IATROGENIC

Are you familiar with the term “iatrogenic”? Going beyond the medical sector can help us question and improve how we run our humanitarian, philanthropic, and impact-investing initiatives.

We must acknowledge that our attempts to bring about positive change can have unintended negative consequences. This is precisely what iatrogenic means, and we must heed it as we devote our time, energy, and money to bettering our communities, climate, and cherished causes.

AVOID UNINTENDED HARM

Iatrogenic is a term used to describe unintended harm or negative consequences caused by medical treatment or intervention. Hippocrates is traditionally credited with stating the first principle of medicine: first, do no harm, which means avoiding iatrogenic effects.

This is an excellent example of an inversion approach, extensively promoted by Charlie Munger.

In recent years, the concept of iatrogenic has been expanded beyond the medical field to include unintended harm or negative consequences caused by any intervention.

Iatros means healer in Greek, meaning “caused by the healer” or “brought by the healer.”

In this sense, a healer is anyone intervening to solve a problem.

I find its application particularly relevant in fields such as development aid, philanthropy, and impact investing, where the call for action is explicitly designed and funded to achieve positive impact. (Be the change you want to see in the world).

Accountability is critical as we ensure selected activities achieve the intended positive goals and avoid unintended harm.

THE INTERVENTIONISTAS

In most cases, the modern healer is no longer a doctor but a thought leader, a CEO, a government, an NGO, a church, an inspired association or community, a philanthropist, or a responsible investor. Nassim Taleb calls these people interventionistas.

In his opinion, these people come armed with solutions to solve the first-order consequences of a decision, but can create worse second and subsequent-order consequences.

Luckily, at least for them, Nassim states, they’re never around to see the train wreck they created. In his book Anti-Fragile, Taleb calls out this naive interventionism when we don’t know the intervention’s break-even point.

THE SECOND-ORDER CONSEQUENCES

The term “iatrogenic” is currently used to describe any outcomes resulting from interventions that exceed their intended benefits. Some examples of iatrogenic effects are more apparent than others. For instance, when negative consequences are immediately visible and appear to have a direct cause-and-effect relationship with the intervention, we can confidently infer that the intervention caused harm.

Conversely, when negative consequences are delayed or can be attributed to various causes, we may be less inclined to conclude that the intervention caused them. Before intervening, we must have a comprehensive understanding of the benefits and potential harms of our actions – the second and subsequent order consequences. Without this knowledge, how will we know when our actions, despite our good intentions, are doing more harm than good?

Why would people do something even when it could cause more harm?

Shane Parrish, the author of the FS blog, lists a few reasons why well-intentioned people tend to intervene even if the consequences outweigh the benefits, which I further expand:

1) An inability to think through problems. This first flaw is the inability to think through second and subsequent-order consequences. They fail to recognise that implications of the second and subsequent orders even exist — let alone that they could outweigh the benefits. Most things in life happen in the second, third, or nth steps. Consequences have a long tail!

2) Separation from consequences. It can be challenging to recognise when we are causing harm when there is a time lag between our actions and their consequences. This time delay may foster self-deception. Since we tend to seek confirmation of our beliefs and presumably take action because we believe it will be beneficial, we are unlikely to acknowledge evidence that contradicts our convictions.

If we concentrate solely on measuring the outputs of our actions without adequately analysing the actual outcomes and long-term impacts, we risk ignoring potential long-term consequences. This highlights the importance of investing sufficient time and resources to fully evaluate our actions’ outcomes and potential impacts, including misleading greenwashing and social washing cases. We cannot simply dismiss unpleasant consequences as lessons learned!

3) A bias for action / Intervention Bias. This is also known as the “do something syndrome.” I call it “solution in search of a problem” syndrome. As an advisor, analyst, politician, or social worker, it can be challenging to admit that you do not know the answer to a problem. When seeking to enhance a situation, the initial impulse is often to modify something, make adjustments, or introduce new strategies. However, this approach can be misleading. Occasionally, taking no action or removing certain elements may be the most effective solution.

4) There is no skin in the game. The fourth flaw concerns an incentive. There is no or little skin in the game. We win if things go right in the short term and suffer no consequences if things go wrong in the long term.

5) In several cases, there is an asymmetric distribution of risks and benefits from the intervention: some stakeholders bear the risks, while others bear the benefits. Clearly, this uneven incentive structure is flawed. As the saying goes, read people’s incentives, and you will understand their behaviour. For instance, in some multi-stakeholder projects, partners using public funding can easily digest a loss, calling it “lessons learned,” while partners using private capital could easily risk their jobs. For a thought-provocative view of international interventions, check out John Perkins’ book, Confessions of an Economic Hitman.

IATROGENIC & RESPONSIBLE INVESTING

Iatrogenic plays a crucial role in impact/responsible/ESG investing, where your money is allocated to generate a measurable positive impact alongside a financial return. Unintended negative consequences can undermine its potential success. Thus, the concept of iatrogenic in investing reminds us to:

1. a) Do no harm! It is necessary to consider the second and subsequent-order effects of our impact investments. By taking a comprehensive approach that considers the potential damage that our interventions may cause, we can create more sustainable and impactful investments that truly make a positive financial, social, and environmental difference
2. b) Do not fall for overestimated or unrealistic benefits of the investment promoted by sell-side greenwashing or social washing practices. On this topic, check out Damodaran’s article “A Skeptical look at ESG Investing” and Tariq Fancy’s essay, The Secret Diary of a Sustainable Investor.

THERAPEUTIC OBSTINACY

When the will to do good reaches its intrinsic limits, there is much to borrow from medical practice to analyse the allocation of resources to a problem or course of action. Therapeutic obstinacy, also known as “medical futility” or “over-treatment,” refers to the practice of continuing medical interventions even when they are unlikely to benefit the patient.

It typically occurs when treatments are disproportionate to the potential outcomes, offering little to no hope of improvement while causing additional suffering or prolonging the process of dying. The underlying concern is whether such treatments are ethical, as they might prioritise medical intervention over the patient’s well-being, dignity, or quality of life. Therapeutic obstinacy is often questioned in scenarios of end-of-life care, as it may extend suffering rather than provide meaningful care.

Just as in therapeutic obstinacy, where the medical intervention does not benefit the patient, the case must be made when humanitarian, solidarity, or philanthropic efforts are not reaching their intended targets, and resources (time, money, supplies) are consumed without tangible benefit to the people in need.

Therapeutic obstinacy may cause harm, prolonging suffering. In a humanitarian scenario, the aid could be misused or exacerbate a conflict by empowering the wrong groups.

In both therapeutic obstinacy and humanitarian interventions, emotional and institutional pressures can drive continued efforts despite knowing the interventions are ineffective. Just as doctors may struggle to “let go” when a patient is terminally ill, aid workers and donors might feel compelled to continue acting, out of compassion or institutional momentum, even when it may not be wise.

In both medical and humanitarian contexts, there is a need for a critical assessment of actions when the intended outcomes are not being achieved. Ethical decision-making should be based on the likelihood of success, potential harm, and respect for the dignity and well-being of those involved. Continuing ineffective interventions without reassessing strategies can result in wasteful or harmful outcomes, regardless of the noble intentions behind them.

BOTTOM LINE

Interventions and Investments — in particular, those explicitly driven by positive impact — should be implemented:

1) When there is a measurable benefit

2) when the benefits visibly outweigh the negatives

3) when there is a consensus and mitigation measures over the management of negative effects

The intervention must demonstrate benefits that are orders of magnitude greater than the natural path of non-intervention. It is crucial to assess the beneficiaries and the individuals who will bear the repercussions of the intervention, as they are often distinct groups of stakeholders. A prime example is the endorsement of electric cars, which eliminate CO2 emissions from traffic but disregard the pollution generated by power plants (nuclear and carbon) and batteries.

Author Shane Parrish invites us to recognise that some systems self-correct; this is the essence of homeostasis. “Naive interventionists, or the interventionistas, often deny that natural homeostatic mechanisms are sufficient, that something needs to be done — yet often the best course of action is nothing at all.”

Overall, when applying the concept of iatrogenic in the philanthropic and solidarity fields, we must take a proactive approach to understand, cap, or mitigate unintended harm. This requires a commitment to measuring risk and a willingness to adapt and adjust activities as new information becomes available.

A critical step in applying the concept of iatrogenic is to engage in meaningful dialogue with stakeholders, clients, and beneficiaries affected by the intervention efforts. This means listening to community members’ perspectives and concerns, and working collaboratively to design interventions that are responsive to their needs and aspirations. By involving stakeholders in designing and implementing interventions, individuals and organisations can ensure that interventions are more likely to have positive, sustainable impacts.

Another critical step in applying the concept of iatrogenesis is to adopt a holistic approach. This means recognising that interventions do not operate in isolation but are part of larger social, economic, and environmental systems. By taking a systemic view of interventions, organisations can identify potential unintended consequences and work to address them before they occur.

Finally, organisations must be willing to focus on the evaluation phase, measuring the actual impact, admitting when they have made mistakes, and taking steps to rectify them. This requires a culture of transparency and accountability, where we – do-gooders “interventionistas” – are open to feedback and are committed to learning from our experiences.

Don’t forget these two timeless proverbs: “The road to hell is paved with good intentions,” and “Don’t make the cure worse than the disease.”

Keep It Real. Sweat Your Assets.

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