Rational Altruist

Often there is a tension between a simple argument suggesting that a trend is positive on average, and more subtle arguments suggesting it might be negative at the moment. For example, all of the following are arguments I have encountered in the last few months: Read the rest of this entry »

Consider the following three actions:

1. I bury $20 in my back yard.
2. I sell a pound of strawberries at a farmer’s market.
3. I accept an engineering job I’m offered.

Each of these actions has some obvious local effects:

1. I’m $20 poorer.
2. I have some money; my customer has some strawberries and they won’t buy strawberries from anyone else.
3. I have an engineering job; my employer has an engineer and will not hire anyone else.

But each of these actions also has a more subtle long-term effect:

1. The value of a dollar is slightly increased; everyone else is slightly richer (or the government is slightly richer, depending on their monetary policy).
2. The price of strawberries is slightly decreased; worldwide strawberry production will decrease to substantially offset my contribution (and those resources will be used for other things).
3. Engineering salaries are slightly reduced.

These long-term effects are very small but affect a very large number of people. They are mediated by complicated chains of cause and effect with which I have no direct experience. There are many causal steps between burying money in the ground and my local supermarket decreasing the price of milk very slightly. This seems like a brittle picture of how the world works, which could well be completely inapplicable to the real world even if it applies to an idealized efficient market.

Nevertheless, I think that these indirect effects are quite robust in the face of uncertainty and non-ideal behavior. Read the rest of this entry »

Summary: when choosing between two options, it’s not always optimal to estimate the value of each option and then pick the better one.

Suppose I am choosing between two interventions, X and Y. One way to make my decision is to predict what will happen if I do X and predict what will happen if I do Y, and then pick the option which leads to the outcome that I prefer.

My predictions may be both vague and error-prone, and my value judgments might be very hard or nearly arbitrary. But it seems like I ultimately must make some predictions, and must decide how valuable the different outcomes are. So if I have to evaluate N options, I could do it by evaluating the goodness of each option, and then simply picking the option with the highest value. Right?

Read the rest of this entry »

It has been observed that money spent helping the poor compounds over time in the same way that profit-oriented investments do (see Holden Karnofsky, or Giving What We Can). When I support the world’s poorest people I’m not just alleviating their suffering, I’m increasing the productivity of their lives. The recipients of aid go on to contribute to the world, and their contributions compound in turn.

Moreover, one can argue that the returns to aid are much higher than achievable financial returns. Equities make around 5% in real terms, while the world’s poorest earn returns upwards of 20%. And that’s not surprising—more people are interested in making money than are interested in improving the world, so we should expect it to be harder to find opportunities to make money than opportunities to improve the world.

So, the argument goes, altruists ought to donate as quickly as possible, doing good works that will compound out there in the world much faster than they will compound in their bank accounts. Make sense?

I think this argument is mistaken. Read the rest of this entry »

Some disasters (catastrophic climate change, high-energy physics surprises) are so serious that even a small probability (say 1%) of such a disaster would have significant policy implications. Unfortunately, making predictions about such unlikely events is extremely unreliable. This makes it difficult to formally justify assigning such disasters probabilities low enough to be compatible with an intuitive policy response. So we must either reconsider our formal analyses or reconsider our intuitive responses. Read the rest of this entry »

Suppose I hope to use my money to do good some day, but for now I am investing it and aiming to maximize my returns. I face the question: how much risk should I be willing to bear? Should I pursue safe investments, or riskier investments with higher returns?

My knee-jerk response is to say “An altruist should be risk neutral. If you have twice as much money, you can do twice as much good. Sure, there are some diminishing returns, but my own investment is minuscule compared to an entire world full of philanthropists. So in the regime where I am investing, returns are roughly linear.” (I might revise this picture if I thought that I was a very unusual philanthropist, and that few others would invest in the same charitable causes as me—in that case I alone might represent a significant fraction of charitable investment in my causes of choice, so I should expect to personally run into diminishing returns.)

But on closer inspection there is something fishy about this reasoning. I don’t have great data on the responsiveness of charitable giving to market performance, but at the individual level it seems that the elasticity of charitable giving to income is about 1—if I am 50% richer (in one possible world than another), I tend to give 50% more to charity. So in worlds where markets do well, we should expect charities to have more money. If markets (rather, the average investor) do 10% better, I should expect 10% more money to be available for any particular charitable cause, regardless of how many donors it has. Read the rest of this entry »