This post contains some notes that I wrote after ~ 1 week of reading about Certificates of Impact as part of my work as a Research Scholar at the Future of Humanity Institute, and a bit of time after that thinking and talking about the idea here and there.
In this post, I
describe what Certificates of Impact are, including a concrete proposal,
provide some lists of ways that it might be good or bad, and reasons it might or might not work,
provide some other miscellaneous thoughts relevant to future work on Certificates of Impact, and
provide some links to relevant resources.
I’m sharing this here in case it’s useful—the intended audience is people who are curious about what Certificates of Impact are, and (to some extent) people who are thinking seriously about Certificates of Impact.
Note that, since I haven’t invested much time thinking about Certificates of Impact, my understanding of this area is fairly shallow. I’ve tried to include appropriate caveats in the text to reflect this, but I might not have always succeeded, so please bear this in mind.
What Certificates of Impact are
Within this document, I’m using Certificates of Impact to refer to the general idea about creating a market in altruistic impact. I think that the general idea is also referred to as Impact Certificates, Tradeable Altruistic Impact, and Impact Purchases.
Certificates of Impact is an idea that’s been floating around in the Effective Altruism community for some time. Paul Christiano and Katja Grace ran an experiment with Certificates of Impact about 5 years ago. I’ve seen various EA forum posts about Certificates of Impact too (see the final section of this post for some links).
By a market in altruistic impact, I mean something like the following: we imagine a future where there are people who want to donate to charity, and there are people who are doing high impact projects, and rather than them making the effort to seek each other out, they connect through this market. In the market, the individuals or organisations doing the projects issue Certificates of Impact, and donors buy them. And maybe as a donor you don’t need to try so hard to find the best project, you just buy some certificates from some marketplace; and as someone doing a high impact project, you don’t have to work so hard to connect to donors, because you find that there are profit seeking organisations that are willing to buy your certificates, and that’s your source of funding.
Note both that the above is quite vague, and also there are probably some aspects you could change and still have something that could fall under Certificates of Impact.
A semi-concrete proposal
There are lots of varieties of Certificates of Impact-type systems that could be tried. To make things easier, from now on in this document I’ll assess a concrete proposal called Certificates of Impact with Dedication (idea due to Owen Cotton-Barratt):
A market is created / exists where someone can issue a Certificate for work they believe to be altruistically impactful. We call this person the Issuer. There is a statute of limitations on issuing Certificates of two years (i.e. Certificates can’t be issued for work more than two years old). The Certificate is assessed by a Validator who confirms that the work specified on the Certificate has in fact been done. The Issuer then sells the Certificate in the market, maybe via an auction mechanism. Note that the Certificate can refer to some percentage of the project, so for example it might represent 40% of the altruistic impact of a project, while the Issuer keeps the other 60%. The Certificate is traded on the secondary market by professional traders and then bought by an Ultimate Buyer who is the ultimate consumer of the Certificate. The Ultimate Buyer then Dedicates the Certificate, possibly to themselves so that they get the credit for the altruistic impact.
Whoever the certificate gets Dedicated to is the one who gets the credit for the counterfactual altruistic impact of the project that the certificate refers to. And once a certificate has been Dedicated it can’t be traded anymore, so Dedication is its end point. Importantly (in my view), if you don’t have a Dedication mechanism it’s not clear whether people who own Certificates of Impact have bought them so that they can resell them at a profit, or because they want to have altruistic impact.
Brainstorm-style lists of ways Certificates of Impact might go well or badly
In this section, I list ways Certificates of Impact might go well or badly, or why it might or might not work. Generally, I’ve tried to err on the side of including things even where I consider them to be very speculative.
Note that my opinions, where I give them, are pretty unstable: I can easily imagine myself changing my mind on reflection or after seeing new arguments.
How good might this be?
Let’s imagine that a well-functioning Certificates of Impact with Dedication system exists with a large number of active participants including profit-seeking intermediaries. I list the ways this could be good below.
Here is a summary of the possible benefits. For each one, I’ve put my opinion regarding how likely it is in brackets.
More efficient allocation of time and money dedicated to altruistically impactful work. (I think this is the most likely benefit)
Improved quality of people working on altruistically impactful work. (I think this is plausible)
Larger pool of donations towards altruistically impactful work. (I think this is plausible)
Assessments of impact can be deferred to the future. (I think this is guaranteed under the proposal I’m using)
Here’s more detail
Resources intended for altruistic impact are allocated more efficiently (in the sense of getting higher impact for the same quantity of input resources through better allocation)
This applies to both cash from donors (the Ultimate Buyers), and cash and non-cash resources, like hours of work, from people working to create altruistic impact (the Issuers).
This comes about from having a well-functioning market in Certificates of Impact. Markets are great at efficient allocation of resources.
In particular
Profit-seeking organisations bring prices to correct levels through expert analysis
Venture Capital
Financial security analysts
Funding (through ordinary finance world) for altruistically impactful projects / start ups at the start (possibly easier if you can issue certificates for a project before it starts, but this isn’t essential)
Lower the barrier for / correctly incentivise risky altruistic projects
Work intended for altruistic impact gets focussed on the best cause areas (through financial incentive / existence of funding)
I have a bit of a worldview that money is an incredibly effective signal and motivator for getting people to work on stuff—see the army of smart graduates going into law, banking, consultancy, accountancy, etc.
Funding makes altruistically impactful startups sexier → easier to attract top talent
Larger pool of donations to effective charities through presence of large and salient Certificates of Impact market, which makes it more culturally usual to donate to effective charities
Probably second-order benefits too (get people to think about what is effective)
Some deference to the future since prices today are set by expectations of how things will be valued in the future
Good because it’s easier to assess things after the fact
Also good to the extent that we trust future people’s moral judgements more than our own
How feasible is this?
I list below considerations for thinking about how feasible it is to get to a state where this is big and being used by lots of people (whether it is actually achieving the desired outcomes of improved efficiency etc or not).
Some kind of critical mass will be necessary to get this off the ground.
Not clear to me what size is necessary
Related: lack of standardisation might make it hard to create a liquid market in the certificates.
Related: getting profit-seeking entities involved might require a huge, standardised market. I’m not sure whether the best/most likely version of Certificates of Impact includes profit-seeking entities.
People need to trust and understand what the Certificates of Impact are supposed to represent.
(maybe?) People need to feel that the Certificates of Impact really represent causal impact—buying a Certificate of Impact causes the impact to happen.
Assessing the value of the projects needs to be feasible.
This needs to work under a mix of altruistic preferences (I think this is probably not an issue, but I’m not sure)
How bad might this be?
I list below the ways a large (but maybe not well-functioning) market in Certificates of Impact with Dedication could fail to have a positive impact, or even be net negative.
Here is a summary of the possible issues / harms. For each one, I’ve put my opinion regarding how likely it is and/or how bad it might be in brackets.
The quality of the altruistic impact pricingwould be inadequate, and this is net negative, e.g. because it’s just too hard to evaluate the altruistic impact of a project. (I think this is fairly likely but perhaps unlikely to make Certificates of Impact strongly net negative)
The presence of money / explicit valuing of projects would destroy intrinsic motivation for Issuers and generally make the whole thing very sordid and transactional. (I think this is unlikely to be a major issue)
The weirdness of the whole concept from the point of view of the Issuer and/or Ultimate Buyer would make this unworkable. (I think this is somewhat unlikely to happen)
Trying to motivate altruistic behaviour with money will be net negative due to fraud etc. (I think this is quite plausible and would be quite bad)
Explicit certification of rich people as causing large altruistic impact will be very unpopular. (unclear to me how likely this is or how bad it would be)
Poor market behaviour such as crashes and bubbles would be very damaging. (seems unlikely to be net-negative to me, but it’s probably still a concern)
Impact is expensive because you have to pay at the price at which you value the impact, rather than e.g. what the project costs. (unlikely to be a major issue in my view, but probably still a concern)
Infrastructure costs would outweigh the benefits (I think this is possibly an issue / closely related to feasibility)
Here’s more detail
Inadequate pricing of altruistic impact
If Ultimate Buyers have poor altruistic preferences (e.g. favouring cute animals over vast numbers of future people) (or perhaps even completely selfish preferences?) the right things won’t get rewarded and the market could be completely dysfunctional.
Some things are not easy to assess after the fact—an extreme case is an intervention that causes extinction.
Downside risks from projects are not accounted for—this incentivises low (or negative) expected impact projects because the price the Issuer can sell at is floored at zero, distorting the expected benefit for the Issuer
You’d be better off making a GiveWell for longtermist projects, giving money to the Open Philanthropy Project, etc
Undesirable effects of putting a price on everything
This would make the altruistic ecosystem very sordid and transactional (for everyone involved and/or for the general public).
This would remove intrinsic motivation for the Issuer.
The weirdness of the concept of Certificates of Impact makes this unworkable
People who want to donate won’t buy into the idea that buying a certificate causes the impact to happen. It’s too confusing and causally remote from the work the Issuer did.
It would be pretty weird for people who are altruistically motivated to do a project if they sell a certificate for all the work and consequently are not (deemed to be) causally responsible for the impact of their project.
You can sell a fraction of the work, but what fraction should you choose?
Looking at the current financial system helps see the flaws that markets can have. E.g. fraud by Issuer—even at a low level by creating incentives to exaggerate impact. Or any other issues with the Issuer optimising for the value of the certificate rather than optimising for altruistic impact. In the same way that public corporations now have an overwhelmingly strong “duty to shareholders” to maximise profits, even though this is very harmful to society.
Contrast “provide money to enable intrinsically motivated people to do good thing” with “pay for anyone to do things that appear high impact”. Maybe you don’t get great outcomes with the latter.
Contrast with the current status quo where things feel pretty cooperative (to me), at least inside Effective Altruism circles.
Ordinary people may be very unhappy with a system that explicitly certifies that a rich person caused lots of positive impact.
The weird things that markets can do—like crash or have bubbles—would be very damaging.
Unlike for a normal market, you have to pay at the price you value the impact at, rather than paying a cheaper price and benefitting from the consumer surplus as you do in ordinary product markets.
The infrastructure costs would outweigh the benefits: e.g. project validation, impact assessment, market infrastructure, etc
Other thoughts
Information value of experimentation
The negative points may not weigh so heavily if we think we can run small, reversible experiments to get more information.
My Notes on Certificates of Impact
Introduction & purpose of post
This post contains some notes that I wrote after ~ 1 week of reading about Certificates of Impact as part of my work as a Research Scholar at the Future of Humanity Institute, and a bit of time after that thinking and talking about the idea here and there.
In this post, I
describe what Certificates of Impact are, including a concrete proposal,
provide some lists of ways that it might be good or bad, and reasons it might or might not work,
provide some other miscellaneous thoughts relevant to future work on Certificates of Impact, and
provide some links to relevant resources.
I’m sharing this here in case it’s useful—the intended audience is people who are curious about what Certificates of Impact are, and (to some extent) people who are thinking seriously about Certificates of Impact.
Note that, since I haven’t invested much time thinking about Certificates of Impact, my understanding of this area is fairly shallow. I’ve tried to include appropriate caveats in the text to reflect this, but I might not have always succeeded, so please bear this in mind.
What Certificates of Impact are
Within this document, I’m using Certificates of Impact to refer to the general idea about creating a market in altruistic impact. I think that the general idea is also referred to as Impact Certificates, Tradeable Altruistic Impact, and Impact Purchases.
Certificates of Impact is an idea that’s been floating around in the Effective Altruism community for some time. Paul Christiano and Katja Grace ran an experiment with Certificates of Impact about 5 years ago. I’ve seen various EA forum posts about Certificates of Impact too (see the final section of this post for some links).
By a market in altruistic impact, I mean something like the following: we imagine a future where there are people who want to donate to charity, and there are people who are doing high impact projects, and rather than them making the effort to seek each other out, they connect through this market. In the market, the individuals or organisations doing the projects issue Certificates of Impact, and donors buy them. And maybe as a donor you don’t need to try so hard to find the best project, you just buy some certificates from some marketplace; and as someone doing a high impact project, you don’t have to work so hard to connect to donors, because you find that there are profit seeking organisations that are willing to buy your certificates, and that’s your source of funding.
Note both that the above is quite vague, and also there are probably some aspects you could change and still have something that could fall under Certificates of Impact.
A semi-concrete proposal
There are lots of varieties of Certificates of Impact-type systems that could be tried. To make things easier, from now on in this document I’ll assess a concrete proposal called Certificates of Impact with Dedication (idea due to Owen Cotton-Barratt):
A market is created / exists where someone can issue a Certificate for work they believe to be altruistically impactful. We call this person the Issuer. There is a statute of limitations on issuing Certificates of two years (i.e. Certificates can’t be issued for work more than two years old). The Certificate is assessed by a Validator who confirms that the work specified on the Certificate has in fact been done. The Issuer then sells the Certificate in the market, maybe via an auction mechanism. Note that the Certificate can refer to some percentage of the project, so for example it might represent 40% of the altruistic impact of a project, while the Issuer keeps the other 60%. The Certificate is traded on the secondary market by professional traders and then bought by an Ultimate Buyer who is the ultimate consumer of the Certificate. The Ultimate Buyer then Dedicates the Certificate, possibly to themselves so that they get the credit for the altruistic impact.
Whoever the certificate gets Dedicated to is the one who gets the credit for the counterfactual altruistic impact of the project that the certificate refers to. And once a certificate has been Dedicated it can’t be traded anymore, so Dedication is its end point. Importantly (in my view), if you don’t have a Dedication mechanism it’s not clear whether people who own Certificates of Impact have bought them so that they can resell them at a profit, or because they want to have altruistic impact.
Brainstorm-style lists of ways Certificates of Impact might go well or badly
In this section, I list ways Certificates of Impact might go well or badly, or why it might or might not work. Generally, I’ve tried to err on the side of including things even where I consider them to be very speculative.
Note that my opinions, where I give them, are pretty unstable: I can easily imagine myself changing my mind on reflection or after seeing new arguments.
How good might this be?
Let’s imagine that a well-functioning Certificates of Impact with Dedication system exists with a large number of active participants including profit-seeking intermediaries. I list the ways this could be good below.
Here is a summary of the possible benefits. For each one, I’ve put my opinion regarding how likely it is in brackets.
More efficient allocation of time and money dedicated to altruistically impactful work. (I think this is the most likely benefit)
Improved quality of people working on altruistically impactful work. (I think this is plausible)
Larger pool of donations towards altruistically impactful work. (I think this is plausible)
Assessments of impact can be deferred to the future. (I think this is guaranteed under the proposal I’m using)
Here’s more detail
Resources intended for altruistic impact are allocated more efficiently (in the sense of getting higher impact for the same quantity of input resources through better allocation)
This applies to both cash from donors (the Ultimate Buyers), and cash and non-cash resources, like hours of work, from people working to create altruistic impact (the Issuers).
This comes about from having a well-functioning market in Certificates of Impact. Markets are great at efficient allocation of resources.
In particular
Profit-seeking organisations bring prices to correct levels through expert analysis
Venture Capital
Financial security analysts
Funding (through ordinary finance world) for altruistically impactful projects / start ups at the start (possibly easier if you can issue certificates for a project before it starts, but this isn’t essential)
Lower the barrier for / correctly incentivise risky altruistic projects
Work intended for altruistic impact gets focussed on the best cause areas (through financial incentive / existence of funding)
I have a bit of a worldview that money is an incredibly effective signal and motivator for getting people to work on stuff—see the army of smart graduates going into law, banking, consultancy, accountancy, etc.
Funding makes altruistically impactful startups sexier → easier to attract top talent
Larger pool of donations to effective charities through presence of large and salient Certificates of Impact market, which makes it more culturally usual to donate to effective charities
Probably second-order benefits too (get people to think about what is effective)
Some deference to the future since prices today are set by expectations of how things will be valued in the future
Good because it’s easier to assess things after the fact
Also good to the extent that we trust future people’s moral judgements more than our own
How feasible is this?
I list below considerations for thinking about how feasible it is to get to a state where this is big and being used by lots of people (whether it is actually achieving the desired outcomes of improved efficiency etc or not).
Some kind of critical mass will be necessary to get this off the ground.
Not clear to me what size is necessary
Related: lack of standardisation might make it hard to create a liquid market in the certificates.
Related: getting profit-seeking entities involved might require a huge, standardised market. I’m not sure whether the best/most likely version of Certificates of Impact includes profit-seeking entities.
People need to trust and understand what the Certificates of Impact are supposed to represent.
(maybe?) People need to feel that the Certificates of Impact really represent causal impact—buying a Certificate of Impact causes the impact to happen.
Assessing the value of the projects needs to be feasible.
This needs to work under a mix of altruistic preferences (I think this is probably not an issue, but I’m not sure)
How bad might this be?
I list below the ways a large (but maybe not well-functioning) market in Certificates of Impact with Dedication could fail to have a positive impact, or even be net negative.
Here is a summary of the possible issues / harms. For each one, I’ve put my opinion regarding how likely it is and/or how bad it might be in brackets.
The quality of the altruistic impact pricing would be inadequate, and this is net negative, e.g. because it’s just too hard to evaluate the altruistic impact of a project. (I think this is fairly likely but perhaps unlikely to make Certificates of Impact strongly net negative)
The presence of money / explicit valuing of projects would destroy intrinsic motivation for Issuers and generally make the whole thing very sordid and transactional. (I think this is unlikely to be a major issue)
The weirdness of the whole concept from the point of view of the Issuer and/or Ultimate Buyer would make this unworkable. (I think this is somewhat unlikely to happen)
Trying to motivate altruistic behaviour with money will be net negative due to fraud etc. (I think this is quite plausible and would be quite bad)
Explicit certification of rich people as causing large altruistic impact will be very unpopular. (unclear to me how likely this is or how bad it would be)
Poor market behaviour such as crashes and bubbles would be very damaging. (seems unlikely to be net-negative to me, but it’s probably still a concern)
Impact is expensive because you have to pay at the price at which you value the impact, rather than e.g. what the project costs. (unlikely to be a major issue in my view, but probably still a concern)
Infrastructure costs would outweigh the benefits (I think this is possibly an issue / closely related to feasibility)
Here’s more detail
Inadequate pricing of altruistic impact
If Ultimate Buyers have poor altruistic preferences (e.g. favouring cute animals over vast numbers of future people) (or perhaps even completely selfish preferences?) the right things won’t get rewarded and the market could be completely dysfunctional.
Some things are not easy to assess after the fact—an extreme case is an intervention that causes extinction.
Downside risks from projects are not accounted for—this incentivises low (or negative) expected impact projects because the price the Issuer can sell at is floored at zero, distorting the expected benefit for the Issuer
You’d be better off making a GiveWell for longtermist projects, giving money to the Open Philanthropy Project, etc
Undesirable effects of putting a price on everything
This would make the altruistic ecosystem very sordid and transactional (for everyone involved and/or for the general public).
This would remove intrinsic motivation for the Issuer.
The weirdness of the concept of Certificates of Impact makes this unworkable
People who want to donate won’t buy into the idea that buying a certificate causes the impact to happen. It’s too confusing and causally remote from the work the Issuer did.
It would be pretty weird for people who are altruistically motivated to do a project if they sell a certificate for all the work and consequently are not (deemed to be) causally responsible for the impact of their project.
You can sell a fraction of the work, but what fraction should you choose?
Looking at the current financial system helps see the flaws that markets can have. E.g. fraud by Issuer—even at a low level by creating incentives to exaggerate impact. Or any other issues with the Issuer optimising for the value of the certificate rather than optimising for altruistic impact. In the same way that public corporations now have an overwhelmingly strong “duty to shareholders” to maximise profits, even though this is very harmful to society.
Contrast “provide money to enable intrinsically motivated people to do good thing” with “pay for anyone to do things that appear high impact”. Maybe you don’t get great outcomes with the latter.
Contrast with the current status quo where things feel pretty cooperative (to me), at least inside Effective Altruism circles.
Ordinary people may be very unhappy with a system that explicitly certifies that a rich person caused lots of positive impact.
The weird things that markets can do—like crash or have bubbles—would be very damaging.
Unlike for a normal market, you have to pay at the price you value the impact at, rather than paying a cheaper price and benefitting from the consumer surplus as you do in ordinary product markets.
The infrastructure costs would outweigh the benefits: e.g. project validation, impact assessment, market infrastructure, etc
Other thoughts
Information value of experimentation
The negative points may not weigh so heavily if we think we can run small, reversible experiments to get more information.
Sources for outside views
How much have markets been beneficial in general?
Overall very good I think.
When have they been bad? E.g. natural monopoly
How have attempts to create a Certificates of Impact type system gone in the past (Paul Christiano and Katja Grace in 2015)?
How have attempts to create unusual markets in something gone in the past?
Online multiplayer game markets
Organ donation
Carbon credits / emissions trading
Gofundme etc
Cryptokitties?
How have similar things aimed at altruistic impact gone
Health Impact Certificates
Social/Development Impact Certificates
Prizes
There is surely an economics literature on when markets are good and when markets can be formed.
Relevant resources
Impactpurchase.org, which represents a record of an experiment with Certificates of Impact by Paul Christiano and Katja Grace in 2015.
Paul Christiano’s Effective Altruism forum post from 2014
Ozzie’s Effective Altruism forum post from last year on Impact Prizes as an improved version of Certificates of Impact.
Some recent relevant Effective Altruism forum posts (note that I haven’t read them!)
Do impact certificates help if you’re not sure your work is effective?
The Case for Impact Purchase | Part 1
Making Impact Purchases Viable
FWIW I think you should make this a top level post.
Kind of surprised that this post doesn’t link at all to Paul’s post on altruistic equity: https://forum.effectivealtruism.org/posts/r7vmtHZKuosJZ3Xq5/altruistic-equity-allocation