Hyperbolic discounting is a ‘time inconsistent’ form of discounting where delays early on are penalised more than delays later on. This results in a ‘fat tail’ where it takes a long time for a hyperbolic function to get near zero. Over a long enough time period, an exponential function (for example growth in happiness driven by population growth) will always be more extreme than a hyperbolic function (for example discount rate in this scenario).
So actually the title should perhaps be reworded; the shape of the discount function matters just as much (if not more so than) the parameterisation of that function. A hyperbolic discount function will always result in longtermism dominating neartermism.
Having said that, I don’t think anyone believes hyperbolic discount rates are anything other than a function of time preference, and the consensus amongst EAs seems to be that time preference should be factored out of philanthropic analysis.
Admittedly, this is a bit of a contrarian take on discount functions, but hyperbolic discounting is more rational than economists or EAs think once we introduce uncertainty. I’ll provide links here for my contrarian take:
Hyperbolic discounting is a ‘time inconsistent’ form of discounting where delays early on are penalised more than delays later on. This results in a ‘fat tail’ where it takes a long time for a hyperbolic function to get near zero. Over a long enough time period, an exponential function (for example growth in happiness driven by population growth) will always be more extreme than a hyperbolic function (for example discount rate in this scenario).
So actually the title should perhaps be reworded; the shape of the discount function matters just as much (if not more so than) the parameterisation of that function. A hyperbolic discount function will always result in longtermism dominating neartermism.
Having said that, I don’t think anyone believes hyperbolic discount rates are anything other than a function of time preference, and the consensus amongst EAs seems to be that time preference should be factored out of philanthropic analysis.
Admittedly, this is a bit of a contrarian take on discount functions, but hyperbolic discounting is more rational than economists or EAs think once we introduce uncertainty. I’ll provide links here for my contrarian take:
https://www.lesswrong.com/posts/tH8bBKCvfdjBKMDqt/link-hyperbolic-discounting-is-rational
http://physicsoffinance.blogspot.com/2011/07/discountingdetails.html?m=1