Christopher tm Herdt (cherdt) wrote,
Christopher tm Herdt

Pragmatic Idealism and Rounding Errors

This morning, I heard an interview with Jonathan Greenblatt, co-founder of Ethos Water, on an episode of Speaking of Faith called The Business of Doing Good.

Mr. Greenblatt calls himself a "pragmatic idealist." Depending on your point of view, you could also translate that as "evil saint" or "wise fool." He countered many of the same criticisms I leveled against Ethos Water in my post last week by pointing to results: over 6 million USD committed to bringing clean drinking water to impoverished areas. This is a public good that would not have existed without Ethos Water.

Not so fast, Mr. Greenblatt! All those nickels had to come from somewhere. The price of your charity is included in your bottle of water. If you did not donate a nickel per bottle, Ethos Water consumers would have an additional 6 million USD that they do not have now. They could have donated that money to a charity of their own choosing, one that they feel more personally connected to, rather than to the charity of your choice. Some people may derive more satisfaction from conserving rain forests, furthering cancer research, or funding education programs.

It is true that Ethos Water consumers would, likely as not, spend that money on consumer goods rather than charitable donations. However, that's a decision that those consumers make every day: every nickel has the possibility of funding either a latte or a bed net to prevent malaria. Maybe that choice is too hedonistic, though, because it could also be a choice to buy a compact fluorescent light bulb or join the Sierra Club, to fund either your child's college education or disaster relief, or to fund your retirement health care or HIV prevention.

It's opportunity cost. It's butter and guns.

Even more than that, though, I think it's a rounding error. People are rounding down that nickel to a cipher. It's an irrelevancy.

It reminds me of Bank of America's Keep the Change offer. Every time you buy something on your debit card, they round the transaction up to the next dollar and put that change into a savings account. That's right, they move money from your checking account to your savings account. They aren't actually giving you anything. Sure, paying whole dollar amounts with a debit card and earning interest on your change beats paying whole dollar amounts with cash and then putting all your change in a jar at home. Honestly, if I want money in a savings account I put it there myself! (It's really easy: it's called online banking.) It's such a bizarre concept to me, but I think it works—for some people—because they don't miss the change. $3.95, while still a more attractive price than $4.00, is still basically $4. And the change they save is change that, in a world of cash, would be neglected in a jar on the nightstand.

In the same way, maybe the Ethos Water model works for some people. They don't mean to leave charity in a jar on the nightstand, but that's just how it ends up. Ethos Water takes care of it for them, and the nickel? They didn't even know it was there.
Tags: ethos water

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