Although EA risk attitudes may have played a role in FTX’s demise, I think to the extent that is true it is due to the peculiar nature of finance rather than EA advice being wrong in most instances. Specifically, impact in most areas (e.g., media, innovations, charitable impact) is heavily right-tailed but financial exchanges have a major left-tailed risk of collapse. As human expectations of success are heavily formed and biased by our most recent similar experiences, this will cause people to not take enough risk when the value is in the right tail (as median<mean) and take on too much when there are major failures in the left tail (as median>mean).
If this is true, we may need to consider which specific situations have these left-tailed properties and to be cautious about discouraging too much risk taking in those domains. However, I suspect that this situation may be very rare and has few implications for what EAs should do going forwards.
NOTE: I published something similar on another thread but feel it is even more relevant here.
Although EA risk attitudes may have played a role in FTX’s demise, I think to the extent that is true it is due to the peculiar nature of finance rather than EA advice being wrong in most instances. Specifically, impact in most areas (e.g., media, innovations, charitable impact) is heavily right-tailed but financial exchanges have a major left-tailed risk of collapse. As human expectations of success are heavily formed and biased by our most recent similar experiences, this will cause people to not take enough risk when the value is in the right tail (as median<mean) and take on too much when there are major failures in the left tail (as median>mean).
If this is true, we may need to consider which specific situations have these left-tailed properties and to be cautious about discouraging too much risk taking in those domains. However, I suspect that this situation may be very rare and has few implications for what EAs should do going forwards.
NOTE: I published something similar on another thread but feel it is even more relevant here.