MK

Mikolaj Kniejski

106 karmaJoined

Comments
3

I just want to flag that I've raised the issue of the inconsistencies in the use of discount rate (if by "the discount rate in the GBD data" you mean the 3% or 4% discount rate in the standard inputs table) in an email sent a few days ago to one of the CE employees. Unfortunately, we failed to have a productive discussion, as the conversation died quickly when CE stopped responding. Here is one of the emails I sent:

 


Hi [name],
 

I might be wrong but you are using 1.4% rate in the CEA but the value of life saved at various ages is copied from GiveWell standard inputs that uses 4% discount rate to calculate the value. Isn't this an inconsistency? 
 

Mikolaj

I might have been too directive when writing this post. I lack the organizational context and knowledge of how CEAs are used to say definitively that this should be changed. I ultimately agree that this is a small change that might not affect the decisions made, and it's up to you to decide whether to account for it. However, some of the points you raised against updating this are incorrect.

I might have focused too much on the 10% reduction, while the real issue, as Elliot mentioned, is that you ignore two variables in the formula for DALYs averted:

Missing out on three 10% reductions in error X results in a difference of 0.1^3 = 27.1% which could be significant. I generally view organizations as growing through small iterative changes and optimization rather than big leaps.  

My critique is only valid if you are trying to measure DALYs averted. If you choose to do something similar to GiveWell, which is more arbitrary, then it might not make sense to adjust for this anymore.

The three changes to the value of life saved come from different frameworks:

  1. GiveWell values don't represent DALYs averted but are mixed with other factors such as survey results.
  2. HLI's work is based on the assumption that death isn't the worst possible state and that there is a baseline quality of life that must be met for a life to be worth living.
  3. The change I'm suggesting is compatible with your current method of estimating the value of life saved. It doesn't introduce any new assumptions; it simply makes some assumptions explicit. Unless you state something like, "We used those values initially but then detached them from their original formulas and now we will update them in another way," my suggestion should fit within your existing framework.

EDIT:

I can't say much about the GiveWell 1.5% rate, but I've heard it comes from the Rethink Priorities review, but it suggests 4.3% discount rate: can you direct me somewhere where I can read more about it?

I agree, this wouldn't change much probably, but this is a change that applies to a lot of CEAs and is in some way a straightforward and safe change?