Great point and perhaps more interesting than you might have expected.
To repeat back what I think you meant, what I’ve called the mission hedging strategy for this case makes the two possible outcomes 15 vs 0. While for just donating the possible outcomes are 10 vs 1. So actually the variance of outcomes is higher. It’s more like anti-hedging.
First, this depends on how happy you are about Biden v Trump for other reasons. If a Biden win is worth +100 in utility for you and Trump −100, then the mission hedging outcomes are 115 & −100, whereas for simply donating the outcomes are 110 & −99. However, if a Biden win is a −100 for you, and Trump +100, then mission hedging outcomes are −85 & 100, whereas simply donating gets outcomes of −90 & 101. So, in the latter case, the spread between outcomes is actually lower for the ‘mission hedging’ strategy.
Next, assuming you prefer a world with Biden as president, then this is absolutely correct. This strategy is the opposite of a hedge in the sense that it increases the variance of outcomes. So, perhaps a better term would be ‘mission leveraging’. Or mission anti-hedging.
Nevertheless, I’d propose that ‘Mission hedging’ is useful as an umbrella term. One that captures both hedging and ‘anti-hedging’. The broad category of ‘mission hedging’ may sometimes involve actual ‘hedges’ (such as investing in evil, like in Hauke’s post) and other times the optimal strategy looks more like ‘mission leveraging’.
The literature on these ideas seems to be at an early stage and small enough that if we agreed on another name then we could run with it. But the main reasons I’d propose ‘Mission hedging’ as an umbrella term are:
1. Practical precedent. Practically, this is just like some hedge funds actually hedge and others make highly leveraged, unhedged bets (and these aren’t actually mutually exclusive). But the umbrella term is ‘hedge’ funds.
2. Academic context. Mathematically, this class of strategies arise from second-order terms related to the covariance between financial returns and the marginal utility (of giving). Sometimes these terms will push to variance reducing ‘hedges’. Other times they will push in favour of investments that are more like leverage. The direction this goes depends on the correlation between returns and the background world state (e.g. for this post, how does Biden/Trump change your utility aside from climate?). Either way these terms define a category of strategies that is about social-financial correlation and not just about first-order things like increasing returns or effectiveness. So, it is nice to be able to refer to these terms with an umbrella term like mission hedging. The original ‘mission hedging’ paper by Roth-Tran uses this term.
3. Existing usage within EA. Last but not least, the distinction between hedging and anti-hedging doesn’t seem to be made in most existing EA usage (this doesn’t mean the distinction shouldn’t be made, but it’s not currently). For example, I would say that Holden’s recent public discussion of mission hedging didn’t involve a claim about whether transformative AI happening sooner is inherently good or bad for the world, just that Open Philanthropy would like to have more money sooner in worlds where this occurs. Whether or not investing in AI as a ‘mission hedge’ is truly a ‘hedge’ or an ‘anti-hedge’ depends on whether or not transformative AI happening sooner is bad or good.
So, I think the point about ‘anti-hedging’ is really interesting, at least philosophically. And if someone has an idea for a better umbrella term than ‘mission hedging’, then I’d be happy to use it. But, for the reasons above, I think it may be here to stay.
@Neel Nanda. Quick update: I’ve now discussed this offline with a bunch of people who are considering potential strategies of this nature. It seems to me that ‘mission-correlated investing’ is a better umbrella term for these strategies that work with financial-mission correlations to enhance expected value. ‘Mission hedging’ strategies would be the subset of mission-correlated strategies that both increase expected value and reduce the variance of outcomes.
Great point and perhaps more interesting than you might have expected.
To repeat back what I think you meant, what I’ve called the mission hedging strategy for this case makes the two possible outcomes 15 vs 0. While for just donating the possible outcomes are 10 vs 1. So actually the variance of outcomes is higher. It’s more like anti-hedging.
First, this depends on how happy you are about Biden v Trump for other reasons. If a Biden win is worth +100 in utility for you and Trump −100, then the mission hedging outcomes are 115 & −100, whereas for simply donating the outcomes are 110 & −99. However, if a Biden win is a −100 for you, and Trump +100, then mission hedging outcomes are −85 & 100, whereas simply donating gets outcomes of −90 & 101. So, in the latter case, the spread between outcomes is actually lower for the ‘mission hedging’ strategy.
Next, assuming you prefer a world with Biden as president, then this is absolutely correct. This strategy is the opposite of a hedge in the sense that it increases the variance of outcomes. So, perhaps a better term would be ‘mission leveraging’. Or mission anti-hedging.
Nevertheless, I’d propose that ‘Mission hedging’ is useful as an umbrella term. One that captures both hedging and ‘anti-hedging’. The broad category of ‘mission hedging’ may sometimes involve actual ‘hedges’ (such as investing in evil, like in Hauke’s post) and other times the optimal strategy looks more like ‘mission leveraging’.
The literature on these ideas seems to be at an early stage and small enough that if we agreed on another name then we could run with it. But the main reasons I’d propose ‘Mission hedging’ as an umbrella term are:
1. Practical precedent. Practically, this is just like some hedge funds actually hedge and others make highly leveraged, unhedged bets (and these aren’t actually mutually exclusive). But the umbrella term is ‘hedge’ funds.
2. Academic context. Mathematically, this class of strategies arise from second-order terms related to the covariance between financial returns and the marginal utility (of giving). Sometimes these terms will push to variance reducing ‘hedges’. Other times they will push in favour of investments that are more like leverage. The direction this goes depends on the correlation between returns and the background world state (e.g. for this post, how does Biden/Trump change your utility aside from climate?). Either way these terms define a category of strategies that is about social-financial correlation and not just about first-order things like increasing returns or effectiveness. So, it is nice to be able to refer to these terms with an umbrella term like mission hedging. The original ‘mission hedging’ paper by Roth-Tran uses this term.
3. Existing usage within EA. Last but not least, the distinction between hedging and anti-hedging doesn’t seem to be made in most existing EA usage (this doesn’t mean the distinction shouldn’t be made, but it’s not currently). For example, I would say that Holden’s recent public discussion of mission hedging didn’t involve a claim about whether transformative AI happening sooner is inherently good or bad for the world, just that Open Philanthropy would like to have more money sooner in worlds where this occurs. Whether or not investing in AI as a ‘mission hedge’ is truly a ‘hedge’ or an ‘anti-hedge’ depends on whether or not transformative AI happening sooner is bad or good.
So, I think the point about ‘anti-hedging’ is really interesting, at least philosophically. And if someone has an idea for a better umbrella term than ‘mission hedging’, then I’d be happy to use it. But, for the reasons above, I think it may be here to stay.
@Neel Nanda. Quick update: I’ve now discussed this offline with a bunch of people who are considering potential strategies of this nature. It seems to me that ‘mission-correlated investing’ is a better umbrella term for these strategies that work with financial-mission correlations to enhance expected value. ‘Mission hedging’ strategies would be the subset of mission-correlated strategies that both increase expected value and reduce the variance of outcomes.