The thing is, lots of jobs at charities just aren’t that impactful.

Some charities focus on programmes that don’t work, like Scared Straight, which actually caused kids to commit more crimes. Others focus on ways of helping that, while thoughtful and helpful, don’t have much leverage, like knitting individual sweaters for penguins affected by oil spills (this actually happened!) instead of funding large-scale ocean cleanup projects.

But there are also many organisations out there — both for-profit and nonprofit — focused on pressing problems, implementing effective and scalable solutions, run by great teams, and in need of people.

If you can build skills that are useful for helping an organisation like this, it could well be one of the highest-impact things you can do.

In particular, organisations often need generalists able to do the bread and butter of building an organisation — hiring people, management, administration, communications, running software systems, crafting strategy, fundraising, and so on.

We call these ‘organisation-building’ skills. They can be high impact because you can increase the scale and effectiveness of the organisation you’re working at, while also gaining skills that can be applied to a wide range of global problems in the future (and make you generally employable too).

Why are organisation-building skills valuable?

A well-run organisation can take tens, hundreds, or even thousands of people working on solving the world’s most pressing problems and help them work together far more effectively.

An employee with the right skills can often be a significant boost to an organisation, either by directly helping them deliver an impactful programme or by building the capacity of the organisation so that it can operate at a greater scale in the future. You could, for example, set up organisational infrastructure to enable the hiring of many more people in the future.

What’s more, organisation-building skills can be applied at most organisations, which means you’ll have opportunities to help tackle many different global problems in the future. You’ll also be flexibly able to work on many different solutions to any given problem if you find better solutions later in your career.

As an added bonus, the fact that pretty much all organisations need these skills means you’ll be employable if you decide to earn to give or step back from doing good all together. In fact, organisational management skills seem like some of the most useful and highest paid in the economy in general.

It can be even more valuable to help found a new organisation rather than build an existing one, though this is a particularly difficult step to take when you’re early in your career. (Read more on whether you should found an organisation early in your career.) See our profile on founding impactful organisations to learn more.

What does organisation-building typically involve?

A high-impact career using organisation-building skills typically involves these rough stages:

1. Building generally useful organisational skills, such as operations, people management, fundraising, administration, software systems, finance, etc.
2. Then applying those skills to help build (or found) high-impact organisations

The day-to-day of an organisation-building role is going to vary a lot depending on the job.

Here’s a possible description that could help build some intuition.

Picture yourself working from an office or, increasingly, from your own home. You’ll spend lots of time on your computer — you might be planning, organising tasks, updating project timelines, reworking a legal brief, or contracting out some marketing. You’ll likely spend some time communicating via email or chatting with colleagues. Your day will probably involve a lot of problem solving, making decisions to keep things going.

If you work for a small organisation, especially in the early stages, your “office” could be anywhere — a home office, a local coffee shop, or a shared workspace. If you manage people, you’ll conduct one-on-one meetings to provide feedback, set goals, and discuss personal development. In a project-oriented role, you might spend lots of time developing strategy, or analysing data to evaluate your impact.

What skills are needed to build organisations?

Organisation builders typically have skills in areas like:

• Operations management
• Project management (including setting objectives, metrics, etc.)
• People management and coaching (Some manager jobs require specialised skills, but some just require general management-associated skills like leadership, interpersonal communication, and conflict resolution.)
• Executive leadership (setting and achieving organisation-wide goals, making top-level decisions about budgeting, etc.)
• Entrepreneurship
• Recruiting
• Fundraising
• Marketing (which also benefits from communications skills)
• Communications and public relations (which also benefits from communications skills)
• Human resources
• Office management
• Events management
• Assistant and administrative work
• Finance and accounting
• Corporate and nonprofit law

Many organisations have a significant need for generalists who span several of these areas. If your aim is to take a leadership position, it’s useful to have a shallow knowledge of several.

You can also pick just one skill to specialise in — especially for areas like law and accounting that tend to be their own track.

Generally, larger organisations have a greater need for specialists, while those with under 50 employees hire more generalists.

Example people

How to evaluate your fit

How to predict your fit in advance

There’s no need to focus on the specific job or sector you work in now — it’s possible to enter organisation-building from a very wide variety of areas. We’ve even known academic philosophers who have transitioned to organisation-building!

Some common initial indicators of fit might include:

• You have an optimisation mindset. You frequently notice how things could be done more efficiently and have a strong internal drive to prevent avoidable errors and make things run more smoothly.
• You intuitively engage in systems thinking and enjoy going meta. This is a bit difficult to summarise, but involves things like: you’d notice when people ask you similar questions multiple times and then think about how to prevent the issue from coming up again. For example: “Can you give me access to this doc” turns into “What went wrong such that this person didn’t already have access to everything they need? How can we improve naming conventions or sharing conventions in the future?”
• You’re reliable, self-directed, able to manage your time well, and you can create efficient and productive plans and keep track of complex projects.
• You might also be good at learning quickly and have high attention to detail.

Of course, different types of organisation-building will require different skills. For example, being a COO or events manager requires greater social and system building skills, whereas working in finance requires fewer social skills, but does require basic quantitative skills and perhaps more conscientiousness and attention to detail.

If you’re really excited by a particular novel idea and have lots of energy and excitement for the idea, you might be a good fit for founding an organisation. (Read more about what it takes to successfully found a new organisation.)

You should try doing some cheap tests first — these might include talking to someone who works at the organisation you’re interested in helping to build, volunteering to do a short project, or doing an internship. Then you might commit to working there for 2–24 months (being prepared to switch to something else if you don’t think you’re on track).

How to tell if you’re on track

All of these — individually or together — seem like good signs of being on track to build really useful organisation-building skills:

• You get job offers (as a contractor or staff) at organisations you’d like to work for.
• You’re promoted within your first two years.
• You receive excellent performance reviews.
• You’re asked to take on progressively more responsibility over time.
• Your manager / colleagues suggest you might take on more senior roles in the future.
• You ask your superiors for their honest assessment of your fit and they are positive (e.g. they tell you you’re in the top 10% of people they can imagine doing your role).
• You’re able to multiply a superior’s time by over 2–20X, depending on the role type.
• If you’re aiming to build a new organisation, write out some one-page summaries of ideas for new organisations you’d like to exist and get feedback from grantmakers and experts.
• If founding a new organisation, you get seed funding from a major grantmaker, like Open Philanthropy, Longview Philanthropy, EA Funds, or a private donor.

This said, if you don’t hit these milestones, you might still be a good fit for organisation-building — the issue might be that you’re at the wrong organisation or have the wrong boss.

How to get started building organisation-building skills

You can get started by finding any role that will let you start learning one of the skills listed above. Work in one specialisation will often give you exposure to the others, and it’s often possible to move between them.

If you can do this at a high-performing organisation that’s also having a big impact right away, that’s great. If you’re aware of any organisations like these, it’s worth applying just in case.

But, unfortunately, this is often not possible, especially if you’re fresh out of college, for a number of reasons:

• The organisations have limited mentorship capacity, so they most often hire people with a couple of years of experience rather than those fresh out of college (though there are exceptions) and often aren’t in a good position to help you become excellent at these skills.
• These organisations usually hire people who already have some expertise in the problem area they’re working on (e.g. AI safety, biosecurity), as these issues involve specialised knowledge.
• We chose our recommended problems in large part because they’re unusually neglected. But the fact that they’re neglected also means there aren’t many open positions or training programmes.

As a result, early in your career it can easily be worth pursuing roles at organisations that don’t have much impact in order to build your skills.

The way to do this is to work at any organisation that’s generally high-performing, especially if you can work under someone who’s a good manager and will mentor you — the best way to learn how to run an organisation is to learn from people who are already excellent at this skill.

Then, try to advance as quickly as you can within that organisation or move to higher-responsibility roles in other organisations after 1–3 years of high-performance.

It can also help if the organisation is small but rapidly growing, since that usually makes it much easier to get promoted — and if the organisation succeeds in a big way, that will give you a lot of options in the future.

In a small organisation you can also try out a wider range of roles, helping you figure out which aspects of organisation-building are the best fit for you and giving you the broad background that’s useful for leadership roles in the future. Moreover, many of the organisations we think are doing the best work on the most pressing problems are startups, so being used to this kind of environment can be an advantage.

One option within this category we especially recommend is to consider becoming an early employee at a tech startup.

If you pick well, working at a tech startup gives you many of the advantages of working at a small, growing, high-performing organisation mentioned above, while also offering high salaries and an introduction to the technology sector. (This is even better if you can find an organisation that will let you learn about artificial intelligence or synthetic biology.)

We’ve advised many people who have developed organisation-building skills in startups and then switched to nonprofit work (or earned to give), while having good backup options.

That said, smaller organisations have downsides such as being more likely to fail and less mentorship capacity. Many are also poorly run. So it’s important to pick carefully.

Another option to consider in this category is working at a leading AI lab, because they can often offer good training, look impressive on your CV, and let you learn about AI. That said, you’ll need to think carefully about whether your work could be accelerating the risks from AI as well.

One of the most common ways to build these skills is to work in large tech companies, consulting or professional services (or more indirectly, to train as a lawyer or in finance). These are most useful for learning how to apply these skills in very large corporate and government organisations, or to build a speciality like accounting. We think there are often more direct ways to do useful work on the problems we think are most pressing, but these prestigious corporate jobs can still be the best option for some.

However, it’s important to remember you can build organisation-building skills in any kind of organisation: from nonprofits to academic research institutes to government agencies to giant corporations. What most matters is that you’re working with people who have this skill, who are able to train you.

Should you found your own organisation early in your career?

For a few people, founding an organisation fairly early in your career could be a fantastic career step. Whether or not the organisation you start succeeds, along the way you could gain strong organisation-building (and other) skills and a lot of career capital.

We think you should be ambitious when deciding career steps, and it often makes sense to pursue high-upside options first when you’re doing some career exploration.

This is particularly true if you:

• Have an idea that you’ve seriously thought about, stress tested, and got positive feedback on from relevant experts
• Have real energy and excitement for your idea (not for the idea of being an entrepreneur)
• Understand that you’re likely to fail, and have good backup plans in place for that

It can be hard to figure out if your idea is any good, or if you’ll be any good at this, in advance. One rule of thumb is that if, after six months to a year of work, you can be accepted to a top incubator (like Y Combinator), you’re probably on track. But if you can’t get into a top incubator, you should consider trying to build organisation-building skills in a different way (or try building a completely different skill set).

There are many downsides of working on your own projects. In particular, you’ll get less direct feedback and mentorship, and your efforts will be spread thinly across many different types of tasks and skills, making it harder to develop specialist expertise.
To learn more, see our article on founding new projects tackling top problems.

Find jobs that use organisation-building skills

See our curated list of job opportunities for this path, which you can filter by ‘management’ and ‘operations’ to find opportunities in this category (though there will also be jobs outside those filters where you can apply organisation-building skills).

View all opportunities

Once you have these skills, how can you best apply them to have an impact?

The problem you work on is probably the biggest driver of your impact, so the first step is to decide which problems you think are most pressing.

Once you’ve done that, the next step is to identify the highest-potential organisations working on your top problems.

In particular, look for organisations that:

1. Implement an effective solution, or one that has a good chance of having a big impact (even if it might not work)
2. Have the potential to grow
3. Are run by a great team
4. Are in need of your skills

These organisations will most often be nonprofits, but they could also be research institutes, political organisations, or for-profit companies with a social mission.¹

For specific ideas, see our list of recommended organisations. You can also find longer lists of suggestions within each of our problem profiles.

Finally, see if you can get a job at one of these organisations that effectively uses your specific skills. If you can’t, that’s also fine — you can apply your skills elsewhere, for example through earning to give, and be ready to switch into working for a high-impact organisation in the future.

Career paths we’ve reviewed that use organisation-building skills

These are some reviews of career paths we’ve written that use ‘organisation-building’ skills:

• Operations management
• Helping build the effective altruism community
• Non-technical roles in leading AI labs
• Earning to give
• Founding new projects tackling top problems
• Become an executive assistant for someone doing especially high-impact work
• Working at effective nonprofits
• Research management

Read next:  Explore other useful skills

Want to learn more about the most useful skills for solving global problems, according to our research? See our list.

Continue →

The post Organisation-building appeared first on 80,000 Hours.

Hedge fund trading may be the highest paying job in the world, so to learn more, we spoke with a former manager at one of the world’s leading hedge funds. They gave us the following information, which allowed us to make a rough estimate of the typical earnings of hedge fund traders.

We also ran this document past several other people in the industry and asked them to point out mistakes.

We found that junior traders typically earn $300k – $3m per year, and it’s possible to reach these roles in 4 – 8 years. Senior portfolio managers can easily earn over $10m per year, though average earnings are probably lower. Read on for the details.

How do hedge funds make money and how is it shared among the employees?

Hedge funds trade in financial markets on behalf of clients in exchange for annual fees, and a cut of the profits. They’re similar to mutual funds but face fewer restrictions on what they can invest in, and can only be used by accredited investors.

The revenue of a hedge fund comes from the fees on the assets it manages. The typical fund charges a fee of 2% of assets under management per year, plus a performance fee. The performance fee is typically 20% of any returns it makes for the clients over and above the 2% base fee. So, if a fund makes 10% returns in a year, then the performance fee is 20% of (10% – 2%), or 1.6% of assets. Adding the base fee brings the total revenue to 3.6% of assets under management.

This means that a $1bn hedge fund returning 10% per year on its investments would have annual revenue of $36m. The clients would receive 6.4% per year on what they put in. These figures are fairly typical. 10% per year is a typical performance target, and similar to what hedge funds actually returned before fees over the last two decades.¹ A few funds charge higher fees and some charge lower ones. Many people think typical fees in the industry have shrunk in recent years.

How is this revenue split between different employees at the fund?

• 20-40% goes to operational costs, including the premises, technology, and operational staff. The larger the fund the lower this percentage.

• About 10% will go to all the junior traders and analysts.

• About 40-55% will go to the senior portfolio manager (who manages the junior traders).

• What remains, 0-30%, goes to the owner of the hedge fund (often also the senior portfolio manager). Many of the costs don’t scale linearly with revenue (i.e. running a $10bn fund isn’t nearly ten times more expensive than running a $1bn fund), so the owner will earn a higher percentage the larger the fund. The percentage is also very sensitive to performance – the owner gets what’s left over after costs, which could easily be negative in a bad year.

• The traders and portfolio managers within the fund are usually paid as a percentage of their returns, typically 10-20%. E.g. if a manager returns 10% in a year, they’ll receive about 1-2% of the assets they manage within the fund. So if they were managing $100m of assets, then they’d earn $1-$2m in that year. In addition they get a base salary, but that will be a small proportion of their total pay (perhaps around $100,000). This means their total pay is very volatile. In some funds, the percentage the traders earn also depends on performance, making pay even more volatile.

• Note there are different compensation structures in different funds and roles (e.g. many quant hedge funds don’t tie pay directly to returns, especially at more junior levels), so this is just a rough guide.

How much do traders actually get?

From the above, we can estimate how much traders earn at each stage. The following is all very rough and could be greatly improved with more data. The extra information about the industry is based on my own judgements having talked to lots of people who work in finance.

• To enter the industry, initially you’ll spend 4-8 years working as an analyst. The ideal path is usually said to be 2-3 years at a top investment bank, then 2-5 years working at a hedge fund as an analyst. In these stages, you’ll be paid typical investment banking salaries (perhaps $100-$300k). An alternative but slower route is to continue in investment banking until you’re known as the best analyst in your sector, then switch.
• After this time, if you manage to progress, you’ll start managing money as a junior trader or portfolio manager. There are many types of trader, but we’re talking about those with significant responsibility for making investment decisions. You might start with $50-$250m of assets under management. So if you successfully earn 10% returns, your income will be $0.6m – $3.8m per year. Of course, there’s a good chance you’ll fail to perform, which would mean earning only your base salary, and could easily lead to losing your job (see next point). Even taking account of the possibility of earning more, because it’s hard to beat the market, a realistic estimate of expected income is probably less than half.
• If you lose money for more than a year, you could easily get fired. How long you have depends on the fund. One or two quarters of bad performance at some funds could already be risky; whereas you might have years at a fund focused on long-term investing. Some quantitative funds rarely fire staff, but let you continue in a more operational role. If you get fired from a top fund, you can usually get a job at a less prestigious fund. If you get fired from a less prestigious fund, you’ll probably have to leave the industry, or switch into a non-trading role. Total turnover varies by fund, but 10-20% is not uncommon for trading roles.
• If you perform well, then the amount you manage can grow rapidly. It’s not uncommon to manage several times as much within a couple of months of starting, though a couple of years is more typical.
• A more senior portfolio manager would manage about $500m-$1bn. If they achieved 10% performance, that would make their pay $6m – $12m per year, though again, average pay is probably less. Moreover, there are probably about 3-10 junior traders per senior trader, suggesting the chance of making it to this level is at most 10-33%. In reality, it’s less since many people leave the industry in the meantime, especially at the more junior levels.
• Note that in some firms, it’s hard to progress from junior trader to portfolio manager, since the managers are recruited directly from banks.

• If you end up owning and managing a hedge fund, then you can earn much more again.

• The owner/senior manager of a $1bn hedge fund which returns 10% p.a. will earn $15 – $25m. However, if the fund fails to return at least a couple of percent they’ll make nothing. If they lose money for more than a couple of years, they could easily go out of business.
• The owner/senior manager of a $10bn hedge fund will make 10-times as much. In fact they’ll probably make even more because many of the costs are fixed, so they get a larger fraction of marginal revenue.

• Of course, very few people make it to this level. A $1bn hedge fund would probably employ tens of traders, suggesting each has only a couple of percent chance of making it to being an owner, even if we ignore those who drop out of the industry.

• Note that some hedge fund managers make more than these figures suggest because they also invest their own money in the fund. The top 5 hedge fund managers usually earn over $1bn in a year. This is because if you already have $10bn and earn a 20% return – which is common among top hedge funds – then you earn $2bn per year.

Much of the above also applies to prop trading. Prop traders trade on behalf of their institution, rather than external clients. They usually exist within small partnerships and banks (though new regulation has reduced the amount of prop trading in banks). Often prop traders trade with a smaller amount of money, but make more aggressive bets. Prop traders typically receive a larger fraction of the returns they make e.g. 30% rather than 10-20%. This means they end up earning a similar amount per year as hedge fund traders.

Sense checks

Looking at the above, and making a very rough estimate, the mean earnings over an entire career in the job could easily be about $400k – $900k per year. This is based on an analyst salary, plus a 10-20% chance of making it as a junior trader, and a couple of percent chance of making it to a top role.

Does that range check out?

We found that the mean income in finance is about $245,000. This includes a wide range of jobs that are mostly much lower earning than trading positions, so it doesn’t seem unreasonable to think that the mean for trading could be several times higher.

We also found that the 99th percentile in finance (i.e. the highest-paid 10,000-20,000 finance workers in the US) earns $1.4m, so are figures are within this bound.

Some hedge funds have to disclose their total compensation, which means you can estimate the average compensation per staff member. Here is an analysis of 15 UK high-frequency hedge funds, which finds mean compensation from $200k-$1.4m. Many of these figures include support staff too, so they are underestimates of the trading salaries. This puts them in line with our estimates. Keep in mind that high-frequency firms generally offer higher pay than hedge funds.

The average employee at a top investment bank earns about $300,000,² but “front office” staff like traders should earn more. The typical front office investment banker age 30 in London earns about $400,000.³ I’d expect hedge fund traders to earn more, so this is in line with the estimates above.

What would the expected earnings be for someone entering the industry?

You’d also need to adjust for the chances of leaving the job. It’s common for people to go into more operational roles, other positions in finance, or entirely different industries, and these all usually have lower income.

You’d also need to adjust for the future prospects of the industry, and other issues we cover here.

Finally, your expected earnings will also be very sensitive to personal fit. If you have a higher than average chance of making it to the top roles, your expected earnings could be many times higher, and vice versa.

Areas for further research

• Make more detailed estimates of the proportion of traders at each level of seniority, and then make a better estimate of the mean.
• Make better estimates of the chances of leaving the industry at each level.
• Cross-check our estimates for each level with more people in the industry.
• Look for more data sources about aggregate earnings (such as industry surveys), and cross-check.
• Make more detailed comparisons with other top earning careers.

Should you “earn to give” in hedge fund trading?

If the mean income of a hedge fund trader is $650,000, then that’s $20m over a 30 year career. If you donated half, that would be enough to cover the salaries of about 5 nonprofit CEOs or 2-3 academic researchers, while still having a huge amount left to live on. This is why, if you’re a good fit for an option like this, ‘earning to give’ can be a high-impact career.

Of course, there’s a lot more to say about the pros and cons of earning to give. You can read more in our guide to earning to give.

To find out more about the job, read this interview with a hedge fund trader.

Read next: what are the highest-paying jobs in America?

The post How much do hedge fund traders earn? appeared first on 80,000 Hours.

Many people are concerned that ‘earning to give‘ in the financial industry is overall harmful for the world, even if you give away most of your income to outstanding charities.

To figure out if this is true, we have been researching the size of the harms, and benefits, caused by finance. (Though please note 80,000 Hours is not just about earning to give and in fact we think it’s the best path for only a small share of our readers.)

One of the concerns we’ve investigated is that certain parts of quantitative finance are a socially-useless competition between traders that only changes who gets some amount of income, not that someone gets it.¹ I think this is the case, but the incredible amount of inequality in the world makes this argument against working in finance fairly weak.

If you are working in ‘low-latency arbitrage’, make a random clever trade on a stock exchange and beat some other trader to a profit by 1 millisecond, whose pocket is this money coming from? A poor African farmer? No, they have no wealth to take. A middle class American family? It’s possible, but most of their wealth, if they have any, is probably in their house or bank account.²

We don’t have perfect figures here, but looking at reasonable estimates, you’re more than 80% likely to be competing against someone in the top 0.1% of global wealth – people so wealthy it scarcely matters if what they earn on their savings is any higher or lower. One estimate, that tries to take into account wealth being hidden from tax authorities, is that 30% of the time you’ll be taking money from someone in the richest 1 in 100,000 in the world!³

The vast majority of the wealth being actively traded in financial markets, often by automated algorithms, is owned by the extraordinarily wealthy. The vast majority of people in the world will never have the resources to be constantly placing orders on the stock market.

This means you can compete to fund your donations to the world’s poorest people without much remorse. A quantitative trader who gives to GiveDirectly might be the clearest example of a (legal) Robin Hood in the modern world. The more you feel that the super rich don’t deserve their wealth, the more justifiable it is to work to ‘arbitrage’ it away penny by penny and hand it to those in poverty.

Now this doesn’t mean that working in finance is actually fine – this is only one possible objection, to a particular kind of trading. The much more compelling concern to me is that excessive attempts to lend by financial institutions leads to a higher frequency of financial crises, which are horrible for people’s wellbeing. If someone were engaged in the kinds of activities that have created financial crises before – externalising risk to governments because the firm they work for is ‘too big to fail’, or working on fraudulent or near-fraudulent lending – I would much prefer that they left finance and stopped giving. I would also suggest they blew the whistle on anything illegal or troubling they observed.

But the concern that you are pointlessly taking from other people in the market doesn’t keep me up at night. The people you’re typically taking from are so rich that ‘drinking their milkshake’ is more neutral than harmful.

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One of the most common misconceptions that we’ve encountered about 80,000 Hours is that we’re exclusively or predominantly focused on earning to give. This blog post is to say definitively that this is not the case. Moreover, the proportion of people for whom we think earning to give is the best option has gone down over time.

To get a sense of this, I surveyed the 80,000 Hours team on the following question: “At this point in time, and on the margin, what portion of altruistically motivated graduates from a good university, who are open to pursuing any career path, should aim to earn to give in the long term?” (Please note that this is just a straw poll used as a way of addressing the misconception stated; it doesn’t represent a definitive answer to this question).

Will: 15%
Ben: 20%
Rob: 10%
Roman: 15%

Instead, we think that most people should be doing things like politics, policy, high-value research, for-profit and nonprofit entrepreneurship, and direct work for highly socially valuable organizations.

The misconception persists for a few reasons: when 80,000 Hours first launched, we led with the idea of earning to give very heavily as a marketing strategy; it was true that we used to believe that at least a large proportion of people should aim to earn to give long-term; earning to give is much simpler and more memorable than our other recommendations; and earning to give is controversial, so the media love to focus on it. Giving too much prominence to earning to give may nevertheless have been a mistake.

Moreover, something that complicates the message is that we believe that jobs that involve earning to give are very often excellent prospects in the short-term, because jobs that build career capital are often high-paying. For example, we often recommend trying consulting after graduation. If you don’t have a clue what you want to do long-term, consulting is a good option: you get a wide network, a good general-purpose business education, a good credential on your CV, and it’s a stepping-stone into many other career paths such as policy and nonprofits. It’s also well-paid, so you can earn to give while doing it, having a good social impact right away.

Here are the reasons why we think fewer people should earn to give than we did in the past (Ben Kuhn has an excellent discussion of some of this on the effective altruism forum):

• Effective Altruism organizations are generally reporting that they are more talent-constrained than money-constrained.
• Some effective altruists who are earning to give are doing so very successfully, and indeed can each already pay the salaries of a number of other people doing directly valuable work; this will only increase as they progress in their careers.
• GoodVentures is looking to spend most of its multi-billion dollar resources over the next 30-40 years. I wouldn’t be surprised if other multi-billion dollar foundations also got explicitly on board with effective altruism. This would create a pressing need for talented people to spend this money well, rather than raise more money.
• In general, important ideas seem to get funding: GiveDirectly has scaled up to moving $7 million/yr in cash transfers in just a few years; research into the responsible development of artificial intelligence now has major donors, including Elon Musk and Open Philanthropy, putting millions of dollars behind it, despite being an extremely niche area just a couple of years ago.
• Many people (i) want to make an impact, but only in a way that they also find personally enjoyable or which doesn’t disrupt their other life plans; (ii) don’t find many careers with direct impact enjoyable or practical; (iii) do find a particular high-earning career enjoyable and compatible with their other plans. For those people, earning to give can be a great option. But it potentially means that people who are open to pursuing any career path should pursue a different and more neglected option than earning to give.

It seems unlikely to me that earning to give would ever be the best choice for the majority of people, just for the boring mathematical reason that there are many more non-earning-to-give paths than there are earning-to-give paths. Moreover, one successful person earning to give can support several people doing direct work, and there are lots of potential donations from people who aren’t earning to give that we can bring in by doing a good job of direct work.

However, do bear in mind that:

• The strength of the argument for earning to give long-term depends heavily on the cause we’re talking about. If you think global poverty is the most important cause, and you think that direct cash transfers are among the very most effective paths for helping the extreme poor, then you’ll probably think that the number of people who should earn to give should be higher than 10%.
• It’s possible that some organizations are able to massively scale up. Being more talent-constrained than funding constrained might only be temporary; some fields popular among the effective altruism community (such as movement-building and research into responsible development of artificial intelligence) are currently very small, so could potentially start new activities that could absorb much more in funding.

Clarification (added July 12th as a result of discussion on Facebook): When I wrote “focused on earning to give as a marketing strategy” I meant that, when doing marketing, we would (i) often illustrate 80,000 Hours’ advice by talking about how we thought earning to give was a good option for graduates to consider, often comparing it with charity work; (ii) wouldn’t push back against journalists if they wanted to focus on earning to give. An article I wrote for Oxford Philosophy in 2012 is pretty representative: I lead with the general idea of taking influential positions, then compare earning to give with charity work, then mention politics and research only more briefly. We didn’t ever pretend for the purposes of marketing that we were exclusively interested in earning to give.

An additional point of clarification concerns whether ‘earning to give’ is too heavily weighted within the effective altruism community vs whether it’s too heavily weighted by the general public. Even though we think that earning to give might on average currently be rated too highly as an option within the effective altruism community (for people who’d be happy doing other things), we still believe that, in general, outside of the effective altruism community, far too few altruistic people think about earning to give as a serious career option.

The post 80,000 Hours thinks that only a small proportion of people should earn to give long term appeared first on 80,000 Hours.

The Chronicle of Higher Education summed up the results:

If you want to get a job at the very best law firm, investment bank, or consultancy:²

1. Go to Harvard, Yale, Princeton, or (maybe) Stanford. If you’re a business student, attending the Wharton School at the University of Pennsylvania will work, too, but don’t show up with a diploma from Dartmouth or MIT. No one cares about those places.
2. Don’t work your rear off for a 4.0. Better to graduate with 3.7 and a bunch of really awesome extracurriculars. And by “really awesome” I mean literally climbing Everest or winning an Olympic medal. Playing intramurals doesn’t cut it.

Here’s a chart showing the key signals that recruiters used to screen candidates.

This isn’t to say that coming from a prestigious school is required to get these jobs – there are many cases of people who get them without – just that it’s going to be much harder.

Another finding was that most candidates were screened out very rapidly:

[When screening candidates…][E]valuators tended to do so very rapidly, typically bypassing cover letters (only about fifteen percent reported even looking at them) and transcripts and reported spending between 10 s to 4 min per resume.

And you need to have the “right kind” of extracurriculars:

Across the board, they privileged activities that were motivated by “personal” rather than “professional” interest, even when activities were directly related to work within their industry (e.g., investing, consulting, legal clinic clubs) because the latter were believed to serve the instrumental purpose of “looking good” to recruiters and were suspected of being “resume filler” or “padding” rather than evidence of genuine “passion,” “commitment,” and “well-roundedness.”

You can see a great summary of the paper and more interesting discussion in the comments on Bryan Caplan’s blog.³

Steve Hsu points out⁴ that elite jobs can be roughly divided into “hard” and “soft”. This study mainly focuses on “soft” elite jobs like consulting, law and deal-making investment banking. The “hard” elite jobs are those in trading, hedge funds, venture funds, technology and startups. In these, performance is easier to measure and raw intelligence is more important, so recruiters put more weight on standardised test scores, track record and academic record, and less on school prestige.

In the “soft” jobs, the ability to sell to and impress clients is relatively more important, so recruiters fall back on signals that will look good to clients, like school prestige and impressive extracurriculars. Quoting from Hsu:

The soft firms know that what they do isn’t “rocket science” — it just isn’t that hard, and any academic admitted to a top university is smart enough. They just have to appear elite and smart enough to snow their clients and sell the work.

Jim Manzi responds⁵ that the big three strategy consulting firms seem to put more emphasis on standardised test scores than the study suggests, and says there’s a shift in consulting and finance towards a greater proportion of “hard” jobs vs. “soft” ones.

All of these commentators are focused on the US. I expect the results would be similar elsewhere in the rest of the developed world, but can easily imagine differences in emphasis.

The post The Chronicle of Higher Education on who gets ‘elite’ jobs appeared first on 80,000 Hours.

It’s based on the popular blog post we released in February – “in which career can you make the most difference? – but with several changes.

How has the content changed?

1. Replaced the ranking. Previously, we put all the careers we considered in rank order. We knew the precise order wouldn’t be robust, which we flagged, but thought it would be more engaging to present the information that way. After more reflection, we decided in favor of clarity. Now we present the list of all the careers we’ve considered (clearly stating how deeply we’ve researched each career), and break them into four groups:
   • Promising: careers that seem to offer an especially good opportunity for people aiming to make a difference.
   • Promising but uncertain: careers that seem like they might make it into the promising class but are not yet thoroughly researched.
   • Very promising but risky and extremely competitive: for paths like politics and tech entrepreneurship which look really high-impact but should not be entered lightly
   • Everything else: careers that didn’t seem unusually good, though they may still be great options for someone with good personal fit, or if you can identify an especially good opportunity within the path.
2. Added an “ease of competition” score. Previously, we tried to take account of different levels of competitiveness by scoring the careers relative to “someone who can plausibly get this career”, which is an unclear and changing baseline. We decided it would be much clearer to create a score for how generally hard the career is to enter and succeed within, then score the other factors based on “your prospects if you make it in”. So, now it’s clear that software engineering is lower paid than tech entrepreneurship, but also less competitive, and it’s up to the reader to make the tradeoff for themselves.

3. Expanded the career profiles. We developed a new template for the career profiles, and expanded many of them while filling out the new fields. In particular, we made tech entrepreneurship and software engineering substantially longer and updated them based on research that has happened in the interim. We also added quantitative trading and focused “founding effective non-profits” on those concerning international development only, so we could make the information more specific.

4. Added a breakdown by career stage and skill-type. We wanted to make it very obvious that which option is best for you depends on personal fit and which stage you’re at in your career. So, we added an extra section that guides you through the careers based on skill-type (using our assessments of what’s required for good personal fit), and those that are best for career capital compared to immediate impact.

How have our views on the careers changed?

• We no longer rate front-office finance as promising (when previously it was ranked 5th) due to concerns over (i) competitiveness and crowdedness (ii) job satisfaction (iii) lack of direct impact (iv) weaker skill-building. If you were very focused on earning to give, it would still be one of the best options; however, we feel that someone able to succeed in this path is often going to be better served by consulting (better for career capital, keeping options open and job satisfaction), tech entrepreneurship (better for direct impact, and maybe also better for earnings and career capital), and quant trading (better for earnings); unless they’re an especially good fit for finance.
• We also didn’t rate law and medicine as promising, though there were only ranked 15th and 10th before.

See the new top careers page to see all the updated scores.

What would we like to improve in the future?

We’re still thinking about how to present the list to minimise misunderstandings for people new to 80,000 Hours.

One measure we plan to take is to clearly present the list as a way to “get ideas” rather than a definitive ranking. In our coaching and workshops, people seem to find it really useful just to have a concrete list of particularly interesting suggestions to help them check they haven’t missed an option. It’s not useful, however, to read much into the list beyond that. Which option is best for you on the list mainly depends on personal fit. Moreover, there are many careers we haven’t considered, and even those we didn’t rate as promising can be very good options for some people in some situations.

We’d also like to add an FAQ addressing some of the most common misunderstandings.

Beyond that, it’s a top priority for us over the next six months to further deepen the research behind the career profiles. We’ll continue to adjust the top careers lists based on what we discover.

What questions came to your mind when you first saw the page? What do you think we should put in the FAQ?

The post Update: In which career can you make the most difference? appeared first on 80,000 Hours.

Ramit came to us with a simple question: should I try to train as a medic with the aim of doing biomedical research, or should I seek a high earning job in finance and pursue Earning to Give?

He’s currently doing both – working as a quantitative financial analyst giving away more than a third of his salary (he was an early stage funder of Give Directly) and taking pre-med courses part time, as well as other projects!

Ramit’s initial thought was that the biomedical research path would be better. Read on to find out how he came to change his mind, and came up with a new set of next steps.

The research

In our first meeting, we discussed Ramit’s background, the decisions facing him and his thoughts on their pros and cons. Ramit’s guess was that he could make a considerably larger contribution as a medical researcher, in part because that might allow him to work on potentially very high return projects like vaccine development. We also discussed some big picture questions, like how concern for the far future might be relevant to picking causes.

After this discussion, we decided to do a full comparison of earning to give and biomedical research. Here’s the report we produced. We also started a shallow investigation of biomedical research careers. You can see two of the four interviews we’ve performed for that here and here.

We ended up coming down in favor of earning to give, especially if Ramit supports the best causes, though we thought it was a difficult call, which is highly dependent on Ramit’s prospects in the two careers. One key reason in favor of Earning to Give was that we think the best causes he can support through donations over the forseeable future are likely to be considerably more effective than the biomedical research cause. Another key reason was that in the earning to give path, his impact can happen much earlier, and we think doing good earlier is generally better than doing good later.

Due to the difficulty of the decision, however, our main recommendation was to find out more about whether he might be a good fit in research. We recommended speaking to more researchers and trying out a research role. All the biomedical researchers we spoke to said that good researchers were highly valuable, so if Ramit has a good chance of becoming a good researcher, then the decision becomes much less clear. Another key variable is Ramit’s earning potential in finance. We suspected he could earn considerably more in a trading or investing position, rather than a research position, so encouraged him to speak to recruiters and make job applications in order to find out.

In our second meeting, we discussed Ramit’s reactions to the report. He was surprised that we thought it was unclear whether research beat earning to give, given that he previously thought research was clearly better. In general, he agreed with our conclusions and ideas for next steps. We also shared our guesses on his earnings prospects in finance.

In the end, Ramit switched from having medical research as his best guess path, to continuing in finance earning to give. He also became more in favor of donating to meta-charities, like GiveWell, which we discussed during our conversations.

Lessons learned

• We improved our process for comparing earning to give to direct work. Applying this, we confirmed our belief that it’s difficult to compare research to earning to give, and in general much comes down to the relative ability of the person in the two paths.
• We found out a lot about how to lead a career and have impact in medical research, which we’ll write up separately.

Summary of the case study

Their plans before starting:

Cause and Mission:

• Socially Valuable Research – Develop vaccines and make vaccine development more efficient as an academic researcher – 60%
• Fighting Global Poverty through earning to give in finance – 20%
• Something else – 20%

Next step:

• Finish up pre-medical classes (postbacc) and apply for MD / PhD programs starting in June 2014 – 60%
• Seek higher earning jobs in finance – 20%
• Something else – 20%

Questions they asked us:

Should I continue in finance and seek to maximise my earnings, or should I start to study medicine?

How many hours did we spend?: 28 hours

Information they gained:

• The potential for earnings in trading or investing roles is much higher than his current role. It’s worth applying for other positions in order to better assess whether he can earn more.
• In medical research, there’s potential to become stranded mid-career.
• It’s tough to say whether medical research or Earning to Give in finance is more high impact, but in this case 80,000 Hours slightly favors Earning to Give overall due to the higher flexibility and ability to support more promising causes.
• Working in a lab during the summer is one good way to better assess fit with biomedical research.
• We think there are strong donation opportunities within meta-charities, for instance, donating to GiveWell.
• The combination of medicine and programming skill is seen as highly valuable in biomedical research.
• Some researchers believe neglected tropical diseases could be a good area to work on within biomedical research, though others favor focusing on basic science.

Their plans after finishing the case study:

Cause:

• Global poverty > global health – 60%
• Biomedical Research – 20%
• Meta-charity (e.g. GiveWell) 20%

Mission:

• Earning to give in finance – 50%
• Medical researcher – 25%
• Train medicine part-time, then choose which way to focus in several years – 25%

Next step:
Probabilities add to above 100% due to inclusivity of options

• Finish pre-medical postbacc program in 6 months – 95%
• Apply for trading positions – 100% (currently ongoing)
• Apply for bioinformatics research position – 60%

Plan changes:

• Substantial update in favor of earning to give (from 20% to 50%)
• Substantial update in favor of supporting meta-charities (from 0% to 20%)
• Next steps changed to include applying for more finance roles immediately and applying for research roles to learn more about them.

In their own words:

Over the past decade, I’ve invested a lot of time thinking about how best I could improve the lot of humanity. I had jumped between earning to give and direct intervention and back.

When I asked 80,000 hours for career advice, I was again stuck between an earning to give path and a medical research path. Their analysis added a level of rigor and clarity that I had never put into this obviously very important decision.

They leveraged their resources and contacts to determine what it takes to make it in the medical research field and the likelihood of making a big impact. They looked into various large earning professions that fit my skills and talked to me about earnings trajectories. They told me what they knew and what they didn’t. And they gave me a path to gather the information that I would need to finally determine what my optimal route is.

Of course, complex decisions with numerous moving parts are always difficult and uncertain, but 80,000 hours added rigor to the career decision process that makes the path forward that much clearer.

The post Case study: earning to give compared to medical research appeared first on 80,000 Hours.

Introduction

Jessica is a software engineer at Google, who donates much of her income to GiveWell recommendations and 80,000 Hours. She plans to continue pursuing earning to give, and came to us wondering whether she might be able earn more using her skills; in particular by switching into finance or moving to Silicon Valley.

Summary of lessons learned

We found:

• An engineer at Google can expect to earn about $150-$200 p.a. after 3 years of experience, which will then grow at 2-6% p.a. afterwards.
• Google engineers are among the most highly paid engineers in big companies.
• Google engineers do not appear to earn more in Silicon Valley compared to major East Coast cities, although software engineers on average earn more in the Valley.
• She may be able to earn more by switching into finance, but we need to do more research.

Our research

Jessica wanted to know whether she could earn more with her software engineering skills, so that she could see how much more she could donate if she switched jobs.

We discussed her key uncertainties, and agreed to work on these questions:

What are my earnings prospects if I continue as an engineer at Google?
Could I earn more by moving to Google HQ in California?
Could I earn more by joining a start-up in Silicon Valley?
Could I earn more by becoming a programmer in finance?

Our findings are here.

Why these questions?

(2)-(4) were some of Jessica’s key uncertainties that we thought we could make progress on. (1) was less important because Jessica already had an answer, but it was not much additional effort to investigate.

Another question about earnings we didn’t consider was whether Jessica could earn more by switching into another software engineering job (e.g. at Twitter). This is because Jessica can determine this relatively easily by making a couple of applications or speaking to recruiters.

During the case study, Jessica was approached by recruiter working for Twitter and several other companies, who told Jessica that it was tough to get people to leave Google because it generally involves taking a pay cut. This agrees with what we’ve heard from a couple of other people in the industry.

What were the results?

Jessica didn’t make any significant plan changes, though she did learn important information about the earnings of other software engineers and that it would be best for her to speak to a headhunter to learn about her prospective earnings in finance.

We’re still waiting to find out the results of her looking into finance jobs, which may cause a shift of plans later.

Complete write up of the case study

Plans before starting:

Causes: Donating to GiveWell recommendations and 80,000 Hours

Mission over the next 5 years:
Earning to give 95%
Something else 5%

Next steps:
Stay in Google 57%
Apply for some other jobs in software engineering in the same city 30%
Other things e.g. finance, or change city 10%,
Start a start-up 3%

Questions asked:

What’s the maximum I could be earning?
What’s the maximum I could be earning if I didn’t change city?

What we did with them:

After clarifying their question and some issues like what discount rate they use, we interviewed 5 people and did some basic analysis on Glassdoor, aimed at answering:

What are my earnings prospects if I continue as an engineer at Google?
Could I earn more by moving to Google HQ in California?
Could I earn more by joining a start-up in Silicon Valley?
Could I earn more by becoming a programmer in finance?

Our research is here.

How many hours did we spend in total?: 8h

Information gained:

• The best way to work out your expected earnings in finance is probably to speak to a headhunter, and there’s a reasonable chance you could earn more there.
• It seems like she probably can’t earn significantly more by moving to Silicon Valley.
• Her current salary at Google seems standard and will be difficult to boost.

Plus several small things about how to switch into finance.

Plan changes:

None

Other benefits:

She was considered for a software job in finance by someone we interviewed.

The post Case study: can I earn more in software or finance? appeared first on 80,000 Hours.