I notice that I’m getting confused when I try to make the market analogy especially well, but I do think there’s something valuable to it.
Caveat that I skim-read up to “To what extent is EA functioning differently from this right now?”, so may have missed important points, and also I’m writing quickly.
Claims inspired by the analogy which I agree with:
Various kinds of competition between EA-oriented orgs is good: competition for hires, competition for funding, and competition for kinds of reputation
And I think this is true roughly for the same reason that competition between for-profit firms is good: it imposes a pressure on orgs/firms to innovate to get some edge over their competitors, which causes the sector as a whole to innovate
I think it is also good to have some pressures to exist for orgs to fold, or at least to fold specific projects, when they’re not having the impact they hoped for. When a firm folds, that’s bad for its employees in the short run; but having an environment where the least productive firms can go bust can raise the average productivity of a firm
If you don’t allow many projects to fail, that could mean (i) that the ecosystem is insufficiently risk-tolerant; or (ii) the ecosystem is inefficiently sustaining failed projects on life-support, in a way which wouldn’t happen in a free market
Here’s a commendable example of an org wrapping up a program because of disappointing empirical results. Seems good to celebrate stuff like this and make sure the incentives are there for such decisions to be made when best
More concretely: I don’t think we need to always assume that it’s not worth starting an org working on X if an org already exists to work on X (e.g. I think it’s cool that Probably Good exists as well as 80k)
Many things that make standard markets inefficient are also bad for the EA ecosystem. You list “corruption, nepotism, arbitrariness, dishonesty” and those do all sound like things which shouldn’t exist within EA
It would be good if there were more large donors of EA (largely because this would mean more money going to important causes)
It’s often good for EA orgs which provide a service to other EA orgs to charge those orgs directly, rather than rely on grant money themselves to provide the service for free. And perhaps this should be more common
For roughly the same reason that centrally planned economies are worse than free markets at naturally scaling down services which aren’t providing much value, and scaling up the opposite
However, there are aspects of the analogy which still feel a bit confusing to me (after ~10 mins of thinking), such that I’d want to resist claims that in some sense this “market for ways to do the most good” analogy should be a or the central way to conceptualise what EA is about. In particular:
As Ben West points out, the consumers in this analogy are not the beneficiaries. The Hayekian story about what makes markets indispensable involves a story about how they’re indispensably good at aggregating preferences across many buyers and sellers, more effectively than any planner. But these stories don’t go through in the analogous case, because the buyers (donors) are buying on behalf of others
Indeed, this is a major reason to expect that ‘markets’ for charitable interventions are inefficient with respect to actual impact, and thus a major insight behind EA!
Another complication is that in commissioning research rather than on-the-ground interventions, the donors are doing something like buying information to better inform their own preferences. I don’t know how this maps onto the standard market case (maybe it does)
Seems to me that the EA case might be more analogous to a labour market than a product market (since donors are more like employers than people shopping at a farmers market). Much of the analogy goes through with this change but not all (e.g. labour supply curves are often kind of funky)
I’m less clear on why monopsony is bad specifically for reasons inspired by the market analogy. My impression of the major reason why monopsonies are bad is a bit different from yours —
Imagine there’s one employer facing an upward-sloping labour supply curve and paying the same wage to everyone. Then the profit maximising wage for a monopsonist can be lower than the competitive equilibrium, leading to a deadweight loss (e.g. more unemployment and lower wages). And it’s the deadweight loss that is the bad thing
But EA employers aren’t maximising profit for themselves — they’re mostly nonprofits!
You could make the analogy work better by treating profits for the donor as impact. I’m confused on exactly how you’d model this, and would be interested if someone who knew economics had thoughts. But it just seems intuitive to me that the analogous deadweight loss reason to avoid monopsony doesn’t straightforwardly carry over (minimally, the impartial donor could just choose to pay the competitive wage)
Competitive Markets can involve some behaviour which is not directly productive, but does help companies get a leg-up on one another (such that many or all companies involved would prefer if that behaviour weren’t an option for anyone). One example is advertising (advertising is useful for other reasons, I mostly have in mind “Pepsi vs Coke” style advertising). I don’t like the idea of more of this kind of competitive advertising-type behaviour in EA
Edit: this is an example of imperfect competition, thanks to yefreitor for pointing out
Companies in competition won’t share valuable proprietary information with one another for obvious reasons. But I think it’s often really good that EA orgs share research insights and other kinds of advice, even when not sharing that information could have given the org that generated it a leg-up on other orgs
Indeed, I think this mutual supportiveness is a good feature of the EA community on the whole, and could account for some of its successes
More generally, if the claim is that this market analogy should be a or the central way to conceptualise what EA is about, then I just feel like the analogy misses most of what’s important. It captures how transactions work between donors and orgs, and how orgs compete for funding. But it seems to me that it matters at least as much to understand what people are doing inside those orgs — what they are working on, how they are reasoning about them, why they are working on them, how the donors choose what to fund, and so on. Makes me think of this Herbert Simon quote.
Hopefully some of that makes sense. I think it’s likely I got some economics-y points wrong and look forward to being corrected on them.
Thanks for this. Reading this, and other comments, I don’t think I’m managed to convey what I think could and should be distinctive about effective altruism. Let me try again!
In normal markets, people seek out the best value for themselves.
In effective altruism (as I’m conceiving of it) people seek out the best value for others. In both cases, people can and will have different ideas of what ‘value’ means in practice; and in the EA market, people may also disagree over how to think of who the relevant ‘others’ are too.
Both of these contrast with the ‘normal’ charity world, where people seek out value for others, but there is little implicit or explicit attempt to seek out the best value for others; it’s not something people have in mind. A major contribution of EA thinking is to point this out.
The normal market and EA worlds thus have something in common that distinguishes them from the regular charity world. The point of the post is to think about how, given this commonality, the EA market should be structured to achieve the best outcomes for its participants; my claim is that this, given this similarity, the presumption is that the EA market and normal market should run along similar lines.
If it helps, try to momentarily forget everything you know about the actual EA movement and ask “Okay, if wanted to design a ‘maximum altruist marketplace’ (MAM), a place people come to shop around for the best ways to use resources to help others, how would we do that?” Crucially, in MAM, just like a regular market, you don’t want to assume that you, as the social planner, have a better idea of what people want than they do themselves. That’s the Hayekian point (with apologies, I think you’ve got the wrong end of the stick here!)
Pace you and Ben West above, I don’t think it invalidates the analogy that people are aiming at value for others, rather than themselves. There seems to be a background assumption of “well, because people are buying for others in the MAM, and they don’t really know what others want, we (the social planner) should intervene”. But notice you can say the same thing in normal markets—“people don’t know really what they want, so we (the social planner) should intervene”. Yet we are very reluctant to intervene in the latter case. So, presumably, we should be reluctant here too.
Of course, we do think it’s justified to intervene in normal markets to some degree (e.g. alcohol sales restricted by age), but each intervention needs to be justified. Not all interventions are justified. The conversation I would like to have regarding MAM is about which interventions are justified, and why.
I get the sense we’re slightly speaking past each other. I am claiming (1) the maximum altruist market should exist, and then (2) suggesting how EA could be closer to that. It seems you, and maybe some others, are not sold on the value of (1): you’d rather focus on advocating for particular outcomes, and are indifferent about (1). Note it’s analogous to someone saying “look, I don’t care about whether there’s a free market: I just want my company to be really successful.”
I can understand that many people won’t care if a maximum altruism marketplace exists. I, for one, would like it to exist; it seems an important public good. I’d also like the central parts of the EA movement to fulfil that role, as they seem best placed to do it. If the EA movement (or, rather, its central parts) end up promoting very particular outcomes, then it loses much of what appeared to be distinctive about it, and it looks more like the rest of the charity world.
You point out that both in markets and in EA (at least its idealised version), people are deliberately seeking out the most value for themselves or others, contrasted to much of the charity world, where people don’t tend to think of what they’re doing as seeking out the most value for themselves or others. That sounds roughly right, but I don’t think it follows that EA is best imagined or idealised as a kind of market. Though I’m not suggesting you claim that it does follow.
It also seems worth pointing out that in some sense there are literal markets for ‘normal charity’ interventions — like the different options I can choose from to sponsor a cute animal as a Christmas gift for someone. And these are markets where people are in some sense choosing the best or most ‘valuable’ deal (insofar as I might compare charities, and those charities will do various things to vie for my donation). I think this shows that the “is this a market” test does not necessarily delineate your idealised version of EA from ‘normal charity’ alone. Again, not suggesting you make that exact claim, but I think it’s worth getting clear on.
Instead, as you suggest, it’s what the market is in that matters — in the case of EA we want a market for “things that do the most good”. You could construe this as a difference in the preferences of the buyers, where the preferences of EA donors are typically more explicitly consequentialist / welfarist / cosmopolitan than donors to other kinds of charity. So I guess your claim is not that being a market in charitable interventions would make EA distinctive, but rather that it is or should be a particular kind of market where the buyers want to do the most good. Is that a fair summary of your view?
If so, I think I’m emphasising that descriptively the ”...doing the most good” part may be more distinctive of the EA project than “EA is a market for...” Normatively I take you to want EA to be more like a competitive market, and there I think there are certainly features of competitive markets that seem good to move towards, but I’m also hesitant to make the market analogy, like, the central guide to how EA should change.
Couple other points:
I still don’t think the Hayekian motivation for markets carries over to the EA case, at least not as you’ve make the pitch. My (possibly poorly remembered) understanding was that markets are a useful way to aggregate information about individuals preferences and affordances via the price discovery mechanism. It’s true that the EA system as a whole (hopefully) discovers things about what are the best ways to help people, but not through the mechanism of price discovery! In fact, I’d say the way it uncovers information is just as similar to how a planner could uncover information — by commissioning research etc. Maybe I’m missing something here.[1]
I agree that the fact people are aiming at value for others doesn’t invalidate the analogy. Indeed, people buy things for other people in normal markets very often.
On your point about intervention, I guess I’m confused about what it means to ‘intervene’ in the market for doing the most good, and who is the ‘we’ doing the intervening (who presumably are neither funder nor org). Like, what is the analogy to imposing taxes or subsidies, and what is the entity imposing them?
You characterise my view as being indifferent on whether EA should be more like a market, and in favour of advocating for particular causes. I’d say my view is more that I’m just kinda confused about exactly what the market analogy prescribes, and as such I’m wary of using the market metaphor as a guide. I’d probably endorse some of the things you say it recommends.
However I strongly agree that if EA just became a vehicle for advocating a fixed set of causes from now on, then it would lose a very major part of what makes it distinctive. Part of what makes EA distinctive are all the features that identifies those causes — a culture of open discussion and curiosity, norms around good epistemic practice, a relatively meritocratic job market, and a willingness on the part of orgs, funders, and individuals to radically reassess their priorities on the grounds of new evidence. Those things have much in common with free markets, but I don’t think we need the market analogy to see their merit.
Another disanalogy might be that price discovery works through an adversarial relationship where (speaking loosely) buyers care about output for money and sellers care about money for input. But in the EA case, buyers care about altruistic value per dollar, but sellers (e.g. orgs) don’t care about profit — they often also care about altruistic value per dollar. So what is the analogous price discovery mechanism?
Competitive markets can involve some behaviour which is not directly productive, but does help companies get a leg-up on one another (such that many or all companies involved would prefer if that behaviour weren’t an option for anyone). One example is advertising (advertising is useful for other reasons, I mostly have in mind “Pepsi vs Coke” style advertising).
It’s worth noting that this is a case of (and cause of) imperfect competition: perfect competition and the attendant efficiency results require the existence of perfect substitutes for any one producer’s goods.
I notice that I’m getting confused when I try to make the market analogy especially well, but I do think there’s something valuable to it.
Caveat that I skim-read up to “To what extent is EA functioning differently from this right now?”, so may have missed important points, and also I’m writing quickly.
Claims inspired by the analogy which I agree with:
Various kinds of competition between EA-oriented orgs is good: competition for hires, competition for funding, and competition for kinds of reputation
And I think this is true roughly for the same reason that competition between for-profit firms is good: it imposes a pressure on orgs/firms to innovate to get some edge over their competitors, which causes the sector as a whole to innovate
I think it is also good to have some pressures to exist for orgs to fold, or at least to fold specific projects, when they’re not having the impact they hoped for. When a firm folds, that’s bad for its employees in the short run; but having an environment where the least productive firms can go bust can raise the average productivity of a firm
If you don’t allow many projects to fail, that could mean (i) that the ecosystem is insufficiently risk-tolerant; or (ii) the ecosystem is inefficiently sustaining failed projects on life-support, in a way which wouldn’t happen in a free market
Here’s a commendable example of an org wrapping up a program because of disappointing empirical results. Seems good to celebrate stuff like this and make sure the incentives are there for such decisions to be made when best
More concretely: I don’t think we need to always assume that it’s not worth starting an org working on X if an org already exists to work on X (e.g. I think it’s cool that Probably Good exists as well as 80k)
Many things that make standard markets inefficient are also bad for the EA ecosystem. You list “corruption, nepotism, arbitrariness, dishonesty” and those do all sound like things which shouldn’t exist within EA
It would be good if there were more large donors of EA (largely because this would mean more money going to important causes)
It’s often good for EA orgs which provide a service to other EA orgs to charge those orgs directly, rather than rely on grant money themselves to provide the service for free. And perhaps this should be more common
For roughly the same reason that centrally planned economies are worse than free markets at naturally scaling down services which aren’t providing much value, and scaling up the opposite
However, there are aspects of the analogy which still feel a bit confusing to me (after ~10 mins of thinking), such that I’d want to resist claims that in some sense this “market for ways to do the most good” analogy should be a or the central way to conceptualise what EA is about. In particular:
As Ben West points out, the consumers in this analogy are not the beneficiaries. The Hayekian story about what makes markets indispensable involves a story about how they’re indispensably good at aggregating preferences across many buyers and sellers, more effectively than any planner. But these stories don’t go through in the analogous case, because the buyers (donors) are buying on behalf of others
Indeed, this is a major reason to expect that ‘markets’ for charitable interventions are inefficient with respect to actual impact, and thus a major insight behind EA!
Another complication is that in commissioning research rather than on-the-ground interventions, the donors are doing something like buying information to better inform their own preferences. I don’t know how this maps onto the standard market case (maybe it does)
Seems to me that the EA case might be more analogous to a labour market than a product market (since donors are more like employers than people shopping at a farmers market). Much of the analogy goes through with this change but not all (e.g. labour supply curves are often kind of funky)
I’m less clear on why monopsony is bad specifically for reasons inspired by the market analogy. My impression of the major reason why monopsonies are bad is a bit different from yours —
Imagine there’s one employer facing an upward-sloping labour supply curve and paying the same wage to everyone. Then the profit maximising wage for a monopsonist can be lower than the competitive equilibrium, leading to a deadweight loss (e.g. more unemployment and lower wages). And it’s the deadweight loss that is the bad thing
But EA employers aren’t maximising profit for themselves — they’re mostly nonprofits!
You could make the analogy work better by treating profits for the donor as impact. I’m confused on exactly how you’d model this, and would be interested if someone who knew economics had thoughts. But it just seems intuitive to me that the analogous deadweight loss reason to avoid monopsony doesn’t straightforwardly carry over (minimally, the impartial donor could just choose to pay the competitive wage)
CompetitiveMarkets can involve some behaviour which is not directly productive, but does help companies get a leg-up on one another (such that many or all companies involved would prefer if that behaviour weren’t an option for anyone). One example is advertising (advertising is useful for other reasons, I mostly have in mind “Pepsi vs Coke” style advertising). I don’t like the idea of more of this kind of competitive advertising-type behaviour in EAEdit: this is an example of imperfect competition, thanks to yefreitor for pointing out
Companies in competition won’t share valuable proprietary information with one another for obvious reasons. But I think it’s often really good that EA orgs share research insights and other kinds of advice, even when not sharing that information could have given the org that generated it a leg-up on other orgs
Indeed, I think this mutual supportiveness is a good feature of the EA community on the whole, and could account for some of its successes
More generally, if the claim is that this market analogy should be a or the central way to conceptualise what EA is about, then I just feel like the analogy misses most of what’s important. It captures how transactions work between donors and orgs, and how orgs compete for funding. But it seems to me that it matters at least as much to understand what people are doing inside those orgs — what they are working on, how they are reasoning about them, why they are working on them, how the donors choose what to fund, and so on. Makes me think of this Herbert Simon quote.
Hopefully some of that makes sense. I think it’s likely I got some economics-y points wrong and look forward to being corrected on them.
Thanks for this. Reading this, and other comments, I don’t think I’m managed to convey what I think could and should be distinctive about effective altruism. Let me try again!
In normal markets, people seek out the best value for themselves.
In effective altruism (as I’m conceiving of it) people seek out the best value for others. In both cases, people can and will have different ideas of what ‘value’ means in practice; and in the EA market, people may also disagree over how to think of who the relevant ‘others’ are too.
Both of these contrast with the ‘normal’ charity world, where people seek out value for others, but there is little implicit or explicit attempt to seek out the best value for others; it’s not something people have in mind. A major contribution of EA thinking is to point this out.
The normal market and EA worlds thus have something in common that distinguishes them from the regular charity world. The point of the post is to think about how, given this commonality, the EA market should be structured to achieve the best outcomes for its participants; my claim is that this, given this similarity, the presumption is that the EA market and normal market should run along similar lines.
If it helps, try to momentarily forget everything you know about the actual EA movement and ask “Okay, if wanted to design a ‘maximum altruist marketplace’ (MAM), a place people come to shop around for the best ways to use resources to help others, how would we do that?” Crucially, in MAM, just like a regular market, you don’t want to assume that you, as the social planner, have a better idea of what people want than they do themselves. That’s the Hayekian point (with apologies, I think you’ve got the wrong end of the stick here!)
Pace you and Ben West above, I don’t think it invalidates the analogy that people are aiming at value for others, rather than themselves. There seems to be a background assumption of “well, because people are buying for others in the MAM, and they don’t really know what others want, we (the social planner) should intervene”. But notice you can say the same thing in normal markets—“people don’t know really what they want, so we (the social planner) should intervene”. Yet we are very reluctant to intervene in the latter case. So, presumably, we should be reluctant here too.
Of course, we do think it’s justified to intervene in normal markets to some degree (e.g. alcohol sales restricted by age), but each intervention needs to be justified. Not all interventions are justified. The conversation I would like to have regarding MAM is about which interventions are justified, and why.
I get the sense we’re slightly speaking past each other. I am claiming (1) the maximum altruist market should exist, and then (2) suggesting how EA could be closer to that. It seems you, and maybe some others, are not sold on the value of (1): you’d rather focus on advocating for particular outcomes, and are indifferent about (1). Note it’s analogous to someone saying “look, I don’t care about whether there’s a free market: I just want my company to be really successful.”
I can understand that many people won’t care if a maximum altruism marketplace exists. I, for one, would like it to exist; it seems an important public good. I’d also like the central parts of the EA movement to fulfil that role, as they seem best placed to do it. If the EA movement (or, rather, its central parts) end up promoting very particular outcomes, then it loses much of what appeared to be distinctive about it, and it looks more like the rest of the charity world.
Thanks for the response.
You point out that both in markets and in EA (at least its idealised version), people are deliberately seeking out the most value for themselves or others, contrasted to much of the charity world, where people don’t tend to think of what they’re doing as seeking out the most value for themselves or others. That sounds roughly right, but I don’t think it follows that EA is best imagined or idealised as a kind of market. Though I’m not suggesting you claim that it does follow.
It also seems worth pointing out that in some sense there are literal markets for ‘normal charity’ interventions — like the different options I can choose from to sponsor a cute animal as a Christmas gift for someone. And these are markets where people are in some sense choosing the best or most ‘valuable’ deal (insofar as I might compare charities, and those charities will do various things to vie for my donation). I think this shows that the “is this a market” test does not necessarily delineate your idealised version of EA from ‘normal charity’ alone. Again, not suggesting you make that exact claim, but I think it’s worth getting clear on.
Instead, as you suggest, it’s what the market is in that matters — in the case of EA we want a market for “things that do the most good”. You could construe this as a difference in the preferences of the buyers, where the preferences of EA donors are typically more explicitly consequentialist / welfarist / cosmopolitan than donors to other kinds of charity. So I guess your claim is not that being a market in charitable interventions would make EA distinctive, but rather that it is or should be a particular kind of market where the buyers want to do the most good. Is that a fair summary of your view?
If so, I think I’m emphasising that descriptively the ”...doing the most good” part may be more distinctive of the EA project than “EA is a market for...” Normatively I take you to want EA to be more like a competitive market, and there I think there are certainly features of competitive markets that seem good to move towards, but I’m also hesitant to make the market analogy, like, the central guide to how EA should change.
Couple other points:
I still don’t think the Hayekian motivation for markets carries over to the EA case, at least not as you’ve make the pitch. My (possibly poorly remembered) understanding was that markets are a useful way to aggregate information about individuals preferences and affordances via the price discovery mechanism. It’s true that the EA system as a whole (hopefully) discovers things about what are the best ways to help people, but not through the mechanism of price discovery! In fact, I’d say the way it uncovers information is just as similar to how a planner could uncover information — by commissioning research etc. Maybe I’m missing something here.[1]
I agree that the fact people are aiming at value for others doesn’t invalidate the analogy. Indeed, people buy things for other people in normal markets very often.
On your point about intervention, I guess I’m confused about what it means to ‘intervene’ in the market for doing the most good, and who is the ‘we’ doing the intervening (who presumably are neither funder nor org). Like, what is the analogy to imposing taxes or subsidies, and what is the entity imposing them?
You characterise my view as being indifferent on whether EA should be more like a market, and in favour of advocating for particular causes. I’d say my view is more that I’m just kinda confused about exactly what the market analogy prescribes, and as such I’m wary of using the market metaphor as a guide. I’d probably endorse some of the things you say it recommends.
However I strongly agree that if EA just became a vehicle for advocating a fixed set of causes from now on, then it would lose a very major part of what makes it distinctive. Part of what makes EA distinctive are all the features that identifies those causes — a culture of open discussion and curiosity, norms around good epistemic practice, a relatively meritocratic job market, and a willingness on the part of orgs, funders, and individuals to radically reassess their priorities on the grounds of new evidence. Those things have much in common with free markets, but I don’t think we need the market analogy to see their merit.
Another disanalogy might be that price discovery works through an adversarial relationship where (speaking loosely) buyers care about output for money and sellers care about money for input. But in the EA case, buyers care about altruistic value per dollar, but sellers (e.g. orgs) don’t care about profit — they often also care about altruistic value per dollar. So what is the analogous price discovery mechanism?
It’s worth noting that this is a case of (and cause of) imperfect competition: perfect competition and the attendant efficiency results require the existence of perfect substitutes for any one producer’s goods.