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

1. Before choosing between two giving or investment options, calculate: "What does $100 buy in outcome terms for each?"
2. If the ratio is 10:1 or 100:1 in favor of one option, weight the allocation accordingly.
3. 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.