The thing I’m looking for is the comparison between the benefits and the costs; are the costs larger?
Efficient impact markets would allow anyone to create certificates for a project and then sell them for a price that corresponds to a very good prediction of their expected future value. Therefore, sufficiently efficient impact markets will probably fund some high EV projects that wouldn’t otherwise be funded (because it’s not easy for classical EA funders to evaluate them or even find them in the space of possible projects). If we look at that set of projects in isolation, we can regard it as the main upside of creating the impact market. The problem is that the market does not reliably distinguish between those high EV projects and net-negative projects, because a potential outcome that is extremely harmful affect the expected future value of the certificate as if the outcome were neutral.
Suppose x is a “random” project that has a substantial chance to prevent an existential catastrophe. If you believe that the EV of x is much smaller than the EV of x conditional on x not causing a harmful outcome, then you should be very skeptical about impact markets. Finally, we should consider that if a project is funded if and only if impact markets exist then it means that no classical EA funder would fund it in a world without impact markets, and thus it seems more likely than otherwise to be net-negative.
Sure, I buy that adverse selection can make things worse; my guess was that the hope was that classical EA funders would also operate thru the market.
(Even if all EA funders switched to operate solely as retro funders in impact markets, I think it would still be true that an intervention that gets funded by an impact market—and wouldn’t get funded in a world without impact markets—seems more likely than otherwise to be net-negative.)
Efficient impact markets would allow anyone to create certificates for a project and then sell them for a price that corresponds to a very good prediction of their expected future value. Therefore, sufficiently efficient impact markets will probably fund some high EV projects that wouldn’t otherwise be funded (because it’s not easy for classical EA funders to evaluate them or even find them in the space of possible projects). If we look at that set of projects in isolation, we can regard it as the main upside of creating the impact market. The problem is that the market does not reliably distinguish between those high EV projects and net-negative projects, because a potential outcome that is extremely harmful affect the expected future value of the certificate as if the outcome were neutral.
Suppose x is a “random” project that has a substantial chance to prevent an existential catastrophe. If you believe that the EV of x is much smaller than the EV of x conditional on x not causing a harmful outcome, then you should be very skeptical about impact markets. Finally, we should consider that if a project is funded if and only if impact markets exist then it means that no classical EA funder would fund it in a world without impact markets, and thus it seems more likely than otherwise to be net-negative.
(Even if all EA funders switched to operate solely as retro funders in impact markets, I think it would still be true that an intervention that gets funded by an impact market—and wouldn’t get funded in a world without impact markets—seems more likely than otherwise to be net-negative.)