But beating the market is the only way to generate higher than average returns in the long run.
I’m not claiming that investing in AI companies will generate higher-than-average returns in the long run.
I’m claiming that an altruist’s marginal dollar is better put towards investment (in AI companies or in the S&P 500) than towards present-day donations.
Fantastic, I completely agree, so I don’t think we have any substantive disagreement.
I guess my only remaining question would then be: should your AI predictions ever influence your investing vs donating behavior? I’d say absolutely not, because you should have incredibly high priors on not beating the market. If your AI predictions imply that the market is wrong, that’s just a mark against your AI predictions.
You seem inclined to agree: The only relevant factor for someone considering donation vs investment is expected future returns. You agree that we shouldn’t expect AI companies to generate higher-than-average returns in the long run. Therefore, your choice to invest or donate should be completely independent of your AI beliefs, because no matter your AI predictions, you don’t expect AI companies to have higher-than-average future returns.
Therefore, your choice to invest or donate should be completely independent of your AI beliefs, because no matter your AI predictions, you don’t expect AI companies to have higher-than-average future returns.
I do think that your AI predictions should bear on your decision to invest or donate now, as even if AI companies won’t have higher-than-average returns, the average return of future firms could be extremely high (given productivity gains unlocked by AI), and it would be a shame to miss out on that return because you donated the money you otherwise would have invested (in a basket AI companies or a broader index fund like VTSAX, wherever).
I’m not claiming that investing in AI companies will generate higher-than-average returns in the long run.
I’m claiming that an altruist’s marginal dollar is better put towards investment (in AI companies or in the S&P 500) than towards present-day donations.
Fantastic, I completely agree, so I don’t think we have any substantive disagreement.
I guess my only remaining question would then be: should your AI predictions ever influence your investing vs donating behavior? I’d say absolutely not, because you should have incredibly high priors on not beating the market. If your AI predictions imply that the market is wrong, that’s just a mark against your AI predictions.
You seem inclined to agree: The only relevant factor for someone considering donation vs investment is expected future returns. You agree that we shouldn’t expect AI companies to generate higher-than-average returns in the long run. Therefore, your choice to invest or donate should be completely independent of your AI beliefs, because no matter your AI predictions, you don’t expect AI companies to have higher-than-average future returns.
Would you agree with that?
I feel somewhat confused about whether to expect that AI companies will beat the broader market.
On one hand, I have an intuition that the current market price hasn’t fully baked in the implications of future AI development. (Especially when I see things like most US executives thinking that AI will have less of an impact than the internet did.)
On the other, I accord with your point about it being very hard to “beat the market” and generally have a high prior about markets being efficient.
Inadequate Equilibria seems relevant here.
I do think that your AI predictions should bear on your decision to invest or donate now, as even if AI companies won’t have higher-than-average returns, the average return of future firms could be extremely high (given productivity gains unlocked by AI), and it would be a shame to miss out on that return because you donated the money you otherwise would have invested (in a basket AI companies or a broader index fund like VTSAX, wherever).
Also, I was being somewhat sloppy in the post on this point – thanks for pushing on it!
I’ve edited the post to better reflect my view.