All of Wayne_Chang's Comments + Replies

Is effective altruism growing? An update on the stock of funding vs. people

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)

Is effective altruism growing? An update on the stock of funding vs. people

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)

5Owen_Cotton-Barratt22moBut the investment-like giving opportunities also preserve optionality! This is the sense in which they are investment-like. They can result in more (expected) dollars held in a future year (say a decade from now) by careful thinking people who will be roughly aligned with our values than if we just make financial investments now.
3RyanCarey2moIf I recall correctly (and I may well be wrong), the secretary problem's solution only applies if your utility is linear in the ranking of the secretary that you choose - I've never come across a problem where this was a useful assumption.
2kokotajlod2moInteresting! The secretary problem does seem relevant as a model, thanks! FWIW, many of us do think that. [] I do, for example.
2[comment deleted]2mo
Is effective altruism growing? An update on the stock of funding vs. people

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%.  

2kokotajlod3moThanks Wayne, will read!

I think it's implausible that the optimal giving rate today could be 0%. This is because many giving opportunities function as a form of investment, and we're pretty sure that the best of those outperform the financial market. (I wrote more about ~this in this post: )

Launching 60,000,000,000 Chickens: A Give Well-Style CEA Spreadsheet for Animal Welfare

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

1AppliedDivinityStudies4moThis is very specifically attempting to compile some existing analysis on whether it's better to eat chicken or beef, incorporating ethical and environmental costs, and assuming you choose to offset both harms through donations. In the future, I would like to aggregate more analysis into a single model, including the one you link. As I understand it (this might be wrong), what we have currently is a much of floating analyses, each mostly focused on the cost-effectiveness of a specific intervention. Donors can then compare those analyses and make a judgement about where best to give their money. Where the Give Well style monolithic CEA succeed is in ensuring that a similar approach is used to produce analysis that is genuinely comparable, and in giving readers the opportunity to adjust subjective moral weights. That's my ultimate goal with this project, but it will likely take some time. This was maybe a premature release, but so far the feedback has already been useful.
Launching 60,000,000,000 Chickens: A Give Well-Style CEA Spreadsheet for Animal Welfare

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)

2AppliedDivinityStudies4moYes that's a good point, as Scott argues in the linked post []: Give Well notes that their analysis should only really be taken a relative measure of cost-effectiveness. But even putting that aside, you're right that it doesn't imply human lives are cheap or invaluable. Actually, I pretty much agree with all your points. But a better analogy might be "is it okay to murder someone to prevent another murder?" That's a much fuzzier line, and you can extend this to all kinds of absurd trolly-esque scenarios. In the animal case, it's not that I'm murdering someone in cold blood and then donating some money. It's that I'm causing one animal to be produced, and then causing another animal not to be. So it is much closer to equivalent. To be clear again, the specific question this analysis address is not "is it ethical to eat meat and then pay offsets". The question is "assuming you pay for offsets, is it better to eat chicken or beef?" And of course, there are plenty of reasons murder seems especially repugnant. You wouldn't want rich people to be able to murder people effectively for free. You wouldn't want people getting revenge on their coworkers. You wouldn't want to allow a world where people have to life in fear, etc etc etc. So I don't think it's a particularly useful intuition pump.
ESG investing needs thoughtful trade-offs

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)

Is shareholder activism worth it?

This paper is relevant to your question.

Abstract: This article asks how sustainable investing (SI) contributes to societal goals, conducting a literature review on investor impact—that is, the change investors trigger in companies’ environmental and social impact. We distinguish three impact mechanisms: shareholder engagement, capital allocation, and indirect impacts, concluding that the impact of shareholder engagement is well supported in the literature, the impact of capital allocation only partially, and indirect impacts lack empirical su... (read more)

1sbowman1yThanks, Wayne! This looks like a good starting point for further research, but it's hard to take much that's actionable from this without more background in finance. Is there anything you'd take away as advice to a smallish-scale individual investor?
The case for investing to give later

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)

The case for investing to give later

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)

6CarlShulman1yI agree risks of expropriation and costs of market impact rise as a fund gets large relative to reference classes like foundation assets (eliciting regulatory reaction) let alone global market capitalization. However, each year a fund gets to reassess conditions and adjust its behavior in light of those changing parameters, i.e. growing fast while this is all things considered attractive, and upping spending/reducing exposure as the threat of expropriation rises. And there is room for funds to grow manyfold over a long time before even becoming as large as the Bill and Melinda Gates Foundation, let alone being a significant portion of global markets. A pool of $100B, far larger than current EA financial assets, invested in broad indexes and borrowing with margin loans or foundation bonds would not importantly change global equity valuations or interest rates. Regarding extreme drawdowns, they are the flipside of increased gains, so are a question of whether investors have the courage of their convictions regarding the altruistic returns curve for funds to set risk-aversion. Historically, Kelly criterion leverage on a high-Sharpe portfolio could have provided some reassurance with being ahead of a standard portfolio over very long time periods, even with great local swings.
How to make the most impactful donation, in terms of taxes?

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)

How to make the most impactful donation, in terms of taxes?

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.'

4CarlShulman1yWayne, the case for leverage with altruistic investment is in no way based on the assumption that arithmetic returns equal median or log returns. I have belatedly added links to several documents that go into the issues at length above,. The question is whether leverage increases the expected impact of your donations, taking into account issues such as diminishing marginal returns. Up to a point (the Kelly criterion level), increasing leverage drives up long-run median returns and growth rates at the expense of greater risk (much less than the increase in arithmetic returns). The expected $ donated do grow with the increased arithmetic returns (multiplied by leverage less borrowing costs, etc), but they become increasingly concentrated in outcomes of heavy losses or a shrinking minority of increasingly extreme gains. In personal retirement, you value money less as you have more of it at a quite rapid rate, which means the optimal amount of risk to take for returns is less than the rate that maximizes long-run growth (the Kelly criterion), and vastly less than maximizing arithmetic returns. In altruism when you are a small portion of funding for the causes you support you have much less reason to be risk-averse, as the marginal value of a dollar donated won't change a lot if it goes from $30M to $30M+$100k in a given year. At the level of the whole cause, something closer to Kelly looks sensible.
[updated] Global development interventions are generally more effective than climate change interventions

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)

2HaukeHillebrandt2yThank you- I've now included this in my model: "Some global development interventions have been estimated to be 17.5x more effective than cash-transfers (e.g. deworming).[34] [] We use this as the optimistic case."
Consequences of animal product consumption (combined model)

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)

2kbog2yI did that because I was only looking at one year of welfare improvement. One year for one year is simpler and more robust than comparing lifetimes. If you want to look at lifetimes, you have to scale up the welfare impacts as well.
2kbog2ySorry I have little time and I'm just going to respond to the logic of offsetting right now. In utilitarianism ordinarily we maximize expected utility, so there's no need to hedge. If two actions have the same expected utility but one has a higher % chance of having a negative outcome, they're still equally good. Companies and investors need to protect certain interests so $2 million is less than twice as good as $1 million, but in utility terms 2 million utils is exactly twice as good as 1 million utils. Of course you could deny expected utility maximization and be morally loss averse/risk averse, and then this would be a conversation to have. There are good arguments against doing that, however, it's a minority view
Consequences of animal product consumption (combined model)

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!

4kbog2yIn the long run it seems like the meat eater problem will drop off quite a bit. First because of improving welfare standards, second because of pressures to switch to more efficient plant-based calories, and third because people stop eating more meat or even eat less meat beyond a certain income. So making the US wealthier for instance is most likely good for farm animals in the long run. For global development in the short run, we can see that $1000 in Africa cuts animal welfare by -800 (best estimate) to -4000 (high estimate) points. And I conservatively estimated that $1 to an ACE charity improves animal welfare by 10,000 points. So $1,100 donated to GiveDirectly (=~$1,000 received) should require between $0.08 and $0.40 if you want to offset to an effective animal charity. But it's rather arbitrary depending on just how conservative you want to be. I sort of assumed that the real effectiveness of ACE charities is 5x lower than their estimate. Note that I don't think that offsetting as a practice actually makes sense, it doesn't make sense under utilitarianism, it's more of a methodological tool to put the impacts of different things in perspective with one another.
Non-Profit Insurance Agency

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)

Review of Education Interventions and Charities in Sub-Saharan Africa

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)

3Huwelium2yHi Wayne, Thanks for your post. I would love to get in touch and compare notes on research for advising donors. I’ll try to reach you via this site’s messaging. Sorry for the very late reply (I don’t get alerts when someone posts here). I believe the difference comes simply from the wide range of cost effectiveness of education interventions. As mentioned in the Google doc, “Rachel Glennerster mentions in an 80000 Hours podcast that good interventions typically deliver at least 1 learning adjusted year of schooling (LAYS) per 100 USD spent, with some interventions delivering about 10-30 LAYS per 100 USD, and the best delivering up to 460 LAYS per 100 USD.” For Pratham, the info I found suggested roughly 1.7 to 27.6 extra years per 100 USD. Assuming an increase in income of 8.8% for each extra year of schooling, this means an increase in income of about 15% to 243% per 100 USD donated. Comparing to DDK 2017, GiveWell cites a 24% increase in income for 541$ spent, so 4.4% increase in income per 100$ spent. I don’t know if this helps? I think the basic explanation is that there is a very wide range in effectiveness of education interventions, and that Pratham seems to be higher in this range than DDK, say.
Reflections on doing good with lump sums - the retired person's dilemma

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)