I think (?) I may have pointed this out previously, but there are some significant issues with this article. For example, it suggests a $42,000 average social cost of jobs in finance:
We also made a rough estimate of the damage caused by jobs in the financial sector that increase the chance of a financial crisis, and found a figure of $42,000 per year.
...
First, the estimates are highly uncertain, and only apply to finance jobs on average. If you picked the most harmful jobs in finance, they could be much worse.
But if you follow the source link, you can see that this estimate is actually for only the 10% most harmful jobs:
The US financial sector employs some 6,000,000 people. I am going to guess that the share of people that are involved in activities that could predictably increase systemic financial risk is around 10%. …
That would suggest through financial instability each of these 600,000 people lowered other people’s income in the US by $42,000 on average, for each year they worked.
So the average harm is 10x less, i.e. $4,200.
Even then, I think this is quite a poor estimate. It relies on ascribing all the expected costs of financial crisis to financial workers. However, a huge deal of the responsibility should surely be borne by other actors. Depending on your views of the causes of the crisis, some collection of these groups are quite responsible:
Politicians who passed regulations like the community reinvestment act.
Regulators who focused on solvency over liquidity.
The Federal Reserve for excessively tight monetary policy.
Individual borrowers who knowingly mis-stated their ability to repay.
Investors in ABS CLOs or Prime MMFs who did not do their due diligence.
Academics who over-emphasised normal distributions and ignored skew/kurtosis.
Furthermore, it does not assign any monetary value to the positive aspects of finance, even though these are probably very large:
Banks allow people to save money without being afraid it will be stolen by burglars.
Credit card networks allow us to purchase things without needing to carry cash.
Paypal allows us to buy things from merchants who are not physically nearby.
The stock market provides signals to investors about where would be useful to invest their money.
Companies can raise money in order to grow much more quickly than they would otherwise.
The bond market allows governments to borrow money to finance additional spending during recessions and pandemics.
(etc.)
Similarly, the article suggests that being a Tobacco CEO is unacceptable, linking to this analysis. However, I think the fermi calculation involved in this estimate was quite far off, as I explained here:
However, I think that while 80,000 Hours substantially improved on the analysis in the original paper, they omit a number of factors. Unfortunately, almost all of these factors seem to pull in the same direction, causing them to over-estimate the amount of harm done by a tobacco CEO. These include both over-estimating the direct harm done and under-estimating the benefits donating your income would cause.
At the time Rob suggested he would think more on the issue, but to my knowledge the analysis was never updated.
Well you did announce the policy change as a comment on an article about Delo!
Sorry, I mean my most recent comment specifically—the reasons we’re considering these kinds of changes are not just because of this one situation but also because of others that could arise. I’ll edit to clarify.
Well you did announce the policy change as a comment on an article about Delo!
I think (?) I may have pointed this out previously, but there are some significant issues with this article. For example, it suggests a $42,000 average social cost of jobs in finance:
But if you follow the source link, you can see that this estimate is actually for only the 10% most harmful jobs:
So the average harm is 10x less, i.e. $4,200.
Even then, I think this is quite a poor estimate. It relies on ascribing all the expected costs of financial crisis to financial workers. However, a huge deal of the responsibility should surely be borne by other actors. Depending on your views of the causes of the crisis, some collection of these groups are quite responsible:
Politicians who passed regulations like the community reinvestment act.
Regulators who focused on solvency over liquidity.
The Federal Reserve for excessively tight monetary policy.
Individual borrowers who knowingly mis-stated their ability to repay.
Investors in ABS CLOs or Prime MMFs who did not do their due diligence.
Academics who over-emphasised normal distributions and ignored skew/kurtosis.
Furthermore, it does not assign any monetary value to the positive aspects of finance, even though these are probably very large:
Banks allow people to save money without being afraid it will be stolen by burglars.
Credit card networks allow us to purchase things without needing to carry cash.
Paypal allows us to buy things from merchants who are not physically nearby.
The stock market provides signals to investors about where would be useful to invest their money.
Companies can raise money in order to grow much more quickly than they would otherwise.
The bond market allows governments to borrow money to finance additional spending during recessions and pandemics.
(etc.)
Similarly, the article suggests that being a Tobacco CEO is unacceptable, linking to this analysis. However, I think the fermi calculation involved in this estimate was quite far off, as I explained here:
At the time Rob suggested he would think more on the issue, but to my knowledge the analysis was never updated.
Sorry, I mean my most recent comment specifically—the reasons we’re considering these kinds of changes are not just because of this one situation but also because of others that could arise. I’ll edit to clarify.