Undercover Economist

Ice bucket challenge: the cold facts

In a world of limited generosity, who is to say which cause should be at the head of the queue?

Last week I finally succumbed to social pressure and invited some colleagues at the BBC to film me having a bucket of iced water tipped over my head. As surely nobody needs telling by now, the deal is that people film themselves being drenched, donate money to the US-based ALS Association or its British equivalent, the Motor Neurone Disease Association, and then nominate three further people for the same treatment.

The challenge is an infectious plague, humiliation TV and pyramid scheme all rolled into one, and it’s fundraising genius. Lady Gaga’s done it; Mark Zuckerberg has done it; George W Bush has done it. By the time this column is in print, I imagine everyone on the planet will have done it.

Social pressure is a powerful thing, and it’s refreshing to see it being used to spread smiles and encourage a generous spirit. This is not new, of course. Charities have long sought celebrity endorsements, and seeing famous people have liquids poured on them is a venerable tradition. As for seeking sponsorship to run a marathon or climb Kilimanjaro, we all know that shamelessly pressuring friends and colleagues to give money is the very essence of the exercise.

Peer pressure can also produce reluctant givers. Adriaan Soetevent, an economist at the University of Groningen, studied church collections in an open basket versus a closed collection bag. The open basket elicited larger donations. And in another clever field experiment run by three economists, Stefano DellaVigna, John List and Ulrike Malmendier, fundraisers went door to door raising money. Some households, chosen randomly, had received a flyer warning them exactly when the fundraisers would be around: this warning dramatically increased the chance that the door would not be opened. Not all of us welcome the opportunity to give money to randomly selected charities, it seems.

This time, the social element seems to be a source of no small joy: at a family gathering recently, people were gleefully ice-bucketing each other until the garden had become a swamp. Surely the ice bucket challenge is a good thing, raising money for a worthy cause while giving us a good chuckle into the bargain.

But any good economist has to ask – and I do apologise about this – “a good thing compared to what?” Some critics have suggested that charitable donations are a zero-sum game: more money for the ALS and MND associations means less money for other charities. The evidence for that proposition is thin, as it happens, but even if the many tens of millions raised by the ice bucket challenge are brand-new charitable giving, we could still ask where that money would best be spent.

The strength of a viral giving campaign is also its weakness: people join in for a laugh because their friends have put them up to it, rather than because of a logical analysis of the most worthy cause. Motor neurone disease traps people in their own bodies as they lose the ability to move, speak, eat and, eventually, even to breathe. It is a truly dreadful condition – but so is bowel cancer, fatal diarrhoea or simply starving to death. In a world of limited generosity and finite resources, who is to say which cause should be at the head of the queue?

The fact that ice-bucketeers are donating to the ALS Association feels entirely arbitrary. If the Red Cross or the American Cancer Society had happened to be the beneficiaries instead, very little else about the viral campaign would have changed. Would that have been a better situation?

GiveWell is an organisation which seems well placed to answer such questions: it aims to give donors the information they need to make the most effective donations. It sounds like an impossible job. GiveWell’s approach is to find cost-effective, evidence-based approaches such as distributing antimalarial bednets, and then search for transparent, efficient charities pursuing that approach. One of their top recommendations, for example, is the Schistosomiasis Control Initiative – a charity that could use a catchier name. It organises treatment for parasitic worms, a very unsexy cause indeed. But the worms can do a lot of harm and are absurdly inexpensive to treat – hence the finding that the SCI offers value for your donated money.

In the end, I sent a few pounds of my ice bucket donation to the Motor Neurone Disease Association. It would have felt wrong, somehow, to do otherwise. I sent a more substantial donation to SCI, surely one of the least media-friendly charities on the planet. All lives are equally valuable but some lives may be saved far more cheaply than others. It seems strange not to respond to a philanthropic bargain.

No doubt some will find this line of reasoning colder than a bucket full of iced water. But the truth is that whenever we give money to one cause rather than another, we’re making a decision about how deserving that cause is. When a social media campaign gathers momentum, it is human nature to make that decision spontaneously and without a moment’s reflection. It feels good. But feeling good and doing good are not the same thing.

You can donate to the SCI at www3.imperial.ac.uk/schisto

Also published at ft.com.