The Moral Implications of Spending Money - Effective Altruism

If you earn $52,000 a year, you are one of the top 1% richest people in the world.^[1] The average American household brings in $51,939 a year.^[2] These facts raise some concerns.

First and foremost, the fact that earning $52,000 a year makes you rich by global standards says a lot about the economic conditions of the world as a whole. Many American families earn more than this amount and still manage to amass huge amounts of debt by spending on unnecessary luxuries, meanwhile families in underdeveloped parts of the world are still struggling just to have their basic needs met.

Clearly, there is a disconnect between those of the prosperous, developed world and those suffering in third world countries. We have the means to greatly impact global poverty and health concerns, and yet this possibility does not seem to mean a great deal to enough people.

First, let's start by considering a popular thought experiment on the subject.

Imagine you are walking alone in a park wearing a $3,500 suit when you notice a child is drowning in a pond nearby. If you choose to save the child you will ruin your $3,500 suit in the process. Do you save the child or save your suit?

I'm assuming it did not take you long to decide you would save the child. Now, consider the fact that there is a charity that saves an average of one child's life for every $3,500 donated.^[3] Armed with this fact, there are now some startling implications to consider when deciding how to spend our money.

Every $3,500 spent on unnecessary luxury items is really just self-indulgence at the expense of a human life.

You could spend $3,500 upgrading your current TV to a 65" Curved 4K TV, or you could save a child's life. And yet chances are you have lost no sleep to decisions like this. Why is that?

The fact that we do not see the worst suffering in the world during the course of our normal, everyday lives explains why we are so oblivious to it. There is a considerable difference between actually seeing children by the thousands dying of malaria with your own two eyes and hearing about them on a commercial. The real issue at hand seems to be awareness.

Using your money in self-indulgent ways does not make you a bad person. It is a seemingly morally indefensible choice, but perhaps one you would not have made if you were aware of other options, such as saving a child's life through charitable giving.

Spending money is a zero sum game. In order to gain one thing you must give up the possibility of gaining another thing.

The way we spend our money has consequences. If we choose, both individually and collectively, to spend the majority of our money on unnecessary items and activities, we have chosen self-indulgence over human life.

On the other hand, it seems as though giving up all of the unnecessary, yet pleasurable, luxuries of prosperous life would be a great sacrifice. You may, however, find this is not the case at all, and this is why most effective altruists recommend an approach based on sustainability. In other words, just give it a try.

Start by committing to give 10%, or even just 5%, of your income to an effective charity. If you find you are comfortable with the resulting lifestyle, try and increase the percentage.

Ultimately the goal is to give as much as you can to the right places, but you probably shouldn't try to strive for this ideal from the start if it means a radical change in lifestyle. You should work up to it gradually.

Perhaps the most interesting aspect of committing to an altruistic lifestyle is that it can make you considerably happier.

Research in the field of the psychology of happiness shows that circumstances only account for about 7-12% of our overall happiness level once our basic needs are met.^[4] We are incredibly adaptable creatures, and a cut in income probably wouldn't affect your happiness level nearly as much as you expect. In the case of donating that income to charity by committing to effective altruism, it can actually make you much happier.

What if donating disposable income that would have otherwise been spent on unnecessary indulgence actually leads you to a more sustainable, long-lasting form of happiness?

Perhaps one of the greatest side effects of pledging a considerable portion of your income to effective altruism is the way it can rip you right out of the vicious circle of materialistic greed. The pleasure gained from buying something new often disappears quickly and can actually lead to you being unhappier than you were before you purchased the item.

On the other hand, the pleasure and satisfaction gained from knowing you are making a massive impact on the wellbeing of other human beings - actually saving lives - is a long-lasting type of gratification far superior to any superficial desire.

All things considered, leading an altruistic lifestyle may be the best thing you can do if you desire long-term happiness.

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I hope this article has encouraged you to consider the implications of spending large sums of money on things you don't need and has provided you with a potentially life-changing alternative. Effective altruism is a way of not only changing the lives of the recipients of its charity but also those giving it. Try it yourself.

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^[1] The Haves and the Have-Nots by Branko Milanovic
^[2] Household Income in the United States
^[3]Against Malaria Foundation
^[4]The Ultimate Happiness Prescription by Deepak Chopra