Suppose I am trying to evaluate the consequences of taking job X. Here is a sequence of (hopefully decreasingly) naive ways to think about the impact of my decision.
(I don’t know if the later analyses are actually reasonable, but I’d really like to see more intellectually serious discussion of this issue by people who understand the world, and particularly economics, better than I do. I wouldn’t be surprised if more sophisticated versions of this analysis are already well-understood amongst economists, and simply haven’t been noticed by altruists trying to understand this issue. In that case, hopefully someone can point that out to me. Some of these analyses, and more sophisticated elaborations on them, appear in Ben Todd’s masters thesis.)
(Skip to section 6 if you want the punchline.)
1.
I should look at the direct consequences of doing job X, and choose a job for which those consequences are best.
2.
If I don’t take job X someone else will. So I shouldn’t be at all concerned with the immediate consequences of a job. Instead I should focus on the money I earn doing job X, which I will be able to spend at my own discretion (and which a substitute would have spent differently).
2b.
I should also reason about other parts of the job which I might do differently from my substitute; for example, if I intend to sabotage a company, my substitute probably won’t. If I will do a better or worse job than my substitute, that will also be relevant, etc.
3.
But when I take job X I slightly increase the supply of people who are willing to do job X, slightly decrease the wages for job X, and therefore slightly increase the amount of that job X that gets done. So I should compare the elasticity of supply and demand in this market to determine what will happen to the total amount of job X that gets done. (I think this is a standard calculation in basic microeconomics.)
3b.
Markets aren’t perfect spheres, and wages, demands, supplies, etc., will be slow and inconsistent in their reaction to an increase in supply. But if we look at the aggregate of many such decisions over a long period of time, this analysis should hold on average over many such decisions (and that should be good enough for our decision). Similarly, because workers commit to industries (for example by obtaining a degree in neuroscience) and industries commit to a number of workers (for example by investment in complementary capital) there is some necessary lag between an increased wage for job X and an increased supply. But over a long time period, on average, these effects seem to be neutral.
4.
In most industries the supply of labor is very elastic (because at equilibrium, if wages within an industry are lowered, people will instead take higher paying jobs elsewhere). Thus if I take job X, it will have little effect on the total amount of job X that gets done. So I should reason entirely about the money.
5.
But when I displace someone who would have done job X they take job Y, thus displacing someone else who goes on to take job Z. This process continues, each step having a small impact on wages, but the aggregate impact of many steps being unpredictable. To analyze the outcome we should appeal to a simple equilibrium analysis: there is some supply of labor, and both before and after my introduction to the workforce, that supply of labor was being used roughly efficiently. So my impact is the same regardless of what job X is—it is as if I were doing the most economically productive activity (on the margin).
5b.
Incentives aren’t defined in terms of economic productivity. For example, there may be philanthropists or governments funding activity in a domain. Then we need to adjust the analysis to say: my impact is as if I were doing the activity which is most rewarded on the margin.
5c.
Different employees aren’t perfect substitutes. I have my own set of skills, and the above analysis actually shows that I would be doing the most effective thing for a worker with my skills. So if I am a researcher, my impact will be to do the most productive research.
But of course it doesn’t matter what my skills are, it matters what skills I am using—the above analysis needs to be modified to take into account the fact that I might not pursue the most lucrative opportunity for someone with my skills. If I have a few different skills which don’t often appear together, I can choose which of those skills to use (and therefore change my impact).
However, if there are any laborers who were previously ambivalent between using those skills, then this effect will disappear. And if I can do either job X or job Y, in a large world it is very likely that others can as well. So I can actually have an impact only when everyone else faced with the choice between job X and job Y would definitely choose one or the other, i.e. when one of the jobs is less desirable than the other.
6.
But laborers differ in more ways than just their skills. The last consideration was actually a special case of the more general observation that laborers differ in terms of the values they have. In fact I am not alone in considering jobs based on more than just my anticipated compensation—if I would choose job X over job Y because of altruistic considerations, there may be others who would do the same.
What I am really doing when I decide to choose my job on the basis of altruistic concerns in addition to monetary compensation is changing the aggregate demand of laborers. In a world where all laborers made their decisions on the basis of only monetary compensation, the jobs that got done would be those that produced the most economic value. In a world where all laborers made their decisions on the basis of altruistic impact, the jobs that got done would be those that produced the most (direct) altruistic impact. In intermediate worlds, in which the labor force collectively makes its decisions on the basis of a combination of altruistic impact and economic value, the jobs that get done are those that are optimal according to that combination of values.
Assuming that workers all value money enough that markets continue to function efficiently and facilitate (implicit) trade amongst people with different values, then my decision to base my job selection on a particular combination of money and other values serves to (slightly) change the collective values of the labor force, which in turn slightly changes which jobs get done.
6b.
If my values are sufficiently unusual that I am taking jobs which no one else would consider, then the above analysis breaks down—unless individuals can engage in explicit trade with one another, in which case it seems to go through (modulo uncertainty about bargaining outcomes). This seems to be the role of money in the above picture.
Appendix:
An analogous situation seems to obtain with respect to spending money, charitable or otherwise (and in fact in a broader set of domains). If I choose to spend my money to accomplish project X, others may also stop spending money on project X. The proper way to understand my spending seems to be as a change to the aggregate demands of people with money. If I am spending money on things that are good for me, then I’ve shifted the notion of “economic value” to include things that are good for me. If I spend more money, I shift it farther. If I spend money on things that are good for future generations, then I’ve shifted the notion of “economic value” to include things that are good for future generations.
So if we are comparing job-related impacts of a career with donation-related impacts, it seems like we should be reasoning about the importance of shifting “what people are willing to work for” vs. “what people are willing to pay for.” I hope that this kind of framework can lead to a less brittle picture than we currently have.
Replaceability
Suppose I am trying to evaluate the consequences of taking job X. Here is a sequence of (hopefully decreasingly) naive ways to think about the impact of my decision.
(I don’t know if the later analyses are actually reasonable, but I’d really like to see more intellectually serious discussion of this issue by people who understand the world, and particularly economics, better than I do. I wouldn’t be surprised if more sophisticated versions of this analysis are already well-understood amongst economists, and simply haven’t been noticed by altruists trying to understand this issue. In that case, hopefully someone can point that out to me. Some of these analyses, and more sophisticated elaborations on them, appear in Ben Todd’s masters thesis.)
(Skip to section 6 if you want the punchline.)
1.
I should look at the direct consequences of doing job X, and choose a job for which those consequences are best.
2.
If I don’t take job X someone else will. So I shouldn’t be at all concerned with the immediate consequences of a job. Instead I should focus on the money I earn doing job X, which I will be able to spend at my own discretion (and which a substitute would have spent differently).
2b.
I should also reason about other parts of the job which I might do differently from my substitute; for example, if I intend to sabotage a company, my substitute probably won’t. If I will do a better or worse job than my substitute, that will also be relevant, etc.
3.
But when I take job X I slightly increase the supply of people who are willing to do job X, slightly decrease the wages for job X, and therefore slightly increase the amount of that job X that gets done. So I should compare the elasticity of supply and demand in this market to determine what will happen to the total amount of job X that gets done. (I think this is a standard calculation in basic microeconomics.)
3b.
Markets aren’t perfect spheres, and wages, demands, supplies, etc., will be slow and inconsistent in their reaction to an increase in supply. But if we look at the aggregate of many such decisions over a long period of time, this analysis should hold on average over many such decisions (and that should be good enough for our decision). Similarly, because workers commit to industries (for example by obtaining a degree in neuroscience) and industries commit to a number of workers (for example by investment in complementary capital) there is some necessary lag between an increased wage for job X and an increased supply. But over a long time period, on average, these effects seem to be neutral.
4.
In most industries the supply of labor is very elastic (because at equilibrium, if wages within an industry are lowered, people will instead take higher paying jobs elsewhere). Thus if I take job X, it will have little effect on the total amount of job X that gets done. So I should reason entirely about the money.
5.
But when I displace someone who would have done job X they take job Y, thus displacing someone else who goes on to take job Z. This process continues, each step having a small impact on wages, but the aggregate impact of many steps being unpredictable. To analyze the outcome we should appeal to a simple equilibrium analysis: there is some supply of labor, and both before and after my introduction to the workforce, that supply of labor was being used roughly efficiently. So my impact is the same regardless of what job X is—it is as if I were doing the most economically productive activity (on the margin).
5b.
Incentives aren’t defined in terms of economic productivity. For example, there may be philanthropists or governments funding activity in a domain. Then we need to adjust the analysis to say: my impact is as if I were doing the activity which is most rewarded on the margin.
5c.
Different employees aren’t perfect substitutes. I have my own set of skills, and the above analysis actually shows that I would be doing the most effective thing for a worker with my skills. So if I am a researcher, my impact will be to do the most productive research.
But of course it doesn’t matter what my skills are, it matters what skills I am using—the above analysis needs to be modified to take into account the fact that I might not pursue the most lucrative opportunity for someone with my skills. If I have a few different skills which don’t often appear together, I can choose which of those skills to use (and therefore change my impact).
However, if there are any laborers who were previously ambivalent between using those skills, then this effect will disappear. And if I can do either job X or job Y, in a large world it is very likely that others can as well. So I can actually have an impact only when everyone else faced with the choice between job X and job Y would definitely choose one or the other, i.e. when one of the jobs is less desirable than the other.
6.
But laborers differ in more ways than just their skills. The last consideration was actually a special case of the more general observation that laborers differ in terms of the values they have. In fact I am not alone in considering jobs based on more than just my anticipated compensation—if I would choose job X over job Y because of altruistic considerations, there may be others who would do the same.
What I am really doing when I decide to choose my job on the basis of altruistic concerns in addition to monetary compensation is changing the aggregate demand of laborers. In a world where all laborers made their decisions on the basis of only monetary compensation, the jobs that got done would be those that produced the most economic value. In a world where all laborers made their decisions on the basis of altruistic impact, the jobs that got done would be those that produced the most (direct) altruistic impact. In intermediate worlds, in which the labor force collectively makes its decisions on the basis of a combination of altruistic impact and economic value, the jobs that get done are those that are optimal according to that combination of values.
Assuming that workers all value money enough that markets continue to function efficiently and facilitate (implicit) trade amongst people with different values, then my decision to base my job selection on a particular combination of money and other values serves to (slightly) change the collective values of the labor force, which in turn slightly changes which jobs get done.
6b.
If my values are sufficiently unusual that I am taking jobs which no one else would consider, then the above analysis breaks down—unless individuals can engage in explicit trade with one another, in which case it seems to go through (modulo uncertainty about bargaining outcomes). This seems to be the role of money in the above picture.
Appendix:
An analogous situation seems to obtain with respect to spending money, charitable or otherwise (and in fact in a broader set of domains). If I choose to spend my money to accomplish project X, others may also stop spending money on project X. The proper way to understand my spending seems to be as a change to the aggregate demands of people with money. If I am spending money on things that are good for me, then I’ve shifted the notion of “economic value” to include things that are good for me. If I spend more money, I shift it farther. If I spend money on things that are good for future generations, then I’ve shifted the notion of “economic value” to include things that are good for future generations.
So if we are comparing job-related impacts of a career with donation-related impacts, it seems like we should be reasoning about the importance of shifting “what people are willing to work for” vs. “what people are willing to pay for.” I hope that this kind of framework can lead to a less brittle picture than we currently have.
Crossposted from Rational Altruist