Is Leaving Wall Street Immoral? Thoughts on Effective Altruism
I recently left a job on Wall Street where some of my former coworkers donated large fractions of their income to charity. At least one was motivated to work on Wall Street by the possibility of earning more to donate more. I wondered: what does that say about my choice to leave? Not only was I not donating any significant amount before leaving, but even worse, I was giving up potentially much greater future earnings that could have been donated. Was my choice bringing indirect harm to those that would have benefited? Admittedly this is not something most people have considered. A person struggling to get by is not going to feel guilty about not donating a sufficient fraction of their income, so posing this question at all is already privileged. Before deciding we need to start with the movement that motivated my coworkers: effective altruism.
Thought Experiment 1: The Drowning Child (Wall Street version)
You are a successful Wall Street trader. Walking to work one morning, you pass a shallow pond where a child is drowning (there are no ponds near Wall Street, but let’s pretend). If you wade into the pond to save the child, you will ruin your $3,000 suit and need to purchase a new one. Are you still obligated to do so?
The next day you are walking to work and pass a booth requesting donations for an anti-malaria charity. The sign states that a $3,000 donation will buy enough mosquito nets to save one child’s life in Africa. You know the person manning the booth, and have already researched this charity, and you believe this claim to be accurate. Are you obligated to write them a check?
I’m paraphrasing the story of the Drowning Child originally from philosopher Peter Singer, who argued that both cases are equivalent, and that we have as much moral obligation to write the check as we do to jump in the water. The distance of the child in Africa and the difference in nationality make no ‘morally relevant difference’.
This idea is just one piece of a broader philosophy and social movement known as ‘Effective Altruism’. In his Ted talk outlining the central tenets of this philosophy, Singer describes effective altruism as an attempt to combine the ‘heart and the head’, meaning we should combine our empathy for suffering children with a logical consideration of how we can most effectively reduce it. One consequence is a careful consideration of which charities to donate to. We should favor those that have proven they are most efficient at converting dollars into saved lives and reduced suffering.
Singer argues it should also induce us to donate significantly more than we currently do. Say your income is $50,000 per year. Does donating $3,000 to reduce that to $47,000 cost your well being more than the value of a child’s life? When weighing the importance of first world desires against third world suffering, Singer concludes that donating 10% of your income (or more, with some in the movement going beyond 50%) comes at a small cost.
With this in mind, why not choose a career that will allow you to earn more and thus donate more? This is the concept of ‘Earning to Give’. An effective altruist weighing two career choices might choose the one with greater earning potential. This idea is unusual enough that examples of it have received publicity: the New York Times article “The Trader Who Donates Half His Pay” discusses my former coworker Matt Wage who chose a career on Wall Street over academia and donated $100,000 to charity in 2013. Or the Washington Post article “Join Wall Street. Save the world.” where Jason Trigg describes his choice to work on Wall Street and donate half of his salary. Trigg said:
“A lot of people, they want to make a difference and end up in the Peace Corps and in the developing world without running water, and I can donate some of my time in the office and make more of a difference.”
If, as Trigg says, working on Wall Street is making more of a difference than if he had joined the Peace Corps, what does this imply for someone choosing between the two careers that decides to go to the Peace Corps? What does this imply for someone like myself, who chose to leave Wall Street without planning to go work for the Peace Corps? Does ‘Join Wall Street. Save the world’ imply that leaving is akin to abandoning a moral obligation?
The interesting parts of this question lie in the details. To dig into them I present another thought experiment (a variation on the Trolley Problem). The numbers involved give us something to work with later, but they are not critical.
Thought Experiment 2: The Altruistic Trader
You are a wall street veteran and effective altruist at work on the trading floor. You are staring at your computer screen, waiting for a large trade that might happen at any moment. If a certain set of numbers appear on the screen, you’ll need to press a certain set of keys quickly to execute the trade. You expect the profit on the trade will be $1mm. As part of your contract, you receive 3% of the firm’s profits as a bonus each year, so if you execute the trade, your bonus will increase by $30,000. As an effective altruist, you will donate half of this money to the anti-malaria charity, saving 15,000/3,000 = 5 children’s lives.
While staring at the computer screen, you see through the window a child drowning in the pond outside. It appears no one is going to help her. If you step away from your desk it is likely you will miss the trade. Are you obligated to ignore the drowning child?
The answer is: it depends.
You protest, ‘Isn’t there lots of waste in charities? How do I know my money is getting where it is supposed to be? How do I know that $15,000 donation will really save 5 lives?’ A valid concern, but a distraction from more interesting questions. Organizations like Givewell have made significant investment in determining how effective particular charities are. By doing this, they help improve confidence in these claims. There is uncertainty and they will make mistakes, but for now let’s take it as fact: donating that money will save that many lives.
‘How do you know you’ll make $1mm on the trade? Isn’t trading like gambling, with probabilities and no certainty?’ Again a valid concern, and accurate – I don’t remember ever waiting for a trade with a certain $1mm profit, but to keep things interesting let’s assume such a trade exists, the profit is certain, and so is the effect on your bonus.
‘There is no definite moral right and wrong. It will always be grey, not black and white as you have described it. There are too many variables and we can never know what the right thing to do is.’ I find this difficult to argue with. In reality there will always be too many variables and too many second or third order effects from every choice we make to really understand the consequences. Maybe you believe there are no ‘moral obligations’ at all, and questions of morality depend entirely on an individual moral framework. Right and wrong is always subjective, and with the right context any action could be justified. I believe this to an extent, yet I’ve still made the effort to have the discussion below. Why? First, because it is interesting. Second, because even an imperfect model making these assumptions might still teach us something. Through exposure to new ideas and perspectives it can still influence our actions.
What if you can’t swim? Jumping in the water means you, the drowning child and the five children in Africa die, which seems to be the worst possible outcome. In my own case, if I believed my only skills to be those needed for trading, I would be doing a disservice both to myself and the world by leaving a career on Wall Street.
What if the office has no windows, and you saw the girl drowning on a security camera feed? Perhaps next to that is a video feed showing African families, likely to contract malaria, who will receive the mosquito nets if you make a donation. Singer argued that changing our visibility of or proximity from suffering does not change our moral obligations, and I agree. These superficial changes should not affect our actions.
Why not yell at someone else to go save the child? Obviously you would do this in reality. In fact, you should be willing to pay someone to save the drowning child – but not more than $3,000, which would save lives more efficiently with a donation to the malaria charity. Let’s assume no one else is able to help out.
If you leave your desk to go and help the drowning child, and the trade occurs while you are gone, where do the profits go? They don’t disappear – someone else at another trading firm will execute the trade and reap the profits. How bad is this? We can do some math with this toy example to come up with the damage. Suppose someone at another firm executes the trade, and their bonus also increases by $30,000. They are a bit less generous and donate only 20% to charity. They also donate to a less effective charity called the ‘Staff Parties and Anti-Malaria Charity’, which uses half the money donated to throw lavish parties for the staff and the other half to buy mosquito nets. In total there are 6 lives at stake. Had you stayed at your desk, 5 would have been saved. Since you went to save the child, now 1 will be saved by you, and we can calculate that $30,000 * 20% * 0.5 / 3,000 = 1 life will be saved by the donation of the other trader. Net, 3 more people will die because of your choice to go save the child.
It might not have to occur this way. Perhaps you have a coworker who can’t swim but can watch the computer while you’re gone. Assuming the coworker does execute the trade successfully, the profits will contribute to your firm and bonus. As long as the coworker is 80% likely to execute the trade correctly in your place, the total expected lives saved would be 1 (drowning child) + 5 * (0.8) = 5, the same as if you had stayed at your desk. The question becomes: how replaceable are you, and how confident are you about it? The more uncertainty in how well a coworker can perform the task in your place, and the the more uncertainty in how likely you are to save the child, the less obvious the ‘right’ choice becomes.
In a blog post about replaceability, Ben Kuhn argues that for this particular career (quantitative trading) one person employed does not necessarily replace another. In the recruiting process, the firm is limited not by roles to fill at the firm, but by the number of people found with the necessary skills. Effectively, the firm is always understaffed, and additional hires will always lead to more profits. The only factor limiting firm size is how difficult it is to find the right people. If this is true someone leaving the firm will not change the pace of recruitment or growth (they are already recruiting as much as they can!), and the firm will simply be one person smaller than it would have been otherwise. How should this influence a decision to leave? In my own case, while not donating a large portion of my own income, I knew some coworkers did (e.g. Matt Wage mentioned above). I might reason:
(1) If I leave the firm will be effectively smaller than if I had not
(2) The smaller firm will be less profitable
(3) Matt Wage and other effective altruists will receive less compensation
(4) Fewer lives will be saved as a result of their donations
(1) and (2) are not so clear: Maybe I am quite easily replaceable, or perhaps others at the firm could just work harder to close the gap. If (2) is true I believe (3) will be also, but without knowing the inner working of the firm it’s not clear to what extent. Even if (4) is true, it would need to be offset by gains from good I might choose to do elsewhere.
Wall Street is Bad
You protest, ‘Wall Street has ruined the economy. The system is doing more harm than you can make up for by donating money. You are part of a system that keeps people in poverty. By sitting at your desk and working as a trader you support that system.’
The simplest argument against this (and my personal belief) is that while not perfect, Wall Street is a critical part of the economy. We can improve it, but trying to tear it down and threatening the global financial system would do much greater harm. The type of quantitative trading firms often recommended for the purpose of earning to give are providing important (though hard to define) functions like ‘providing liquidity’ and ‘taking on risk’ that improve the market. At worst the marginal value they add is small due to competition between firms, but some are not only profitable but also have leadership that advocates for improvements to market structure.
My evidence for this is partially anecdotal and I haven’t provided any data to back it, so suppose you reject it completely. You believe HFT (high frequency trading) and other trading practices keep people in poverty and lead to more suffering in the world. What if you have this belief, and were a skilled mathematician offered a job working for a trading firm? If you take the job, you might be able to undermine or slow the advancement of new trading strategies internally. You might be able to better advocate for changes to the ‘system’ from that position. If you do not take the job and the firm hires someone else, you believe they are more likely to zealously seek profits with no regard for negative externalities. Therefore, if you are a utilitarian you conclude you are obligated to take the job. This type of thought experiment comes from philosopher Bernard Williams, who objected to it and called it ‘an attack on his integrity’.
In his book ‘The Most Good You Can Do’, Singer discusses the argument from Williams and shows how it might be used to reach less palatable conclusions.
“It implies, for instance, that the guards at Auschwitz were not acting wrongly if their refusal to serve in that role would have led only to their replacement by someone else, perhaps someone who would have been even more brutal toward those who were about to be murdered there.”
We can fall into a philosophical rabbit hole debating different ethical frameworks, rule utilitarianism, collective responsibility, etc, but some might just accept this as a consequence and say yes, some of the guards at Auschwitz were not in the wrong.
Is there another alternative? Surely we are not forced to accept either Wall Street is good, or it is bad but if we are able we have an obligation to work there. Returning to the thought experiment: why is this child drowning? Was there no fence around the pond, or lifeguard if people swim there often? Perhaps the best use of your time is not to be a trader, but to appeal to government to improve policy that will prevent future drowning deaths. To their credit effective altruists discuss policy advocacy as a career possibility. In his book Singer states,
*‘Advocacy for policy change has obvious appeal to those who are concerned that more traditional forms of aid are putting a Band-Aid on the symptoms of poverty rather than dealing with its deeper roots.’ *
Measuring the effects of policy changes numerically is probably harder, but maybe sometimes possible. Imagine data exist that 15 children have drowned in this pond during the last year, and the cost of hiring a full time life guard for the year is $30,000. If the lifeguard prevented all of these deaths, it would have been at a cost of $2,000 per child, a better return than donating to the anti-malaria charity. If you had spent the day convincing lawmakers to enact this change, you would have saved 15 lives instead of 5. Most causes, unfortunately, are not so easily quantified.
Self Interest and Legacy
‘Sure,’ you say, ‘I can see the numbers, but to coldly compute that I should sit and look at my computer screen to earn money I can donate feels wrong to me. That sounds unpleasant and unsatisfying. Shouldn’t you find your passion and follow that, and try to do what good you can?’
Perhaps while waiting for the trade to occur and allowing the child outside to drown in the pond you are having second thoughts. Two futures come to mind. Decades from now, at your funeral, a friend reads your eulogy. In one version, he speaks of your accomplishments as a trader.
‘He was an excellent and efficient trader, able to sit at his desk in complete focus for hours at a time. In his career his total salary plus bonus was approximately $23.7mm, of which he donated $12.7mm. At a cost of $3,000 per life this saved an estimated 4,233 lives’
In another future, he speaks of a different path.
‘His life was changed one day when in a great act of bravery he jumped from his desk and dove into the Wall Street pond to save a drowning child, who sits here with us and her three children today. This experience changed his whole view on life, and he left Wall Street to pursue his newly discovered passion for work as a lifeguard. Thanks to his bravery and courage, he personally saved nearly 100 swimmers from drowning over the course of his career.’
Perhaps your friend is wrong, and the braver path is to look at the numbers, see that 4,000>100, and conclude that the thousands of additional lives saved outweighs your personal legacy preference. Some might prefer the first regardless of the numbers: they could find trading satisfying work they are talented at, and also find the idea of earning to give and effective altruism inherently satisfying.
Examples of those earning to give in Singer’s book express this view. Matt Wage stated that he finds the work itself interesting, and “I’m extremely happy with my life. I’d still do this altruistic stuff even if I thought it was making my life worse…” Another effective altruist donating a large fraction of his pay, Alex Foster said his job was “insanely fulfilling – mores satisfaction than any other period in my life. Despite heavily reduced social life.”
Matt states he’d still do this ‘altruistic stuff’ if it made his life worse, but it is difficult to find stories of people in unsatisfying careers gritting their teeth through it because they value the lives they are saving above their own suffering. In an article entitled ‘Is it ok to make art?’, author Rhys Southan interviews a number of effective altruists while trying to come to terms with the idea that choosing to be an artist might be very selfish. In the article he quotes Robert Wiblin, the Executive Director of the Centre for Effective Altruism, as saying:
- “It is true that Effective Altruism would sometimes say that the thing you most enjoy isn’t the most moral thing to do,”* later describing how he used to be “extremely interested in evolutionary biology” but unfortunately, “couldn’t really justify it on the effects that it has on helping other people“.
So much for following your passion. While Singer does not advocate this, he points out this type of situation is not uncommon in another context:
“…it is, unfortunately, the fate of many people to spend their lives supporting themselves and their families by doing work they do not find intrinsically interesting or enjoyable.”
If many people do unsatisfying work for the sake of supporting themselves or their family, why should I or anyone not do so if it allows us to save lives through additional earnings?
One answer is essentially publicity: for effective altruism to work as a movement, it must seem appealing from the outside. Sure, taken to its limit the philosophy might demand people work on maximally profitable jobs they don’t enjoy and live in tiny apartments. But, if you are trying to recruit others to join you this is probably not optimal. Better to convince ten people to give 10% of their income than zero to give 90%. On her blog ‘Giving Gladly’, Julia Wise writes:
- “Effective altruism is not about driving yourself to a breakdown. We don’t need people making sacrifices that leave them drained and miserable.”*
If working on Wall Street is driving you to a breakdown, then it doesn’t make sense to continue for many reasons. Burn out or breakdown might affect your ability to do other work in the future. Better to give half as much a year over a career spanning decades than to give a huge amount up front working on a job you can only sustain working at for a few years. In a response to the article on Jason Trigg, David Brooks of the NYT writes,
“I would worry about turning yourself into a means rather than an end. If you go to Wall Street mostly to make money for charity, you may turn yourself into a machine for the redistribution of wealth.”
Brooks implies this might lead to burn out, and could be ‘corrosive’ over time. He does not acknowledge that some might find turning themselves into the most efficient and productive such machine deeply satisfying.
Weird Considerations: Existential Risk
Lets consider a final objection. ‘Forget about trading, or saving the drowning child. If we don’t do something about global warming soon, hundreds of millions will die and the future of the human race will be in jeopardy. That is what we should be working on’.
I mention this argument because I find it fascinating. Existential questions, like global warming, nuclear war, or an earth destroying asteroid, might outweigh most other considerations like malaria because the destruction of the earth would result in the deaths of billions of people, and all future generations. Even ignoring future generations, how much should we be willing to spend on projects to prevent things like the destruction of earth by an asteroid? If we can save the life of 1 child spending $3,000 to prevent malaria, we should spend that money on anti-asteroid technology if we believe it will reduce the chance of such an impact (in the near future) by 1/7 billion = 1.4*10-10. Would $3,000 accomplish this? How well can we measure the likelihood of an asteroid impact? How much will technologies to prevent it cost? Estimating answers is difficult. To their credit effective altruists have considered these questions and Singer devotes an entire chapter of his book to preventing human extinction.
With this view, perhaps the greatest effective altruists of all time have not been those that donated the most money, like Bill Gates, or an advocate of nonviolence like Gandhi. Instead I would nominate JFK, who helped bring the world back from the brink of nuclear war during the Cuban Missile Crisis and who (while certainly not alone) helped prevent the destruction of all current and future human life.
While working on Wall Street I was not an effective altruist and did not donate a large portion of my income, but some around me did. I respect their choice to do so. Career paths are not certain but those individuals can estimate with some confidence the total dollars and thus lives they can save over the course of their lifetime. Effective altruism has been criticized for this obsession with measurement. Donate X dollars, turn that into Y mosquito nets, save Z lives. This to the detriment of other causes that might not save lives but are still ‘worthy causes’. When digging deeper, you’ll find there is nothing compelling about this argument. The movement has been open to radical ideas of what causes might be ‘worthy’ – ideas like helping to locate and track earth threatening asteroids. It is open to careers outside of earning to give like policy advocacy, when those choices are carefully considered. In addition they are happy to admit that the current ‘best’ causes might not be optimal, and will change which charities to support in the face of new evidence. Just because we can never really know what the ‘best’ cause is, we should still work to measure it and act accordingly, lest we make perfect the enemy of the good.
My own conclusion is one that can be applied to all philosophies or social movements: take what you like and leave the rest. Will I look at Givewell and consider what they believe are the most effective charities before donating money? Yes. Will I stop donating to my alma matter because that money could be used more efficiently elsewhere? No, though I’m less likely to donate a large sum in the future. Will I feel riddled with guilt that by quitting a job on Wall Street I have forgone the opportunity to consistently earn a high salary and bonus that I could have donated to save hundreds of lives each year? No. The advantage of my own future being vague and uncertain is the impossibility of comparing it to the path I could have followed on Wall Street. Who is to say I might not do even more good in the world? I accept that I am selfish to some degree, like everyone. If you find Singer’s arguments convincing, then no one is doing enough. Why did Matt Wage donate only $100,000 last year and not $110,000? Should we measure his, or my own selfishness by the number of dollars at stake? Perhaps it is arrogant to believe that you could ever do better than donating the money earned from a consistently high paying job on Wall Street. Even so, what good comes of feeling guilty about it? When the philosophical debates are over the question that remains is what motivates people to action, and by this measure effective altruism is seeing success.
Update 5/4/15 7:27pm: For some reason I had accidentally referred to Peter Singer as John Singer, now fixed.