cognitive biases

Saving administration costs or saving lives?

By Lucius Caviola & Nadira Faulmüller

Imagine a car company advertising as follows: “90c of any dollar you pay for your car goes directly to building cars. Only 10% of our expenses go into planning, designing, and advertising them.” Such a campaign strategy would seem patently bizarre; when buying a product few of us are interested in how much went into administration, all we care about is what we get for our money. Overhead ratio (the proportion of money going into administration) is irrelevant; only cost-effectiveness matters.

This common sense approach to purchasing goods or services does not seem to translate into the non-profit sector, however. Consider the following advertisement by the organisation CARE:  “More than 90 percent of our expended resources – among the highest of all philanthropic organisations – support our poverty-fighting projects around the world. Less than 10 percent of expended resources go toward administrative and fundraising costs.” Continue reading

Hillsborough, Heysel and the Availability Bias

One of my clearest childhood memories is of seeing images  of the 1989 Hillsborough Disaster on the television news. Ninety-six Liverpool fans died in the crush, with an estimated 766 injured. I lived on the other side of the world, had never been to see a football game, and presumably had little comprehension of what the victims had gone through, yet the images of the crush, and of a few people being hauled to safety from it, made a strong and disturbing impression. Continue reading

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