Hi Adam! Thanks for the detailed reply. From a brief look at your model, it seems you’ve understood my reasoning in this post correctly. I had indeed overlooked that their numbers were already discounted.
However, since they use a 3% discount rate and you use a 4% discount rate, you would still need to adjust for the difference. If we still assume that the economic impacts hit throughout your entire career, from 15 to 60 years into the future (note: 15 years into the future is not the average, but the initial year of impacts!), then you get to around $0.7 of NPV for each $1 today—much better than the $0.28 in my analysis, but still less than the $1 without discounting. Using this number, the result would be very close to GiveWell’s 20% estimate. How curious!
Hi Adam! Thanks for the detailed reply. From a brief look at your model, it seems you’ve understood my reasoning in this post correctly. I had indeed overlooked that their numbers were already discounted.
However, since they use a 3% discount rate and you use a 4% discount rate, you would still need to adjust for the difference. If we still assume that the economic impacts hit throughout your entire career, from 15 to 60 years into the future (note: 15 years into the future is not the average, but the initial year of impacts!), then you get to around $0.7 of NPV for each $1 today—much better than the $0.28 in my analysis, but still less than the $1 without discounting. Using this number, the result would be very close to GiveWell’s 20% estimate. How curious!
Best,
Jakob
Thanks for the flag, Jakob!