Can you elaborate on why you believe this? Are you talking specifically about global poverty interventions, or (EA-relevant) philanthropy in general? (I can see the case for global poverty[1], I’m not so sure about other causes.)
I was mosty thinking global poverty and health yes. I think it’s still probably true for other EA-relevant philanthropy, but I don’t think I can claim that here.
I’m also not clear on why you believe this, can you explain? (FWIW the claim in the parenthetical is probably false: on a cross-section across countries, GDP growth and equity return are negatively correlated, see Ritter (2012), “Is Economic Growth Good for Investors?”)
1/ I don’t think that study is particularly relevant? That’s making a statement about the correlation between countries growth rates and the returns on their stock markets.
2/ I don’t think there’s really a study which is going to convince me either way on this. My reasoning is more about my model of the world:
a/ Economic actors will demand a higher risk premium (ie stocks down) when they are more uncertain about the future because the economy in the future is less bright (ie weak economy ⇒ lower earnings)
b/ Economic actors will demand a higher risk premium when their confidence is lower
I don’t think there’s likely to be a simple way to extract a historical correlation, because it’s not clear how forward looking you want to be estimating, what time horizon is relevant etc. I think if you think that stocks are negatively correlated to NGDP AND you think they have a risk premium, you want to be loading up on them to absolutely unreasonable levels of leverage.
I was mosty thinking global poverty and health yes. I think it’s still probably true for other EA-relevant philanthropy, but I don’t think I can claim that here.
1/ I don’t think that study is particularly relevant? That’s making a statement about the correlation between countries growth rates and the returns on their stock markets.
2/ I don’t think there’s really a study which is going to convince me either way on this. My reasoning is more about my model of the world:
a/ Economic actors will demand a higher risk premium (ie stocks down) when they are more uncertain about the future because the economy in the future is less bright (ie weak economy ⇒ lower earnings)
b/ Economic actors will demand a higher risk premium when their confidence is lower
I don’t think there’s likely to be a simple way to extract a historical correlation, because it’s not clear how forward looking you want to be estimating, what time horizon is relevant etc. I think if you think that stocks are negatively correlated to NGDP AND you think they have a risk premium, you want to be loading up on them to absolutely unreasonable levels of leverage.