Will "impact certificates" value only impact?

Consider two scenarios:

1. I flip a switch, saving five lives, but leading one person to be run over by the stray train trolley. I create an "impact certificate", which sells for $M.
2. I push a fat man off a bridge, ending his life, but saving five lives.  I create and sell an "impact certificate" for $N.

Will N and M be the same? It depends who's buying. If the buyers are ideal utilitarians (and careful assumptions are added to the thought experiment) then N=M. If, however, the buyers prefer switching to pushing, then M<N. 

An alternative hypothesis for what is going on is that these "impact certificates" will value the expected choiceworthiness of the action, rather than just its consequentialist impact. But I think this is not quite right either. Consider the following two cases:

• An artist who lives off a $10M trust fund sells an "impact certificate" for their upcoming painting for $A. Without such funding, they would make the painting anyway.
• A broke artist sells an "impact certificate" for their upcoming painting for $B. Without such funding, they would not be able to make the painting.

Most of us would expect the price for $B to be greater than that of $A. I think one big reason for this is that in the latter case, the patron has had a larger impact on the creation of the art - without them, it would not happen. That is, merely saying that the certificate represents the totality of the artist's creation does not make it true. People will intuitively understand that the certificate represents the act of being a patron for the art, and that for different artworks, being a patron can be a larger or smaller part of creating the value.

This suggests that an "impact certificate" might serve to represent the value of being a patron to a certain project. We have several more reasons to believe this hypothesis:

1. If a researcher sells all of the impact for some work, then receives a prize for the work, we would generally not think that the prize ought to go to the owner of the impact certificates. This suggests that we do not realistically think that all of the responsibility for an action is transferred to the purchaser of its impact certificate.
2. Impact purchases have previously been capped at 50%, to follow the convention that the person who does the work ought to retain some of its impact
3. Impact purchases have been thin on buyers. Partly, this may be because the prices suggested they would receive all of the impact, whereas the social convention would only accord them part of it (the part corresponding to that of a patron).
4. If an immoral and unpopular person sells an impact certificate for a rare positive act, people would be less likely to buy that certificate. This is partly because buyers will take into account how the seller's reputation could reflect on them, i.e. they will take into account the fact that they are acting as the seller's patron.

So let us treat as our working hypothesis that an "impact certificate" for some project will confer to its holder the responsibility for being a patron to that project. Note that this won't be particularly sensitive to whether the certificate is called an "impact certificate", a "responsibility certificate", a "patronage certificate", or something else. When you put a certificate to the market, what that certificate signifies is in the eye of the beholder, not the namer!

The "patronage" hypothesis has many interesting implications.

Certificates that signify patronage could exist not just for utilitarians, but also for deontologists, art afficionados, basically anyone. This is good news for fans of "impact certificates" because it means non-utilitarians can help them to reach a critical mass. And indeed, many kinds of patronage certificates have already done so a long time ago. For example, when a plaque outside a public designates the sponsor of that building, this is a patronage certificate in its essence (albeit a non-transferable one). When a new way of issuing patronage certificates arises, such as Patreon, or NFTs for charitable acts, we can rest assured that others will use them. That is, creating certificates for patronage is relatively easy.

A trickier question is as follows: if the certificates will be taken to designate patronage, then how can we still establish an impact economy? Insofar as the buyers are relatively utilitarian, they can still value projects proportionally to their impact. So certain sectors of the economy could behave as an impact economy, at least in that they could give equal values to M and N in the first example. But it seems harder to give equal values to A and B in the second example. This means that these certificates could not be taken to directly indicate the value of a project. Instead, they would at best value the grantmaker's contribution to that project. This suggests that impact valuations might be less informative for people running projects, relative to what we previously thought, but more useful for grantmakers.

It also offers a hint regarding how to discover more buyers in the impact economy: don't try to sell all the impact of a project. Rather, just sell the impact of patronage. If the impact of being a patron is 20% of the impact of the total project, then this would suggest that buyers could cause a project to happen for 1/5 of the price, and so the market ought to become more thick with buyers.

Fractions of Certificates. The existing convention was that patrons would purchase the impact of a project, up to 50%. What we really want is for them to purchase the impact of being a patron, which may be more or less than 100%. But how could we implement this? One convention would be to sell "the impact of being a patron". On this scheme, the first 1/2 of the certificate for being a patron of a project would be the same as the 2nd. If the patron deserves 60% of the impact of the project, then every fraction of the impact certificate would be worth 60% of its fraction of the impact. An alternative scheme would be to sell fractions of a certificate with differing prices, so that if the patron has 60% of the responsibility of a project, then the first 60% of the certificate are valued at full-value, whereas the remaining fraction of the certificate is worth nothing. The latter scheme is better for giving an insight into the value of a project (not just the value contributed by patrons), because this is encoded in the value of the first fraction of the certificate. But the former scheme is a bit simpler. I'm not sure which scheme folks will settle on, and whether we can influence it, given that ultimately the market will decide how these certificates are valued.

Directness of patronage. I have said that the "patronage" hypothesis might explain why people aren't prepared to buy all of the impact of a project. But it also might suggest that people should not by all the impact of being a patron. Consider the following three cases:

1. A patron funds a project before it happens, paying $D for the "impact certificate"
2. A patron funds a project after it happens, paying $E for the "impact certificate"
3. A patron compensates someone who compensated someone who retrospectively funded a project, paying $F for the impact certificate.

I think intuitively, most of us would expect the prices to line up as F<E<D, as in case (1) the patron had the most direct effect on causing the project to happen, and in case (3), they had the least. Also, I think that I don't think it's psychologically realistic for a patron three-times removed to be able to take all of the credit for supporting a project, as would be implied by any valuation where E=F (3). After all, we will always know who really discovered it - the direct patron. In some regard, we need the price to decay with each step that we take away from the original patron. I think there are two ways to do this. Either we: (a) expect that each patron will only sell some fraction of their impact certificates on to the next, or (b) rather than allowing patrons to sell impact certificates themselves, we allow them to mint new impact certificates for their act of being a patron. Then, they can sell all of these. Either solution will create room for price decay mechanics. 

In conclusion, I think the "patronage" hypothesis explain more of what we've seen so far, and if you minted some certificates and priced them according to the impact of being a patron, rather than the total impact, you might see a much better-functioning impact economy.

NB: this post is a work in progress!