All of Wayne_Chang's Comments + Replies

Thanks, Ben, for writing this up! I very much enjoyed reading your intuition.

I was a bit confused in a few places with your reasoning (but to be fair, I didn't read your article super carefully).

1. Nvidia's market price can be used to calculate its expected discounted profits over time, but it can't tell us when those profits will take place. A high market cap can imply rapid short-term growth to US$180 billion of revenues by 2027 or a more prolonged period of slower growth to US$180B by 2030 or 2035. Discount rates are an additional degree of freedom. We can

What concerns me is that I suspect people rarely get deeply interested in the moral weight of animals unless they come in with an unusually high initial intuitive view.

This criticism seems unfair to me:

1. It seems applicable to any type of advocacy. Those who promote global health and poverty are likely biased toward foreign people. Those who promote longtermism are likely biased toward future people. Those who advocate for effective philanthropy are likely biased toward effectiveness and/or philanthropy.
2. There's no effective counter-argument since, almo

Thanks so much for such a thorough and great summary of all the various considerations! This will be my go-to source now for a topic that I've been thinking about and wrestling with for many years.

I wanted to add a consideration that I don't think you explicitly discussed. Most investment decisions done by philanthropists (including the optimal equity/bond split) are outsourced to someone else (financial intermediary, advisor, or board). These advisors face career risk (i.e. being fired) when making such decisions. If the advisor recommends something that ... (read more)

Thanks for posting this, Jonathan! I was going to share it on the EA Forum too but just haven't gotten around to it.

I think GIF's impact methodology is not comparable to GiveWell's. My (limited) understanding is that their Practical Impact approach is quite similar to USAID's Development Innovation Ventures' impact methodology. DIV's approach was co-authored by Michael Kremer so it has solid academic credentials. But importantly, the method takes credit for the funded NGO's impact over the next 10 years, without sharing that impact with subsequent funders.... (read more)

Thanks for your response, Joel!

Stepping back, CEARCH's goal is to identify cause areas that have been missed by EA. But to be successful, you need to compare apples with apples. If you're benchmarking everything to GiveWell Top Charities, readers expect your methodology to be broadly consistent with GiveWell's and their conservative approach (and for other cause areas, consistent with best-practice EA approaches). The cause areas that are standing out for CEARCH should be because they are actually more cost-effective, not because you're using a more lax me... (read more)

Hi Joel, I skimmed your report really quickly (sorry) but suspect that you did not account for soda taxes being eventually passed anyway. So the modeled impact of any intervention shouldn't be going to 2100 or beyond but out only a few years (I'd think <10 years) when soda taxes would eventually be passed without any active intervention. You are trying to measure the impact of a counterfactual donated dollar in the presence of all the forces already at play that are pushing for soda taxes (how some countries already have them). This makes for a more plausible model, and I believe is how LEEP or OpenPhil model policy intervention cost-effectiveness (I could be wrong though).

New phrasing works well!

Got it. But I think the phrasing for the number of animals that die is confusing then. Since you say "100 other human [sic] would probably die with me in that minute," the reference is to how many animals would also do during that minute.  I think what you want to say is for every human death, how many animals would die, but that's not the current phrasing (and by that logic, the number of humans that would die per human death would be 1, not 100).

I'd suggest making everything consistent on a per-second basis as smaller numbers are more relatable. So  1 other human would die with you that second, along with 10 cows, etc.

Thanks for writing this! The very last sentence seems off. Did you mean to say every second (instead of minute)? Also, the number of farm animals that die every second should be 1/60 (not 1/120) of that in the “minute” table above.

This last sentence was quite shocking for me to read. It’s sad…but very powerful.

Minor suggestion: in your title and summary, please just write out "10 k" as 10,000. No need to abbreviate when people may be unsure that it's actually 10,000 (given that it's such a large difference). 

I agree with Michael that concrete examples would be very helpful, even for researchers.  A post should be informative and persuasive, and examples almost always help with that. In this case, examples can also make clear the underlying logic, and where the explanation can be confusing. 

For example, let's think about investing in alternative protein companies as a way to tackle animal welfare. Assume that in a future state where lots more people eat real meat (bad world state), the returns for alt-proteins in that state are low but cost-effectiven... (read more)

This post (and the series it summarizes) draws on the scientific literature to assess different ways of considering and classifying animal sentience. It persuasively takes the conversation beyond an all-or-nothing view and is a significant advancement for thinking about wild animal suffering as well farm animal welfare beyond just cows, pigs, and chickens.

Thanks for the clarification, Owen! I had mis-understood 'investment-like' as simply having return compounding characteristics. To truly preserve optionality though, these grants would need to remain flexible (can change cause areas if necessary; so grants to a specific cause area like AI safety wouldn’t necessarily count) and liquid (can be immediately called upon; so Founder's Pledge future pledges wouldn't necessarily count). So yes, your example of grants that result "in more (expected) dollars held in a future year (say a decade from now) by careful t... (read more)

Hi Owen, even if you're confident today about identifying investment-like giving opportunities with returns that beat financial markets, investing-to-give  can still be desirable. That's because investing-to-give preserves optionality. Giving today locks in the expected impact of your grant, but waiting allows for funding of potentially higher impact opportunities in the future.

The secretary problem comes to mind (not a perfect analogy but I think the insight applies). The optimal solution is to reject the initial ~37% of all applicants and then accep... (read more)

I highly recommend the Founder's Pledge report on Investing to Give. It goes through and models the various factors in the giving-now vs giving-later decision, including the ones you describe. Interestingly, the case for giving-later is strongest for longtermist priorities, driven largely by the possibility that significantly more cost-effective grants may be available in the future. This suggests that the optimal giving rate today could very well be 0%.  

Have you compared your analysis to this previous EA Forum post? Are there different takeaways? Have you done anything differently and if so, why? 

Here’s the math on moral/financial fungibility:

...

You’re probably better off eating cow beef and donating the $6.03/kg to the Good Food Institute 

Is refraining from killing really morally fungible to killing + offsetting? Would it be morally permissible for someone to engage in murder if they agreed to offset that life by donating $5,000 to Malaria Consortium? I don't mean to be offensive with this analogy, but if we are to take seriously the pain/suffering that factory farming inflicts on animals, we should morally regard it in a similar lens t... (read more)

Thanks, Sanjay, I’m sharing a basic model I’ve written that highlights the trade-off for impact investments that seek both social impact and financial returns. This isn’t specifically about ESG but the key ideas still apply. The upshot: the investment must produce annually one percent of a same-sized grant’s social benefit for every one percent concession on its financial return. I construct impact investing’s version of the Security Market Line and quantitatively define what ‘impact alpha’ means.

This model was written a couple of years ago but since then,... (read more)

I agree with Michael that a 70% allocation to US stocks is way too high. US stocks' outperformance against international developed stocks can almost entirely be explained by the increase in the US market's valuation (which shouldn't be assumed to continue and indeed, is more likely to reverse). See AQR's analysis on pg 6 here. Also, what about Emerging Market stocks? This should certainly get some allocation as well, especially if you're focused on the next 100 years. China and India will increasingly be key economic players and have capital markets that w... (read more)

I don’t think it makes sense to compound the model distributions (e.g. from 1 year to 10 years). Doing so leads to non-intuitive results that are difficult to justify.

1) Compounded model results (e.g. 10x impact in 10 years) are highly sensitive to the arbitrarily assumed shape, range, and skewness parameters of the variable distributions. Also, these results will vary wildly from simulation to simulation depending on the sequence of random draws. This points to the model's fragility and leads to unnecessary confusion.

2) The parameter estimat... (read more)

A 7% real investment return over the long-term is in my opinion, highly aggressive. World real GDP growth from 1960 through 2019 is 3.5%. Since the proposed fund expects to invest over “centuries or millennia,” any growth rate faster than GDP eventually takes over the world. Piketty’s r > g can’t work if wealth remains concentrated in a fund with no regular distributions.

Even in the shorter run, it’s unrealistic to expect the fund to implement a leveraged equity-only strategy (or analogous VC strategy):

1) A leveraged ... (read more)

Hi Carl, thanks for your response and for posting the links. I have now retracted my initial strong downvote of your comment.

I understand and am sympathetic of the view that altruists investing to donate should be a lot more risk-seeking than when investing to fund their own future consumption. My concern was entirely based on your recommendation to invest long term in leveraged ETF’s. I did not think this is a good idea because leveraged ETF’s can have realized returns that deviate substantially from its underlying index in a bad and unexpec... (read more)

You should NOT be holding leveraged ETF's for long periods of time (i.e no more than a day or two). When held for a year, a 3x leveraged ETF will not deliver 3x the returns of the underlying index. In fact, it is quite possible given high current volatility, that the ETF delivers negative returns even when the underlying index is positive. For more info, see 'Why Leveraged ETFs Are Not a Long Term Bet.'

Hauke's calculation simply determines a standard Benefit/Cost ratio. If it costs $10 to avert a tonne of CO2 that provides benefits of $417 (in damages averted), this Benefit/Cost ratio equals 41.7. This ratio should be directly comparable to Copenhagen Consensus 'Social, economic, and environmental benefit per $1 spent.' For the Post-2015 Consensus, 'Climate Change Adaption' is listed as providing a Benefit/Cost ratio of 2 while climate-related 'Energy Research' has a ratio of 11. I would weight these results from meta-l... (read more)

Thanks for your response, kbog!

Animal welfare issues are plausibly getting worse and not better so I’d be less confident to assume it will not be an issue in the future. As the world develops and eats more meat, Compassion in World Farming estimates that annual factory farm land animals killed could increase by 50% over the next 30 years. Assuming people’s expanding moral circle will reverse this trend is dangerous when the animal welfare movement has progressed little over the past few decades (number of vegetarians in US have been flat; there are some a... (read more)

Thanks for posting this, kbog! I would be interested in your recommendation for someone donating to the EA funds. The Long Term Future and Global Development funds focus on humans and thus potentially runs into the meat eater problem. For every dollar donated to the above funds, what would be an appropriate amount to donate to the Animal Welfare Fund that is enough to offset this issue? Thanks!

A company structure to consider would be a mutual organization where all profits go to members, which in your case would be the policy holders. Profits can be retained to grow the company or policy fees can be reduced by the amounts of its profits. Mutuals have a long history and many of the most successful financial organizations in the US are mutuals (e.g. Vanguard, State Farm, Liberty Mutual, NY Life). You could develop an insurance brokerage mutual that offers products from different insurance companies. I'm not sure if there are mutuals in this s... (read more)

Hi Huwelium, thanks so much for your post! I’m also advising someone on highly cost-effective interventions, so I found your thoughtful analysis to be very interesting. My question relates to your cost effectiveness estimates vs GiveWell’s. Based on GiveWell’s spreadsheet, their modeling of DDK (2017) places that program’s cost effectiveness at 0.5x – 2.5x GiveDirectly’s. Their modeling of Bettinger et al (2017) places that program’s at 0.2x – 1.4x GiveDirectly’s. Both of these estimates are for consumption effects only and excludes non-pecuniary benefits ... (read more)

I would challenge your notion that you are over-analyzing the problem and that you must make a definitive decision soon.

1. In general, better knowledge and information leads to better decision making. If you are new to the EA community or to thinking deeply about philanthropy more generally, it is very unlikely that your current notions of how to give are appropriate.

2. Once you give away money, you cannot get it back. But money you save now can always be given away later. This argues for waiting in the presence of uncertainty. For example, in the optima... (read more)