This isn’t about your giving per se, but have your views on the moral valence of financial trading changed in any notable ways since you spoke about this on the 80K podcast?
(I have no reason to think your views have changed, but was reading a socialist/anti-finance critique of EA yesterday and thought of your podcast.)
The episode page lacks a transcript, but does include this summary: “There are arguments both that quant trading is socially useful, and that it is socially harmful. Having investigated these, Alex thinks that it is highly likely to be beneficial for the world.”
In that section (starts around 43:00), you talk about market-making, selling goods “across time” in the way other businesses sell them across space, and generally helping sellers “communicate” by adjusting prices in sensible ways. At the same time, you acknowledge that market-making might be less useful than in the past and that more finance people on the margin might not provide much extra social value (since markets are so fast/advanced/liquid at this point).
My views have not changed directionally, but I do feel happier with them than I did at the time for a couple of reasons:
I thought and continue to think that the best argument is some version of ‘clever arguments aside, from a layperson perspective what you’re doing looks awfully similar to what caused the GFC, and the GFC was a huge disaster which society has not learned the lessons from’.
If you talk to people inside finance, they will usually reject the second claim and say a huge amount has changed since the GFC.
In particular, regulatory pressure shifted many ‘interesting’ risks from too-big-to-fail banks to hedge funds and firms like Jane Street (JS), where I used to work. JS arguably has much better incentives to keep its house in order than the big banks did, and it shouldn’t have any call on public funds if it fails to do so.
But of course there was a reasonable question of whether JS and its ilk would actually succeed in doing this. And if they failed, would society pick up the tab somehow. As more time passes, the GFC looks more like the outlier event here.
On the positive side of the ledger, most of my work at JS was improving the pricing of equity ETFs. When I started there I felt like almost nobody I spoke to outside JS knew what an ETF was and when I explained it they couldn’t really see the point. Now I feel like virtually all UK personal financial advice I see will mention ETFs as a solid option; a cheap and simple way to invest in a diversified fashion. I’m fine with having been a very small part of what made that happen.
With my more recent work it seems much too soon to say anything definitive about social impact, so I always try to acknowledge some chance that I’ll feel bad when I look back on this.
ETFs do sound like a big win. I suppose someone could look at them as “finance solving a problem that finance created” (if the “problem” is e.g. expensive mutual funds). But even the mutual funds may be better than the “state of nature” (people buying individual stocks based on personal preference?). And expensive funds being outpaced by cheaper, better products sounds like finance working the way any competitive market should.
This isn’t about your giving per se, but have your views on the moral valence of financial trading changed in any notable ways since you spoke about this on the 80K podcast?
(I have no reason to think your views have changed, but was reading a socialist/anti-finance critique of EA yesterday and thought of your podcast.)
The episode page lacks a transcript, but does include this summary: “There are arguments both that quant trading is socially useful, and that it is socially harmful. Having investigated these, Alex thinks that it is highly likely to be beneficial for the world.”
In that section (starts around 43:00), you talk about market-making, selling goods “across time” in the way other businesses sell them across space, and generally helping sellers “communicate” by adjusting prices in sensible ways. At the same time, you acknowledge that market-making might be less useful than in the past and that more finance people on the margin might not provide much extra social value (since markets are so fast/advanced/liquid at this point).
My views have not changed directionally, but I do feel happier with them than I did at the time for a couple of reasons:
I thought and continue to think that the best argument is some version of ‘clever arguments aside, from a layperson perspective what you’re doing looks awfully similar to what caused the GFC, and the GFC was a huge disaster which society has not learned the lessons from’.
If you talk to people inside finance, they will usually reject the second claim and say a huge amount has changed since the GFC.
In particular, regulatory pressure shifted many ‘interesting’ risks from too-big-to-fail banks to hedge funds and firms like Jane Street (JS), where I used to work. JS arguably has much better incentives to keep its house in order than the big banks did, and it shouldn’t have any call on public funds if it fails to do so.
But of course there was a reasonable question of whether JS and its ilk would actually succeed in doing this. And if they failed, would society pick up the tab somehow. As more time passes, the GFC looks more like the outlier event here.
On the positive side of the ledger, most of my work at JS was improving the pricing of equity ETFs. When I started there I felt like almost nobody I spoke to outside JS knew what an ETF was and when I explained it they couldn’t really see the point. Now I feel like virtually all UK personal financial advice I see will mention ETFs as a solid option; a cheap and simple way to invest in a diversified fashion. I’m fine with having been a very small part of what made that happen.
With my more recent work it seems much too soon to say anything definitive about social impact, so I always try to acknowledge some chance that I’ll feel bad when I look back on this.
Thanks!
ETFs do sound like a big win. I suppose someone could look at them as “finance solving a problem that finance created” (if the “problem” is e.g. expensive mutual funds). But even the mutual funds may be better than the “state of nature” (people buying individual stocks based on personal preference?). And expensive funds being outpaced by cheaper, better products sounds like finance working the way any competitive market should.