Charity makes mathematical sense

A young friend who is at school asked "How could Warren Buffet give away $37 billion to charity?". His older sister said "You will know when you grow up". I started thinking what would be an appropriate answer. One of the answers seems to be in pure math.

In rural India, it costs about $12/yr to save a child from malnourishment. So, if we give up eating breakfast out for a day and eat cereal at home, we could save a child. What if our life style changed and we always have healthy breakfast at home?

Extending that a little bit, if we were to support 300 kids for a year($3600), that would have almost no impact on the short term life style and possibly about 5% reduced living expenses during our retirement. Compared to 5% reduction in long term life style, the 100% difference it could make in the lives of 300 kids makes for a winning argument.

Now, one could argue why not take a 10% reduction in long term life style and support 600 kids. Sure, why not. If one could give up 10%, that is even better.

Next comes the question of trust. If I am giving up something to help some one, is it really reaching that some one? For that you need an organization that you can trust and that has minimum operational expenses. Fortunately we have AID India (and Vibha, Asha as well), local organizations run by volunteers we know.

Warren Buffet already made his mark. To lead the same life till the end, Warren Buffet would probably need no more than $1 billion, so it makes mathematical sense to give away the rest. Who else would he give it to but the foundation run by his buddy: Bill Gates.

For a more detailed analysis look at this article or Peter Singer's NY times article.

It is not surprising that when we started reducing our carbon and resource foot print (read: reduction in life style), the health and savings seem to improve.