Setting our salary based on the world’s average GDP per capita

By Joey🔸 @ 2017-08-26T19:57 (+34)

A lot of people in the EA movement have a large say over their salary, whether it be earning to give where you can donate down to a certain amount or working for a nonprofit where you take a lower salary. EAs are a unique group in that many of them are taking a salary they feel is ethical instead of the average amount the market would pay for someone of their skill set. So what amount is ethical?

One model I really like the idea of, and Katherine and I have decided to use for now, is taking a look at the world average GDP per capita(1,2). This comes out to about 10k USD per person or about 20k USD for a couple, although estimates vary and there are other plausible models (e.g. this number does not take into account PPP adjustments). This approximate world average has a very strong intuitive appeal to us, because it’s what somebody would get paid if there was complete equality. It fits well with utilitarianism and the veil of ignorance arguments. It also nicely goes up over time (as world poverty is going down and inflation happens) and is currently achievable for a couple with no children in many first world cities (I personally live in Vancouver but have also lived off similar/less wages in Oxford). I personally do not feel this model impairs my work productivity (I pay for many time saving luxuries such as having a dishwasher, premade vegan meals and getting my groceries delivered) nor is it is a strong self sacrifice (I live in a safe part of town at a decent level).

For people interested my monthly budget breaks down roughly like this (per person USD)

Rent $220, Utilities $37, Phone bill $19, Internet $25, Food $170, Transportation $50, Other spending $150, Saving $100, Taxes $35.

There are some things that are specific to my life that is not replicable. For example having no healthcare costs due to living in Canada, sharing a room with my wife, and having no student debt. There are some sacrifices for sure. I do not own a car (although I do have a car-coop membership); I do not eat out often (maybe once a month); I don’t do expensive activities (like rock climbing), the basement suite we are renting is old and things occasionally break down; I live with a roommate as well as my wife; and I do not travel often.

But I really feel far from deprived, especially after seeing poverty first hand in India. I never feel hunger or live without heat. I never live paycheck to paycheck and always have thousands of hours of entertainment at my fingertips. I end up living like a lot of people lived in college. I’m posting this because I think a lot of other people can do this too if they try and want to show that it’s possible.

CarlShulman @ 2017-08-28T17:54 (+21)

As with Eric, I'd like to express praise for your altruism, respect for your choice, but raise some cautions about the idea of a global human mean income as global norm.

I think it makes sense to think about this in terms of market compensation (including wages and nonpecuniary benefits) and explicit and implicit donation thereof. Depending on people's opportunity costs that salary could represent a large boost in income relative to their outside prospects, a 10% donation rate, 50%, or 99%+. I'd also think about to what extent the change in donation affects your impact (positively and negatively). The degree of sacrifice and magnitude (and sign) of impacts will be enormously different across cases.

This approximate world average has a very strong intuitive appeal to us, because it’s what somebody would get paid if there was complete equality.

Some thoughts on this:

If you include nonhuman animals then mean income is orders of magnitude less; even adjusting for cost of living, that would imply low subsistence wages, i.e. absolute poverty and <$200 for humans (which would be clearly highly counterproductive)
Equal allocations of income would leave no extra for those expensive needs, e.g. health conditions that require hundreds of thousands of dollars per to survive, young vs old
If equality meant bringing up productivity and conditions for poor people, then total and per capita output could rise several fold; if it meant everyone allocating their efforts altruistically optimally then per capita wealth could explode (or collapse alongside skyrocketing total wealth)
Conversely, if equality were achieved by taxation at 100% rates and transfers then incomes would collapse, ceteris paribus
Median income is dramatically lower than mean, but has a plausible better claim re living high while others die

undefined @ 2017-08-29T03:18 (+17)

I'll put Carl's third sentence in stronger terms.

Such very low salaries are fine and may be the most moral lifestyle for people whose direct altruistic efforts aren't that time-effective.

If applied to the key figures of the EA movement - take for example someone like Holden - who is generating the equivalent of millions of dollars (perhaps tens of millions) worth of additional EA-style donations each year via their direct work, it would be highly destructive. Every hour of Holden's time is worth ~thousands of dollars in marginal donations, so virtually any time he uses to save money isn't worth it. I would feel fine if Holden were spending a million a year to eke out every moment of his time and happiness and never give a second thought to money.

Because I'm optimistic about the value of the work Joey is doing leading an innovative anti-poverty organisation, I suspect he would do more good for the world if he took a higher salary and used it to buy more time and attention, even at expensive hourly rates. But I'm only weakly confident about that as he surely knows his personal circumstances better than me.

All of the rational analysis aside, I find the intensity of commitment to personal sacrifice in the name of a moral ideal demonstrated here highly admirable and wish more people shared it.

undefined @ 2017-08-29T13:46 (+12)

Every hour of Holden's time is worth ~thousands of dollars in marginal donations, so virtually any time he uses to save money isn't worth it.

I'm skeptical of this reasoning.

First, Holden is an extreme example, and many EAs (even some "key figures of the EA movement") are thinking overly highly of themselves if they think their time is consistently worth "~thousands of dollars in marginal donations".

Second, the time you spend thinking about frugality may not trade directly off of productive time. I know it doesn't for me. (Though I'm also not all that frugal.)

Third, it may be possible to save thousands of dollars with an hour of thinking about frugality (especially if you are already spending a million a year).

To be clear, I'm of the opinion that frugality in EA is supererogatory -- I'd rather see most people think about improving other aspects of their effectiveness first. However, I definitely call BS on 95%+ of arguments of the "I can't be frugal/vegetarian/etc. because it would harm my productivity" type. I think we should just own up to having room to improve on the frugality angle and just not wanting to make that sacrifice. That's how I feel, at least.

I would feel fine if Holden were spending a million a year to eke out every moment of his time and happiness and never give a second thought to money.

I would agree that I still would think positively about Holden and still judge him to be very high performing from an EA perspective even if he spent $1M, but I am skeptical that there really are $1M in such improvements.

Because I'm optimistic about the work Joey is doing leading an innovation anti-poverty organisation, I suspect he would do more good for the world if he took a higher salary and used it to buy more time and attention, even at expensive hourly rates.

I can confirm that Joey does spend money to buy time and I can't think of any other things he should be doing in this area.

undefined @ 2017-08-30T03:57 (+8)

I agree with all of this in principle so we're now down to an empirical question.

Holden is the most extreme single case I can think of, for the purposes of demonstration. There are a handful of other managers who generate bottlenecks who I think might generate an expected $1,000+ worth of donations with an hour of extra work. But yes they're not the typical case.

I doubt Holden could find ways to spend $1m usefully to save time. But $200k? Probably.

Options include:

Live next to your office in the centre of town (not an issue for Joey as he works at home).
Get an executive assistant to manage your house and personal life so you never have to think about it or buy anything yourself.
Always fly direct in a seat you can work in. Always catch UberX wherever you're going.
Update you phone and laptop, etc to the best equipment each year.

In SF this stuff could easily run in to the hundreds of thousands, and I'd be psyched to see Holden spending that kind of money so he can work every hour God gives without any other stressors in his life.

"However, I definitely call BS on 95%+ of arguments of the "I can't be frugal/vegetarian/etc. because it would harm my productivity" type. I think we should just own up to having room to improve on the frugality angle and just not wanting to make that sacrifice. That's how I feel, at least."

I suspect that many EAs doing direct work are committing the reverse moral error of undervaluing their time in order to seem i) humble, ii) morally dedicated by being conspicuously frugal. They would be more moral people if they spent more on themselves. I didn't used to think this, but seeing how time-effective direct work can be I have changed my mind.

"Second, the time you spend thinking about frugality may not trade directly off of productive time"

In my experience during the middle of the workday I think it translates close to 1:1. Hence I get UberX if I'm moving between work tasks. During random evenings, or weekends it's more like 3:1 (i.e. a third of the time I save goes towards extra work). So I often use Uber Pool if I'm just relaxing. But YMMV.

I don't want to tell Joey he has opportunities he thinks he doesn't. His circumstances are a bit unusual - my impression is that people working in professional positions in the centre of expensive cities (e.g. high up positions in government) can easily spend up to $100k on sensible things to free up their time, and even more importantly, their attention. And I admire them for figuring out how to do it so they can fully apply themselves to their comparative advantage.

undefined @ 2017-08-30T05:37 (+8)

I like getting down to the empirics :) Some thoughts/empirical data on some of the suggestions. Specific to me as it’s hard for me to speak for Holden, but I would be somewhat surprised if my situation/work loads were way different than other folks working in EA orgs.

i) Indeed at CSH our Canada office is small enough to fit in a single home which we do to save money and travel time. Our India location does have an office, but I have found its location to have near 0 effect on staff work hours (this is tracked so we have decent data on it). This might be due to the fact that most staff seem to work a pretty set 35-40 hours in all cases.

ii) We have in fact hired a PA to manage our life operations, but I found the benefits to be pretty minimal (also via hour tracking). Sadly the between the coordination time between us managing the PA and the work they were able to accomplish without our physical presence, our total time saved was pretty limited. This was in large part due to bureaucracy type issues like banks needing to talk to the account holder that I would expect to be true for most PA’s. We do use a bunch of technological systems which mimic a lot of their work (calendly, online groceries, etc)

iii) My job (even though we are based out of India) is pretty minimal in terms of flights, so maybe I am just lucky that I always have enough work-reading to cover the time in them. Maybe this is an issue for folks that fly a lot more or have less reading intensive work tasks? I also am lucky small enough (6 feet) to work on a laptop in even an economy class seat.

iiii) I do spend a decent amount on business class laptops that are updated before they break, but not sure that technological progress is fast enough to see huge differences in this in a single year unless someone is doing pretty computer intensive tasks like video editing.

Regarding any of these or other ideas I would be really interested in seeing any empirical data on them improving work hours as I have found this historically pretty hard to find and hard to create in my personal data. Even data on overall time trades off 1:1 vs 1:3 etc or data on really huge amounts of well time tracked hours worked by people using systems like these would be super handy.

undefined @ 2017-08-30T09:49 (+9)

Joey, am I right in thinking your don't count work expenses in your estimate?

Your circumstances seem quite unusual for a couple of reason.

It seems you work in your home, and so don't commute to work. Most people don't get to move their office to suit their preferences. In general, if your office is in a city, you either pay to commute to it, or you'd pay more rent if you move closer, both of which are more expensive than your set up. (You could cycle, but you'd expect to you pay more to live within cycling distance).

I'd also be curious to know how you spend as part of your work and whether you count those trips in your budget or class them as business expenses. Just to push the point, if I spent 52 weeks of the year on business travel I claimed from my organisation, my personal expenditure would be tiny. I think there's also something in that travelling abroad for work will be a partial replacement for holidays (at the least, it's a change of scenery), which I don't see in your budget either.

Maybe the other thing is you're living with a partner. This isn't something one can guarantee, and if you doubled your rent, utilities and internet numbers (leaving aside, for the moment, the normal costs of dating!), because I'm assuming you split those, that adds $3300 dollars-ish, around an extra third, to your total.

I think what you're doing is admirable, but my concern is that because you run your own organisation and live with a partner, which not all EAs can or will do, you're able to reduce your own expenditure in ways that are hard to recreate. Hence I'm not sure how practical a standard this is, even leaving aside all the concerns you might be able to spend more to save time.

undefined @ 2017-08-30T19:05 (+6)

It depends on the work expense. I would guess I generally err on the side of covering it under personal expense (e.g. using our home as an office space we do not get compensation for, or the free food we provide in Van comes out of our personal budget.). But we do put some things under it (e.g. my next flight to India will indeed be under work costs). I think in general our work expenses budget wise follow a similar pattern of lower cost than comparable organizations, so I do not feel my personal budget is offset by it any more so than the average EA org/earning to give job, probably a little less.

It's true I have no specific budget for travel (although this would go under “other spending”). I generally find there are less money and time consuming ways to maximize novelty and life satisfaction. I wish I could count my trips to India as holiday travel and I guess they are novel. Overall though the locations we are going to (low income cities in north India) would not count as a vacation for most people. Certainly that is the way I feel, although I can imagine other people enjoying travel as a whole more than I do.

I definitely think you're right it's hard to cross-apply any specific rule, and there are things that could pull in both directions (I do think living with a partner makes this possible where it would otherwise not be). Of course there are other things that would pull in the opposite direction (there are cities cheaper than Vancouver for example). As mentioned in first comment, this was the number we felt we could both be comfortable and optimally effective at. If it was different circumstances we would have picked a different number.

We do not think we are so atypical in terms of skills and life circumstances in the EA movement that some EAs wouldn’t benefit from this post. Of course we believe that many people will have different life circumstances that prevent it, but there are also many who could do something more like this. Many people cannot donate 10%, but I still think it's very worthwhile to talk about and I expect many people that hear about folks donating 10% increase their net donations. I think the same applies to stronger commitments (e.g. 50% or more).

undefined @ 2017-08-30T04:22 (+6)

Thanks for the thoughtful response.

Rob:

I agree with all of this in principle so we're now down to an empirical question.

Me:

"However, I definitely call BS on 95%+ of arguments of the "I can't be frugal/vegetarian/etc. because it would harm my productivity" type. I think we should just own up to having room to improve on the frugality angle and just not wanting to make that sacrifice. That's how I feel, at least."

Rob:

I suspect that many EAs doing direct work are committing the reverse moral error of undervaluing their time in order to seem i) humble, ii) hardcore by being conspicuously frugal. They would be more moral people if they spent more on themselves. I didn't used to think this, but seeing how time-effective direct work can be I have changed my mind.

I suspect you're right here that this would be empirically answerable, but the exact methods I'd want to employ elude me right now. Potentially worth thinking about, as it would definitely affect how I think and message around EA. There are certain people I'd want to be more hardcore and certain people I think who worry too much and should relax. It's hard communicating that just right, and I don't really meet up with enough EAs, in person, regularly enough, to get a good sense of what the balance is.

undefined @ 2017-08-29T05:13 (+5)

One thing I wish I made more clear in the post is that I do already spend pretty generously on time to money trade offs. I stay fairly up to date with the various posts about how to spend money to save time. I get food and products delivered, have a cleaner that cleans our house monthly. I do value my time at about the cost I would expect it would take to hire someone into the same role, not the literal number I am paid. I do not spend a huge amount of time thinking about money and how to save an extra $0.50 on bread (although I did spend non-trivial time up front for large recurring costs like housing). I do not see the current level of spending competing against my free time. In fact, it was picked after we had already optimized spending more to save more time.

Maybe there is a bunch of interventions I am missing that directly save time that I have not seen written about?

undefined @ 2017-08-29T05:16 (+4)

I definitely do not see frugality as my main way of doing impact. I see that as productive hours put into Charity Science Health work, and I prioritize my productivity there over saving money.

Overall I am not really concerned about this becoming a norm, but rather letting people know of a wider range of what is possible than what is normally talked about, encouraging a few by example. I do generally think the community could be more frugal while maintaining effectiveness in other domains.

undefined @ 2017-08-29T02:55 (+3)

Good point about nonhuman animals. Going with the norm for humans certainly does have weird implications.

I suppose part of the answer might be that with humans, poverty is the problem we're trying to fix, but with animals, it's a lot more than poverty. (Though at least for wild animals, poverty/starvation is a large part of the problem.)

undefined @ 2017-08-29T05:14 (+1)

At the end of the day the number is based off what I think would not impair my productivity. It’s nice having it anchored to something concrete, but I am not as sold on it being anchored as I am on the good done from spending less. I do think if I based it off the animal average (aside from it being way harder to calculate) it would not be enough to live off of without major time sacrifices.

CarlShulman @ 2017-08-29T06:45 (+4)

At the end of the day the number is based off what I think would not impair my productivity.

If this comes first (which makes sense to me), it might be better to start by framing the description in terms of that, giving yourself as a data point/example of that being low in your judgment of your case, rather than in terms of the global mean (which will often not track your primary criterion)?

Julia Wise's posts on her and Jeff Kaufman's frugal budgets take this form (data point).

undefined @ 2017-08-28T15:45 (+7)

While I certainly don't want to argue against other EAs taking up this example and choosing to live more frugally in order to achieve more overall good, I nevertheless want to remind the EA community that marketing EA to the public requires that we spend our idiosyncrasy credits wisely.

We only have so many weirdness points to spend. When we spend them on particularly extreme things like intentionally living on such a small amount, it makes it more difficult to get EA newcomers into the other aspects of EA that are more important, like strategic cause selection.

I do not want to dissuade anyone from taking the path of giving away everything above $10k/person, so long as they truly are in a position to do this. But doing so requires a social safety net that, as Evan points out elsewhere in this thread, is generally only available to those in good health and fully able-bodied. I will add that this kind of thing is also generally available only when one is from a certain socio-economic background, and that this kind of messaging may be somewhat antithetical to the goal of inclusion that some of us in the movement are attempting with diversity initiatives.

If living extremely frugally were extremely effective, then maybe we'd want to pursue it more generally despite the above arguments. But the marginal value of giving everything over $10k/person versus the existing EA norm of giving 10-50% isn't that much when you take into account that the former hinders EA outreach by being too demanding. Instead, we should focus on the effectiveness aspect, not the demandingness aspect.

Nevertheless, I think it is important for the EA movement to have heroes that go the distance like this! If you think you may potentially become one of them, then don't let this post discourage you. Even if I believe this aspect of EA culture should be considered supererogatory (or whatever the consequentialist analog is), I nevertheless am proud to be part of a movement that takes sacrifice at this level so seriously.

undefined @ 2017-08-29T05:15 (+6)

I am pretty sympathetic to the weirdness points post, but I am also fairly confident that where people set their moral objectives has a lot to do with examples seen in the community. For example, I would not be surprised if more people posting about the more dedicated side of EA would lead to more people moving from 10% donations to 20% donations or equivalent. I think it's a risky thing to only promote a lighter version of EA for broad appeal reasons as some EA might do less good with lower expectations. Especially since donations, like money in general, is a power law distribution, with the big donations (both percentage-wise and absolute numbers) accounting for a disproportionate effects. These would be things that would have to be weighted off more carefully for an outreach post. By posting this on the EA forum I am more aiming for people who are already involved in the movement.

undefined @ 2017-08-29T01:55 (+6)

Instead, we should focus on the effectiveness aspect, not the demandingness aspect.

Nevertheless, I think it is important for the EA movement to have heroes that go the distance like this!

I think EA doesn't have nearly the same amount and same prominence of "heroes of frugality" that it did in 2011-2013. I agree that I don't want "donate everything over $10K or you get kicked out of EA club" to be a thing, but I do want to see a view that celebrates those who can (responsibly, sustainably) donate everything over $10K as something ideal and aspirational.

And I say this recognizing that I am someone who spends ~$54K/yr on myself (not counting tax).

undefined @ 2017-08-29T02:52 (+2)

We only have so many weirdness points to spend. When we spend them on particularly extreme things like intentionally living on such a small amount, it makes it more difficult to get EA newcomers into the other aspects of EA that are more important, like strategic cause selection.

Do you think it's any better in this case than, say, the case of a very particular diet or an odd appearance because in this case Joey is doing something that's uncontroversially good? I would wonder if it would make people want to be more like him and trust his judgment more.

undefined @ 2017-08-26T21:24 (+7)

Another specific part of life that isn't replicable for lots of effective altruists as compared to others is being fully able-bodied, or being in good health. One common but largely unspoken facet of life is lots of people have problems with physical or mental illness which either cost money, or hinder their ability to earn money as they would have been able to otherwise. So, including opportunity costs, the costs of health problems can be quite steep. This is the number one thing I think would affect all kinds of people, and so is a primary consideration to take into account of what the added necessary and fixed costs in a budget would be in addition to the template provided above.

undefined @ 2017-08-29T01:10 (+5)

This is similar to the US poverty line. In the book Strangers Drowning, which featured some EAs, there was a guy trying to live on the global average income in ~1980. That was really extreme because inflation adjusted global per capita income has risen a lot since then.

undefined @ 2017-08-28T16:31 (+5)

Joey, do you think you would adjust this for different circumstances---say, if living in a more expensive region, facing medical hardship, or having to support an elderly family member? For example, assuming you're renting a room for $440 USD, rents in the Bay Area would be anywhere from 200% to 500% more. If for some reason you wound up here, would you take the price difference into account, or still try to go with the global average?

undefined @ 2017-08-29T05:12 (+3)

The global average number came after I had a sense of what our spending was. This was the number we felt we could both be comfortable and optimally effective at. If it was different circumstances we would have picked a different number.

nescio @ 2022-12-19T14:22 (+2)

Do you still do this? If so, do you have any updates on how things are going?

If not, do you mind sharing why?

Joey @ 2022-12-19T16:54 (+5)

Hey Nescio,

Sadly, my circumstances have changed such that this was no longer possible without significant work-productivity trade-offs. Specifically, I moved to London, UK (due to work) and have only intermittently been living with a partner. I now am living off a range between £20k-£30k depending on year. I still have the view that a higher salary would not significantly increase my productivity beyond that and have, if anything, more concerns about the current spending habits of EA for reasons described pretty well here.

nescio @ 2023-01-17T00:52 (+1)

Thanks for your response! I'm glad I found your post – had been thinking about this topic in very similar ways for a while but hadn't seen anyone else discuss it this way (or attempt it).

I do think that living with world GDP per capita is potentially an underestimate of how much one's share should be when living in a very expensive place (e.g. London). Clearly everyone should have right to housing and housing in London isn't that much more expensive to build than anywhere else (?), but world GDP per capita can't cover that.

I think that adjusting one's yearly budget from that ideal point to compensate for one's area's cost of living seems reasonable. Another even more lax approach is to aim to live with 30-50th percentile income of the city/country one lives in: plenty of people do it, thus it must be possible.

undefined @ 2017-08-29T02:50 (+2)

How did you get $220 rent in Vancouver? I live in the Bay Area, which of course is extremely expensive, but I would not have thought it was so vastly more expensive that one could pay $220 for a place in Vancouver. What's the location and how did you find the place?

I'm pretty on the fence about the argument that this garners too many weirdness points. I think if one is weird for doing things that almost everyone would agree makes them a good person, then that's probably as likely to be good as bad. I think much of this question just boils down to what makes us the most effective in our primary activity, and for people with needs or even genuinely more expensive tastes this might not be optimal. I do favor a heavily thrifty norm for EAs, though.

undefined @ 2017-08-29T05:16 (+3)

Regarding rent prices, basically Katherine and I rent a single room (½ the cost of renting a room individually) in a 2 bedroom basement suite that we share with a roommate. So the whole suite costs about four times that. I think an individual who is not coupled would have to spend about double what I personally pay to live in Vancouver at equivalent standard of living.

Harry Luk @ 2023-08-11T23:35 (+1)

Inspirational!

Though the post is 6 years old and your situation has changed - this still inspires and provides a reflection point for me.

If the leaders (co-founders and senior staff) of the organizations set the example with lower salaries, then it creates a culture where employees that come onboard are also thinking about what salary they really need (not want).

Having said that, it seems like lots of people are still hung up about salary (as seen by the majority of the comments on https://forum.effectivealtruism.org/posts/SZ6reaQ2HkABAcY2N/job-opportunity-to-found-charity-entrepreneurship-ngo)

If possible, can you share about the effects of low salary nonprofits (effects on yourself, CE, CE staff or other charities CE incubated), after seeing this in action for the past few years?

Thank you