate — based on who approaches us on the street or what problem we feel a personal attachment to.

Second, established charitable organizations often offer a wide variety of programs they fund. If we don’t know any better, this looks like a good idea — it’s like a wide investment portfolio: there is less risk of neglecting a cause and everybody can choose their favorite. But understanding heavy tails tells us that charities with few highly effective projects will do better than those with many projects of unknown impact —the vast majority of randomly chosen projects will have effectiveness below average. (That’s not to say they choose randomly, but measuring impact is really hard and as a result often neglected).

Finding the top causes or charities or interventions would make a tremendous difference. But does charity impact have a heavy tail and can we tell what it is at all?

You may be thinking: this is nice in theory, but does it apply to the real world? Does charity impact has a heavy tail and can we tell what the impact is at all? The best data we have is on health interventions, where analysis by the DCP Project shows their cost-effectiveness does follow a heavy-tailed distribution indeed. There is other evidence that some interventions within a program area are often more than ten times as effective as others, even when excluding entirely ineffective programs. And different program areas themselves can have huge differences in their importance.

So not only how well I do, but what I set out to do in the first place makes difference? Fishing or gold mining? It seems so — according to 80,000 Hours, to pick the right cause area is the most important thing, while picking the right intervention can give you an additional 2–3x boost.

If you don’t want to miss on opportunities, a good starting point is the research by 80,00 Hours on the most pressing problems or advice on effective charities from GiveWell.

Lesson 2: Know when to trust your experience and when to trust experts

We talked about how we cannot trust our experience in situations where the risks have a heavy tail. The COVID-19 pandemic is a great example of an event eclipsing any other experience we’ve had about infections in our lifetime. Comparison to something familiar, like the flu, does not quite capture the overall impact it has had.

The lesson here is: learn when to trust your experience and when to trust experts. It’s not one or the other, it all depends on the context.

Here is one rule of thumb: In areas where things are almost never 100x better or worse than most, you can probably learn from experience. Otherwise, the heavy tails may rule and field experts (especially with mathematical background) deserve our full trust. If you are choosing a plumber or a dentist, one probably won’t be 100x better than most and you can learn how to spot a good one. But when there are rare 100x better nonprofits, you should not judge the nonprofit sector by what your limited experience has been so far. Nor should you for pandemics.

When there are rare 100x better nonprofits, you should not judge the nonprofit sector by what your limited experience has been so far.

Lesson 3: Know what to expect from hiring

80,000 Hours says there is some evidence the individual job performance does not have a heavy tail even in complex jobs (e.g. a doctor). But the variance is high in the tails for the most difficult and creative work like academic research and this could have implications for hiring.

But that’s just individual job performance. The total impact one has is likely a product of individual performance, the effectiveness of the organization, the importance of the problems one is working on, and other factors. Like cogs that fit together to multiply their speed. This is exactly the kind of situation that gives rise to heavy-tails.

What this means is that you don’t need to be exceptionally talented yourself to have a large impact if you use the right leverage. And it turns out that choosing the right career may be one of the most impactful things you can do in your life.