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Cause and effect – The most effective solutions can be found in the least fashionable areas

01/08/2016

Simon Adler

Simon Adler

Fund Manager, Equity Value

What is the point of working hard for a charitable cause if it is not actually doing any good? This is one of the questions philosophy professor William MacAskill addresses in his book Doing good better: Effective altruism and a radical new way to make a difference – and his observations certainly strike a chord here on The Value Perspective.

MacAskill analyses four charities that have enjoyed varying degrees of popularity and success, perhaps the most fashionable of which is Playpumps. A clever idea involving roundabouts that dig for water and then pump it to the surface as children play on them, it has won a host of celebrity endorsements, including from big-name music stars and former White House inhabitants George and Laura Bush.                                                      

The next, which received a thumbs-up from one-time United Nations secretary-general Kofi Anaan, is Books for Africa and, as the name suggests, the charity was set up to distribute educational material to schools across the continent. Equally well-meaning in nature, if rather more extreme in practice, is the third charity, which bears the intriguing name Scared Straight.

To judge from a quick research session on YouTube, the idea of this initiative is to encourage young offenders away from a life of crime by putting them in a room with a large, angry and heavily tattooed convict, who then explains in terrifying detail and volume what they might expect from a stretch in prison and indeed from sharing his cell.

The final type of charity highlighted by MacAskill receives little in the way of big-name support or publicity because it is on the deeply unfashionable and far from glamorous subject of deworming children in Africa. Still, if you happened to have a spare £20 you felt like donating to a good cause, which of this quartet would you pick?

MacAskill analysed a lot of data to see which of the four has been the most effective. As great in theory as Playpumps might be, in reality the roundabouts are hard work to spin round and, because of a lack of maintenance, they tend to fall into disrepair. As for Books for Africa, decades of research indicates textbooks have a very limited effect on pupils in the absence of properly trained teachers.

There is actually some evidence that Scared Straight helps prevent young people from reoffending but there is also evidence to suggest it can do more harm than good. For one thing, the scheme carries the risk that, far from being scared by the shouty man with tattoos, some youngsters will actually look up to him and so be more likely to end up in prison.

What is more, when the experiment is repeated with a control group, it appears that a higher percentage of young offenders who are screamed at still end up in prison compared with the control – the implication being that 16 or 17 is an age where kids quite often get up to some mischief and then, almost as often, they just grow out of it.

Deworming children in Africa, on the other hand, may receive little support or publicity because of the nature of the work but it is also one of the most effective ways of reducing poverty in poor countries. Studies have suggested, for example, it can lead to children attending school 25% more and thence to a 20% higher income in adult life, which if you are on the poverty line can be revolutionary.

The twin morals of this story – that the best decisions can be reached by analysing data rather than when emotions are in play, and that the most effective solutions can be found in the least fashionable-sounding areas that few people want to back – have great resonance with us here on The Value Perspective.

Author

Simon Adler

Simon Adler

Fund Manager, Equity Value

I joined Schroders in 2008 as an analyst in the UK equity team, ultimately analysing the Media, Transport, Leisure, Chemicals and Utility sectors. In 2014 I moved into a fund management role and have had experience managing Global ESG and Pan-European funds.  I joined the Value investment team in July 2016 to focus on UK institutional and ethical-value portfolios.

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