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.
Key takeaways
- What it is: 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.
- Evidence: Backed by observational / correlational evidence.
- Avoid: 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.
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
- 1Before choosing between two giving or investment options, calculate: "What does $100 buy in outcome terms for each?"
- 2If the ratio is 10:1 or 100:1 in favor of one option, weight the allocation accordingly.
- 3Resist the pull to give equally to emotionally compelling and equally to less-visible but higher-impact causes.
What the evidence says
ObservationalEffective 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.
Honest caveat: 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.
IX Coach prompts a cost-per-unit framing when you’re choosing between competing priorities in a planning session, making relative impact visible before emotional salience sets the allocation.
Practice this with IX Coach →