Social tokens and effective altruism

by Samuel Shadrach10 min read16th Sep 2021No comments

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Markets for altruism
Personal Blog

I wrote this article on social tokens as a way to promote effective altruism some months back on my cryptocurrency blog. My personal views have minorly shifted since then but I felt enough of the article would be relevant here to be worth posting.


Effective altruism is a philosophy and social movement that advocates the use of evidence and reasoning to determine the most effective ways to help others. It usually involves comparing different ways of doing good, and estimating which methods, charities or donations are able to get the most bang for their buck.

Similarity with wealth maximisation

Using rational calculus to maximise social good feeds into our desire to be utilitarian and efficient. This same desire is also what guides most investments made to gain more wealth, and indeed there are a lot of similarities between the two.

There exist low risk low reward ways to increase your wealth, such as T-bills. There are also low risk low reward ways of converting wealth into social good, such as giving it directly to poor people. There exist high risk high reward ways of growing wealth, usually startups. Startups could also be high risk high reward ways of doing good. For instance investing in fuel cell research could have a high chance of no result, and a small chance of doing something big such as solving climate change.

Wealth is compounding and has time value. Wealth today is worth more than wealth in the future, because what is there today can be invested. Social good is compounding and has time value too. Helping a family escape poverty has a compounding effect due to the social good done to the families’ descendants, as they become economically earning and self-sustaining. This could also reduce societal and national burden to sustain the poor.

Startups that are primarily wealth-focussed may also do social good, and those that are socially-focussed may also generate wealth.

It may be a viable strategy to invest wealth with the objective of making more wealth, and then direct that towards social good. It could also be a viable strategy to directly invest in social good. Which strategy is better needs to be quantified and may depend on your individual ability to locate the most rewarding strategies.

As always the most lucrative opportunities may not investing wealth at all, and instead involve scarcer resources such as time and brainpower - potentially by starting your own startup or working on your own research.

Social good is a sink

In the above discussion you may have noticed that social good is a sink. Wealth can create wealth, wealth can create social good, social good can create social good, but social good typically doesn’t create wealth. It can for a society, but usually not for you individually. Even if wealth is created for you as an individual, the ultimate objective of an effective altruist is to convert that wealth into even more social good. In other words your utility function is guided by social good.

Why do people want wealth?

Maslow’s hierarchy is a useful mental model to reason about why people do what they do. Wealth is needed to meet safety and physiological needs, and a significant number of people are still predominantly focussed on making money to fulfill these. However, beyond this, major motivations to earn wealth are to increase status and access to opportunities. People want to be perceived as desirable or own goods perceived as desirable or enter social circles perceived as desirable.

Making wealth has also become a highly gamified experience, especially evident in DeFi with all its food farms and hype cycles.

Can we redirect these motivations towards social good?

Gamification of the experience of doing social good requires objective or semi-objective metrics for social good. Defining these is a non-trivial task.

It should be possible to change how people look at each other from perceiving wealthy people as desirable to perceiving people who do social good as desirable. To quite an extent, this already happens. Adding better metrics will again help people set goals for themselves in order to attain this desirability, it will also aid competition and a desire to push oneself further.

One could argue that this motivation is intrinsically ego-attached, and social good should not be done with social status-related motivations. I’d counter by saying, firstly, that as an effective altruist myself I’m more interested in creating systems that do more good, even if sometimes that good is done with misaligned intentions.

Secondly, that there exists a spectrum between the minimal social validation essential for survival, and using excessive validation to feed one’s ego. This model doesn’t have to apply only towards the latter extreme. Nuances exist. Even today, being wealthy is perceived as a desirable end goal, but boasting about your wealth, not so much. The same could apply to doing good versus excessively showcasing it.

And thirdly, that all of us anyway spend a significant portion of time without pausing to think what the motivations for those are - and often they’re not that grand. Even passing time and fending off boredom is a motivation. You having a way to pass your time while doing good would be better for society, than you playing a video game to do the same (with the caveat that you playing a video game might occassionally cause social good too).

Metrics, please

Measuring and comparing different forms of social good is hard. This isn’t even about the best ways to convert money into good, it is about the good itself. Is saving one life more important than improving the quality of life of ten people? Is teaching someone to read and write more important than providing them a space free of racial violence? Is helping a happy but poor person more important than helping an unhappy but rich person?

One option would be to quantify separate types of social good separately and let people subjectively decide which ones are more important. This is what happens currently, it is however, harder to gamify or form objective theories on.

Otherwise comparisons need to be forced between different forms of good. One way of achieving this would be to involve centralised or decentralised organisations that atttempt to quantify and compare different forms of good.

The other way to achieve this is self-determination. The people you’re helping can themselves inform you of what they deem more important. They can do this by allocating more points or tokens to those services or physical goods they find more essential or beneficial.

Who deserves more tokens?

This comes down largely to the question of whether you want to help poor people or unhappy people. If the objective is to help poor people, then the poor should be granted more tokens which they can then allocate to which organisations or individuals that do more good for them. If the objective is to help everyone, then everyone should be granted the same number of tokens to allocate. Allocation behaviour will still vary based on wealth. For instance a poor person might trade their tokens for food. Someone who can afford to buy food with money however might use their tokens for something else, say research into a disease that affects them.

If upper and upper-middle wealth classes are also provided with tokens to allocate, they may prefer to allocate their tokens to things that cannot be obtained with money alone. Such things are rare. People’s time and attention, for instance a researcher’s, may be hard to obtain by offering money, but it may be obtainable if you signal that it’ll make you happy (by allocating such tokens).

Should tokens be transferrable?

Social good naturally acts as sink for altruisitic behaviour. It can only be earned, not spent. This gives reason to dictate that tokens, once allocated, should be non-transferrable. If a person has done a certain amount of social good and gotten a certain amount of tokens allocated to them, they will not be able to spend them. Instead, the tokens will act solely as a badge or proof which provides both social status and intrinsic satisfaction.

Tokens being transferrable also works, and may even be beneficial for arbitrage purposes (use tokens to acquire goods where they are less needed, and sell them for tokens where they are more needed). One might however then see behaviour where everyone uses all the tokens they can earn, rather than maximise the tokens they have. In an efficient market, using all the tokens you earn implies you’ve done as much good as you’ve got others to do for you.

Non-transferrability is therefore more of a behavioural question.

Do we want free markets?

We can achieve multiple objectives by tokenisation of social good:

gamification

competition

semi-objective means of comparison

Competition is significantly increased in a free market. Organisations will compete for the most effective ways to convert wealth into social good - with more focus on comparisons. There could exist intermediaries who take fees - to analyse what the best opportunities to generate social good are, and share these analyses with industries and philanthropists. These fees could be money or they could be social good tokens themselves, if the fund itself wants to be altruistic. This can happen even if the tokens are non-transferrable once allocated.

Free markets inevitably come with rent-extraction, whose merits and demerits are debatable. Rent extraction is a staple of the capitalist economy - where goods are valuated purely on supply, demand and their respective negotiating powers. (As opposed to intrinsic value, assuming such a thing exists, which is also debatable.) Irreplaceable parties are therefore able to extract more rent. This could be business partners that are more critical getting favourable deals, it could be CEOs of a company being paid more than employees, it could be early investors in a company holding stock and therefore gaining all future profits, it could be an arbitrageur buying stock in one exchange and selling it in a second one. An extreme form of high negotiating power would be collusions and monopolies that distort market structure itself. Social good tokens too could be extracted in various such means by intermiediaries who enable the good to take place, or take place more efficiently.

And while these intermediaries may be necessary for this good to take place, care will have to be taken so that people don’t feel there’s a disconnect between how many tokens someone is actually earning for doing social good and how many they deserve. Such a disconnect will destroy the legitimacy of the tokens themselves, as the tokens only have value because of social perception.

Solving this could involve departing from a free market, although such models are scarce.

Should this be on a blockchain?

There’s nothing about this model that instrinsically demands token ownership must be stored on a blockchain, although there may be some efficiency benefits to do so. Direct global transfer of tokens, no questions asked, suits this model, especially if it is done peer-to-peer rather than through a central issuing authority for the tokens. Storage on a blockchain rather than a centralised database may also be perceived as a more credibly neutral and organic way to bootstrap.

Blockchains however require safe custody of keys, being able to afford fees, and technical skills to use at the moment. All of these are no-go for poor people who are being targeted by this model. Decentralised identity issuance may also be needed, this is still in a nascent stage. Therefore it is unlikely it’ll be on a blockchain anytime soon, if happening at an individual level.

At an institutional level, however, social good could certainly be recorded on the blockchain, in fact, attempts are already being made. For instance MOSS carbon credits can be bought or burned, signalling good done. There have been various disconcerted efforts by DAOs to fund public goods.

Shifting of perspectives

There still remains much research and experimentation left to be done in the tokenisation and gamification of social good. A lot of this research fundamentally involves ways to shift individual preferences and choices in favour of the larger good, therefore it draws from various fields such as psychology, sociology and game theory. And theory goes only so far, a lot of it will have to be tested in practice.

However, this challenge of shifting perspectives is significant, so much so that it might represent the only way to avoid the Malthusian trap. Misaligned goals, fierce competition and technological superiority could lead to a point where humanity risks its own survival to get ahead. This has already happened numerous times - be it the creation of the nuclear bomb, the cyber superiority of a few nation states over the rest of the world or AI research and the impending threat of superintelligence.

Research into better coordination structures and forms of governance can help align people with conflicting goals or act more efficiently in favour of united goals

Shifting perspectives however, is even more powerful, as it changes the goals of individuals and societies themselves. Someone who is made to work for social good because they’re supposed to or because they’re bored or because they want social validation - could in turn actually like the process.

Humans are inherently social and many goals are simply borrowed from peers, role models and general social norms. Incorporating new social norms is a strong way to align goals.

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