One thing which makes me more confident that object-level risk[1] is important in for-profit investing, but expect it to be less central in charitable work, is that I’m more confident that for-profit risk is priced correctly, or at least not way out of line with what it should be. It seems more plausible to me that there are low-risk high-return charitable opportunities, because people are generally worse at identifying and saturating those opportunities. (Although per GiveWell’s post on Broad market efficiency I now believe this effect is much less striking than I first guessed).
[1] I’m not sure this is a correct application of “object-level”, but I mean actual risk that a given investment will succeed or fail, rather than the “meta” risk that we’ll fail to analyse its value correctly. I’m not super confident the distinction is meaningful.
One thing which makes me more confident that object-level risk[1] is important in for-profit investing, but expect it to be less central in charitable work, is that I’m more confident that for-profit risk is priced correctly, or at least not way out of line with what it should be. It seems more plausible to me that there are low-risk high-return charitable opportunities, because people are generally worse at identifying and saturating those opportunities. (Although per GiveWell’s post on Broad market efficiency I now believe this effect is much less striking than I first guessed).
[1] I’m not sure this is a correct application of “object-level”, but I mean actual risk that a given investment will succeed or fail, rather than the “meta” risk that we’ll fail to analyse its value correctly. I’m not super confident the distinction is meaningful.