The rational preference argument only applies for giving to the current generation of recipients at some later point in their lives.
Not necessarily. Let’s say a patient philanthropy foundation wants to expropriate, say, half of the inherited wealth between this generation and the next (in order to invest it for a future generation). The current generation would rationally prefer this not to happen. Conversely, the current generation would prefer to receive from the foundation an amount of wealth equivalent to half the wealth the next generation will be able to inherit.
The fundamental point is that investing wealth to accumulate wealth might make your impact numbers go up, because of an arbitrarily accounting decision, but it doesn’t make the well-being of the people you’re trying to help go up, as measured by their rational preferences or revealed preferences.
Even if you wanted to make an argument that investing in index funds is just always inherently going to be so much more cost-effective than consumption — I think this is highly dubious — you could have fewer recipients and disburse enough to each of them that they’d be able to invest a large enough portion of the cash transfer to satisfy you. Instead of 10 million people getting $1,000, maybe 100,000 people get $100,000, or 10,000 people get $1 million.
I can’t see any moral justification for why this wouldn’t be a preferable option to keeping all the money in a British foundation.
I agree donating now to promote economic growth in poor countries is likely preferable to delaying donations by 100 years, though I am unsure about the tractability of any particular growth intervention.
I think the tractability of stimulating economic growth in poor countries — while I acknowledge it is hard and uncertain, and will probably require funding research — is far better than the tractability of creating patient philanthropy foundations and that successfully execute their 100-year missions. Patient philanthropy foundations are rightly illegal in most Western democracies. It’s hard for any organization to last for 100 years, and especially to both last and remain in good condition. Executing a 100-year old plan to do philanthropic giving seems ridiculous. The plan will have been based on 100-year-old cost-effectiveness estimates that in all likelihood will no longer be considered close to accurate by then.
If the idea of the foundation is not to do any specific plan, then it doesn’t need to exist in the first place. The general pool of capital in wealthy countries, some of which is allocated to philanthropy annually, will be sufficient.
Not necessarily. Let’s say a patient philanthropy foundation wants to expropriate, say, half of the inherited wealth between this generation and the next (in order to invest it for a future generation). The current generation would rationally prefer this not to happen. Conversely, the current generation would prefer to receive from the foundation an amount of wealth equivalent to half the wealth the next generation will be able to inherit.
The fundamental point is that investing wealth to accumulate wealth might make your impact numbers go up, because of an arbitrarily accounting decision, but it doesn’t make the well-being of the people you’re trying to help go up, as measured by their rational preferences or revealed preferences.
I’m not sure I understand this line of argument. Let’s say the world is such that spending in 100 years (i.e on people who do not currently exist and cannot actualize their preferences) is especially cost-effective or otherwise useful. There are two ways of “putting money 100 years into the future”.
Option A: Put money in an index fund, let it grow, spend it in 100 years
Option B: give it to people who will spend some of it now, invest some, pass on some to their children, who will in turn spend some of it, invest some of it, and pass it onto their children, leaving some for their grandchildren to spend in 100 years.
Option A leads to a bigger counterfactual increase in spending-100-years-from-now which is what we care about in this (admittedly contrived) example.
I agree setting up 100-year foundations is hard; but there are more practical steps one can take if they are convinced of the general arguments for patient philanthropy, most simply giving later in their lives or in their wills (I’m not necessarily endorsing this, but I think it is worth considering).
If you think that investing in index funds is sure to lead to the best outcome, why not give each recipient enough money so that they can invest in index funds? Or otherwise arrange it so that the recipients own and control the capital? Is it plausible to think that the donor owning the capital for 100 years is preferable to the recipient owning the capital for 100 years?
Option A: Put money in an index fund, let it grow, spend it in 100 years
Option B: give it to people who will spend some of it now, invest some, pass on some to their children, who will in turn spend some of it, invest some of it, and pass it onto their children, leaving some for their grandchildren to spend in 100 years.
Option A leads to a bigger counterfactual increase in spending-100-years-from-now which is what we care about in this (admittedly contrived) example
Not necessarily. Let’s say a patient philanthropy foundation wants to expropriate, say, half of the inherited wealth between this generation and the next (in order to invest it for a future generation). The current generation would rationally prefer this not to happen. Conversely, the current generation would prefer to receive from the foundation an amount of wealth equivalent to half the wealth the next generation will be able to inherit.
The fundamental point is that investing wealth to accumulate wealth might make your impact numbers go up, because of an arbitrarily accounting decision, but it doesn’t make the well-being of the people you’re trying to help go up, as measured by their rational preferences or revealed preferences.
Even if you wanted to make an argument that investing in index funds is just always inherently going to be so much more cost-effective than consumption — I think this is highly dubious — you could have fewer recipients and disburse enough to each of them that they’d be able to invest a large enough portion of the cash transfer to satisfy you. Instead of 10 million people getting $1,000, maybe 100,000 people get $100,000, or 10,000 people get $1 million.
I can’t see any moral justification for why this wouldn’t be a preferable option to keeping all the money in a British foundation.
I think the tractability of stimulating economic growth in poor countries — while I acknowledge it is hard and uncertain, and will probably require funding research — is far better than the tractability of creating patient philanthropy foundations and that successfully execute their 100-year missions. Patient philanthropy foundations are rightly illegal in most Western democracies. It’s hard for any organization to last for 100 years, and especially to both last and remain in good condition. Executing a 100-year old plan to do philanthropic giving seems ridiculous. The plan will have been based on 100-year-old cost-effectiveness estimates that in all likelihood will no longer be considered close to accurate by then.
If the idea of the foundation is not to do any specific plan, then it doesn’t need to exist in the first place. The general pool of capital in wealthy countries, some of which is allocated to philanthropy annually, will be sufficient.
I’m not sure I understand this line of argument. Let’s say the world is such that spending in 100 years (i.e on people who do not currently exist and cannot actualize their preferences) is especially cost-effective or otherwise useful. There are two ways of “putting money 100 years into the future”.
Option A: Put money in an index fund, let it grow, spend it in 100 years
Option B: give it to people who will spend some of it now, invest some, pass on some to their children, who will in turn spend some of it, invest some of it, and pass it onto their children, leaving some for their grandchildren to spend in 100 years.
Option A leads to a bigger counterfactual increase in spending-100-years-from-now which is what we care about in this (admittedly contrived) example.
I agree setting up 100-year foundations is hard; but there are more practical steps one can take if they are convinced of the general arguments for patient philanthropy, most simply giving later in their lives or in their wills (I’m not necessarily endorsing this, but I think it is worth considering).
If you think that investing in index funds is sure to lead to the best outcome, why not give each recipient enough money so that they can invest in index funds? Or otherwise arrange it so that the recipients own and control the capital? Is it plausible to think that the donor owning the capital for 100 years is preferable to the recipient owning the capital for 100 years?
Well in this case the recipient does not currently exist and I cannot give them any money.
Give it to their ancestors.
see my previous comment:
Giving it to their ancestors is choosing option B
If by Option B you meant that the recipients would invest most or all of the cash transfers in index funds, why is Option A preferable?