Harvard MBAs biggest opportunity for career impact? Giving their money away.
In a few short weeks, the 900+ students of the Harvard Business School MBA Class of 2016 will graduate. There is no doubt that these remarkable people will do great things in the world. But most likely, few will become CEOs of Fortune 500 corporations. Fewer still will be wildly successful entrepreneurs. Chances are, their efforts will improve the world without having a truly remarkable marginal impact.
We should be measured on our marginal impact
The concept of marginal impact is critical. A CEO who creates jobs, protects the environment, pays the fair rate of tax and generates fair returns for shareholders does an enormous amount of good. But the marginal amount of good they do is limited to the difference between their impact and the counterfactual impact of the next best candidate for the job. Viewed in marginal terms, the impact of the work of the vast majority of MBAs will be impressive in absolute terms but modest in marginal terms.
Instead, the biggest opportunity we have for impact will come from leveraging something we all have in common: we are (or very soon will be) tremendously rich.
Consider this: We are not just “the 1%” — globally we are the 0.1%. The median graduate salary and bonus for the HBS Class of 2015 was about $150,000. A single person with that income has a disposable income in the top 0.1% in the world, even adjusting for the higher cost of living in the United States. Even supporting a partner and two children, that income puts you in the top 0.9%.
A small share of our large incomes can make a huge difference
Using our position in the 0.1% is so important because a new generation of highly transparent, evidence-based and cost effective charities can do an astounding amount with a small slice of our large incomes. These “Effective Altruism” charities are strongly evidence based, highly transparent, and rigorously evaluated. The broader Effective Altruism movement identified them by researching how a dollar of charitable giving can have the maximum possible impact in terms of improved health and lives.
This may seem like commonsense, but in fact it is estimated that only 3% of the $250+bn given to charity by US individuals each year is given on the basis of evaluated relative impact. We would never consider investing in a business without researching its impact (for profit, or otherwise). Giving to charity is investing on behalf of others, and we should apply the same high standards and analytical rigour.
Right now, children in the developing world are dying of malaria, or diarrhea. Six million people die every year from diseases we can barely even conceive of as fatal. They die because they lack things we can easily and cost effectively provide: mosquito nets, clean drinking water, electrolyte tablets and de-worming treatments.
If the entire HBS MBA Class of 2016 gave one per cent of our incomes to the Against Malaria Foundation in the next year, we could distribute over 560,000 anti-malarial bed nets, protect 840,000 people from malaria for three to four years and save over 400 lives.
400 lives. Next year. We can do this.
Perhaps most importantly, these will be marginal lives saved: if we do not donate, these lives will not be saved. At present, the Against Malaria Foundation has capacity to receive $100m in incremental donations while achieving the cost effectiveness I used to estimate the above impact.
Giving to save lives is an exciting opportunity
Starting with our wedding gifts and my hedge fund signing bonus, my wife and I have pledged to give 10% of our income to Effective Altruism causes for the foreseeable future. We hope to increase that proportion over time.
At the same time we have been spreading the Effective Altruism message in the HBS community. So far, since the fall, we have hosted over 50 of our classmates and their partners for dinners at our house where we discuss the opportunities available to us all to save lives. Already over fifteen of our classmates (to date) have joined us by pledging to donate one percent or more. In the weeks leading up to graduation I expect this number to grow even further.
Honestly, giving 10% of our incomes or hosting dinners multiple nights of the week doesn’t even register as a sacrifice. It’s thrilling to be able to regularly contribute to organizations that will save and improve the lives of people who haven’t drawn the same numbers we have in the lottery of life.
However meaningful 1%, or 5% or, 10% or 20% of our income is to us — in nights out, loan repayments, Manhattan rent, or trips abroad — the money is infinitely more meaningful to the people whose lives it can save.
Nothing about saving these lives stops us supporting other causes. We can still support medical research, our alma mater or our churches. Indeed adopting the Effective Altruism mindset, by looking at the relative impact and cost effectiveness of the charities we support will improve our impact in the other areas we donate. Greasing the groove of effective giving through these causes will make is better philanthropists for the rest of our lives.
Our MBA class, like others at different schools, and others before us, will achieve great things. But in terms of making an impact that otherwise would not have been made, joining together to use some of our tremendous wealth to save lives can be the greatest.