Options and donations #2

Previous post was about the effect of number of available option on donation amounts.

It turns out that more options give a sensation of more need, which in turn increases the willingness to donate and the donation amounts.

How would one, then,  distribute those contributions when there are multiple options?

This is important, as there is a variety of  NGOs out there competing for our contributions.

In an article published in Judgment and Decision Making, Robin Hogarth and I looked for answers.

We found that the more NGOs we face, the more variable are our contributions. Known NGOs enjoy more the benefit of larger donations due to higher number of options. Unknown NGOs, on the other hand, get less and less as the number of alternatives increases. Competition favors the known organizations.

Interestingly, when we considered campaigns, we observed the opposite. The contributions became more equally distributed across campaigns as the number of options increased from 1 to 13.

Finally, in terms of how NGOs ask for donations in online environments,  results suggest that when organizations make us choose one option among many through some drop-down menus, donations do not increase with the number of options. The positive effect due to increased options disappears.

All the donation sites we reviewed feature some kind of a menu: they offer large number of options, but constrain us to choose one of them as the recipient of our contribution.

This strategy is not optimal!

They should instead let us distribute our donations across their campaigns.

Options and donations #1

Say you want to make a donation.

You have maximum 10o dollars to spare.

You first look for organizations that need and ask for your money.

Let’s say you notice 3 of them; say

Unicef
Oxfam
Mercy Corps

How would you give your 100 dollars away?

Would you give all of it? Or maybe keep some for a next time?

What if, instead of 3, there were 8 of them actively auditioning for your money?

Children’s Network International
Every Child
Global Fund for Children
Mercy Corps
Oxfam
Stop Child Poverty
Unicef
United Children’s Fund

How would you feel now?

What if there were even more of them, say 16?

Care
Children in Crisis
Children’s Network International
Doctors Without Borders
EveryChild
Global Fund for Children
Mercy Corps
Oxfam
Plan International
Serving Our World
Save the Children
SOS Kinderdorf International
Stop Child Poverty
Unicef
United Children’s Fund
World Emergency Relief

It turns out, people donate more when they face more alternatives.The reason, I suspect, is that when there are 3 NGOs asking for help, we perceive a certain need for aid, But when there are 16 of them, the need for aid we perceive is much greater.

Now the question becomes?

How would you distribute your money when there are 3 NGOs?
How would you distribute when there are 16?

More on that later…

Birth luck

How did you become the person you are? What decisions defined your current employment, your current social life, your current house, car, possessions, tastes?

Possibly, many past decisions led you to make other decisions, seize the opportunities and acquire the knowledge and wisdom that brought you where you are right now. In business and leisure, it seems we are the sum of our decisions.

Are we?

Think also about the beginning. How much would you say our birth conditions played a role in our present situation? How much did the initial conditions influence the current state of things?

One rarely asks this question.

Would I be able to enjoy the same decisions, opportunities and accomplishments were I born in Lesotho to a single mother, or in Afghanistan to a family with seven children? What if I were raised by a wealthy family, but in 1542.

How much of one’s success in business or life should be attributed to one’s decisions? I am not sure.

Given the difficulty of the question, I propose another way of looking at this issue. Consider a donation decision.  Some charity, campaign or person is asking for your contribution. Why don’t you try to base part of your decision on the initial conditions of the recipient? Was the recipient of the your contribution underprivileged from the beginning? Would she be able to have a similar life as yours, if her birth conditions were like yours?

I think one would be fairer if he acknowledges the power of birth luck.

Life saver

There are many great ideas out there. From arts to science, technology to popular culture, everyday we face new concepts that affect us. We do not have to like them all, but at least most of them deserve our respect and understanding.

Lifesaver Bottle is beyond that. It is almost too good to be true. It is not only a great idea, but it has already been developed into a great product. I haven’t seen one. I never used it. But it sounds absolutely fantastic.

The idea is very simple. It is a small, portable bottle that transforms any dirty, disease-infected source of water into a safe, drinkable, sterile one. You can literally get some water from the nearest muddy and filthy pond, filter it through the Lifesaver Bottle and drink it after just a few seconds.

When a disaster hits, finding clean water becomes one of the main concerns. In many parts of the world, you do not even need a disaster to make drinkable water scarce. People die by millions. One small bottle can prevent it.

I am disappointed in myself. Why did I not find out about this before? As far as I can tell it has been around for some time. Why aren’t news channels and government agencies shouting about this bottle? Why aren’t there any competitors with similar products/technologies?

Here, you can hear its inventor talk about the Lifesaver Bottle and see what it accomplishes.

Is it too good to be true?

Dog s#@t

After two hours of sitting in the warm conference room I started to see short, surreal dreams, the ones that you see just before falling into a deep sleep. I was at a series of seminars where entrepreneurs presented their innovative ideas to angel investors, who were there to decide whether or not to pump vast amounts of money to these ventures. They literally had their checkbooks ready before them. It was a race of ideas with real consequences.

The presentations were mostly enlightening, ranging from music technologies that tell you whether or not a song will be a hit, to data storage systems that never lose anything. This last guy was not so enthusiastic though, which certainly contributed to my dizziness. Especially when asking for their hundreds of thousands of dollars, you should avoid fusing peoples’ brains by showing them slides with yellow background and five paragraphs written on them with 11pt orange font .

When the guy finished, we turned to the big screen where the next contestant would make his talk through video conference. “Today, I will talk to you about dog s#@t” he said with a harsh accent. My eyes opened wide. “Did you know that there are one million dogs in this country, who s#@t everyday, twice or more. They do it on Sundays too.” Everybody was stunned. What the hell was going on? Then he took (I hope) a plastic dog poop out of his pocket and threw it on the ground. “Two million times a day people have to touch and grab this thing before throwing it to the dumpster. It’s not a good feeling.” He was right. “And two million dog s#@ts a day mean two million nylon bags a day. Hundreds of millions of non-degradable nylon bags a year, just for dog s#@t!”

He was promoting a new degradable bag designed for just this purpose. In particular its shape was like a small shovel which then transformed into a small sack. He showed us how it is used right there on the fake poop. People were crying of laughter and amazement. Everything happened so quickly. If I had any, I would have invested my money in his brilliant and effective idea. His show lasted fifteen minutes. After that people needed a break to compose themselves.

Who new talking s#@t could be so interesting?

Here is the company and the product if you are interested.

Transparency

Transparency of a description denotes how correctly it is perceived and accurately understood by people. If I tell you that, as a side effect, the use of a certain drug increases the probability of say, becoming completely bold by 100%, you would have second thoughts about even touching the pill. But you are missing a crucial piece of information there: the base on which this statistic was calculated. For instance, an increase from one in a million to two in a million would also constitute a 100% increase. The drug seems less scary now, doesn’t it? Hence, the description that includes the base rates is more transparent to the human mind in this case.

Gerd Gigerenzer, Wolfgang Gaissmaier, Elke Kurz-Milcke, Lisa M. Schwartz and Steven Woloshin, in their 2007 report published in Psychological Science for Public Interest (downloadable here), dug deeper into the issue. At one point, they talk about why abortions in England and in Wales increased dramatically around 1995. The reason was that the birth control pills were rumored to have an undesirable side effect, expressed in a non-transparent way, which created an overreaction against their use. Ironically, it was found that the abortion procedure increases even further the probability of facing the same side effect, hence the importance of transparency of a description, especially in medicine.

The most curious cases are medical tests. They can make two types of mistakes: finding a sick guy healthy or a healthy guy sick. They are commonly designed to avoid more the former one (finding a sick guy healthy). On the other hand, one can observe more cases where they find a healthy person sick, especially if there are much more healthy people than sick ones. Consider a test that always correctly identifies a sick person and fails to find a disease (correctly) in a healthy person 90% of the time, i.e. 10% of the time it erroneously claims that a healthy guy is sick. Say that the probability that a random person in the population has the disease is 1%. We grab a random guy from the population and test him. The test says he has the disease. What is the probability that he is really sick then?

Answer: Take the test again.