Hey Larks, thanks for the response to the article. As always when doing a Fermi estimate like this, at some point you have to stop and hope that the remaining unexamined factors roughly balance out. This brings us closer to an accurate estimate. The original estimates were within a few factors of one another, which left open the possibility of them flipping if there were significant changes made.
Here are the headings I basically agree with:
Right to choose
There are probably charities better than AMF, even ex ante
I think Michael is right about the question of whether you’re the best CEO.
I think that these ones are less clear:
Sales vs Volume
Improving production efficiency
While your evidence convinces me that cigarettes aren’t a commodity at the sales end because of branding (in developed countries anyway), presumably they are on the production side (you allude to this by calling the industry ‘mature’). If you can introduce an innovation that lowers cigarette production costs for your firm, that will presumably in time be implemented across the entire industry. The weakness here is that most of the price of cigarettes in rich countries is tax, so a 50% reduction in production costs leads to a much more modest decline in sales prices.
The case study where prices were reduced and the share price also went down suggests inelastic demand with respect to price on this product (in the USA anyway), so little temptation to compete on price.
I’ll give this some more thought.
“But Tobacco CEO does seem like it had a strong prima facie case. Who could be more evil? If even selling cigarettes isn’t harmful enough to offset the good done by your earnings, what is?”
I agree—I was surprised that the answer I got was as close as it was. One qualification is that while selling cigarettes may be bad, being CEO is an unusually lucrative position. There could be poorly paid roles that do a lot of harm (for example, being a soldier in a bad military). Though of course such jobs are less relevant to anyone considering ‘earning to give’.
Hey Larks, thanks for the response to the article. As always when doing a Fermi estimate like this, at some point you have to stop and hope that the remaining unexamined factors roughly balance out. This brings us closer to an accurate estimate. The original estimates were within a few factors of one another, which left open the possibility of them flipping if there were significant changes made.
Here are the headings I basically agree with:
Right to choose There are probably charities better than AMF, even ex ante
I think Michael is right about the question of whether you’re the best CEO.
I think that these ones are less clear:
Sales vs Volume Improving production efficiency
While your evidence convinces me that cigarettes aren’t a commodity at the sales end because of branding (in developed countries anyway), presumably they are on the production side (you allude to this by calling the industry ‘mature’). If you can introduce an innovation that lowers cigarette production costs for your firm, that will presumably in time be implemented across the entire industry. The weakness here is that most of the price of cigarettes in rich countries is tax, so a 50% reduction in production costs leads to a much more modest decline in sales prices.
The case study where prices were reduced and the share price also went down suggests inelastic demand with respect to price on this product (in the USA anyway), so little temptation to compete on price.
I’ll give this some more thought.
“But Tobacco CEO does seem like it had a strong prima facie case. Who could be more evil? If even selling cigarettes isn’t harmful enough to offset the good done by your earnings, what is?”
I agree—I was surprised that the answer I got was as close as it was. One qualification is that while selling cigarettes may be bad, being CEO is an unusually lucrative position. There could be poorly paid roles that do a lot of harm (for example, being a soldier in a bad military). Though of course such jobs are less relevant to anyone considering ‘earning to give’.