Calculate cost per unit of outcome for giving and resource allocation
Divide total cost by the expected outcome units to compare the real efficiency of different options.
Why it works
Scope insensitivity in charitable and resource-allocation decisions means people give based on how moved they feel by the image, not by how much their dollar achieves. Cost-per-unit calculation (cost per life saved, cost per quality-adjusted life year) forces the quantity to re-enter the decision, replacing affect-driven allocation with impact-driven allocation. The mechanism is making the denominator explicit so the comparison is possible.
How to do it
- Before choosing between two giving or investment options, calculate: "What does $100 buy in outcome terms for each?"
- If the ratio is 10:1 or 100:1 in favor of one option, weight the allocation accordingly.
- Resist the pull to give equally to emotionally compelling and equally to less-visible but higher-impact causes.
Evidence
Effective altruism research and GiveWell analyses have documented 10–100x differences in cost-effectiveness between charities that would be entirely invisible to affect-based evaluation. The economic framework here is well established. (observational)
Cost-per-unit calculations require defensible estimates of counterfactual impact, which are genuinely uncertain for many interventions. The tool reduces scope insensitivity; it doesn’t produce certainty.
Common mistake
Applying cost-per-unit only to money and ignoring time allocation — the same scope insensitivity affects how you spend hours on tasks with vastly different impacts.
Practice this with IX Coach
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More practices for Scope Insensitivity: Why Scale Doesn’t Change Your Feelings
- Translate scale into numbers before you respond
Before reacting to any quantity-based problem, convert the scale into a concrete number you can compare.
- Notice when the peak or end of an experience is dominating your memory of it
Your memory of an experience is shaped by its peak intensity and how it ended — not by its total duration.
- Correct for duration neglect in time estimates and commitments
Actively account for how long something will last, not just how intense it will be at its worst or best.
- Resist the identifiable victim effect by keeping statistics in view
When you feel more moved by one identified case than by statistics about many, notice the disproportion.
- Design responses in proportion to actual scale before the emotion sets them
Before deciding how much time, money, or effort to assign, anchor the amount to the scale of the problem.
Related concepts
- Thinking, Fast and Slow, Made Usable
Two systems, the biases they create, and when to slow down
- Base-Rate Neglect: Why We Ignore the Odds
How to let prior probabilities do their real work in your decisions
- Attribute Substitution: When Your Brain Answers a Different Question
The invisible question-swap behind most cognitive biases — and how to intercept it