but it’s not clear to me that the assumptions of these theorems are actually satisfied by EA
Definitely not. A small sample of the obstacles to applying the welfare theorems here:
Certain “trades” have very large negative externalities due to the risk of reputational harm
The largest few funders have huge amounts of market power.
We’re extremely far from perfect information. “Consumers” don’t even have good knowledge of their own utility functions in most cases.
EA is not a complete system of markets—the vast majority of possible charitable interventions are not on offer at any given time.
Perhaps most importantly: “sellers” aren’t profit-maximizers
But even if EA did approximate a perfectly competitive market, that would imply very little about its effectiveness. The first welfare theorem says that perfect competition gets you a Pareto-efficient outcome, but Pareto-efficient outcomes can be almost arbitrarily bad. “The king owns literally everything” is Pareto-efficient. The second welfare theorem is where all the oomph comes from: given perfect competition, you can reach any point on the Pareto-frontier—by redistributing resources and then letting the market reequilibrate. But EA is not a state and cannot carry out redistribution, so this gets us nothing.
Definitely not. A small sample of the obstacles to applying the welfare theorems here:
Certain “trades” have very large negative externalities due to the risk of reputational harm
The largest few funders have huge amounts of market power.
We’re extremely far from perfect information. “Consumers” don’t even have good knowledge of their own utility functions in most cases.
EA is not a complete system of markets—the vast majority of possible charitable interventions are not on offer at any given time.
Perhaps most importantly: “sellers” aren’t profit-maximizers
But even if EA did approximate a perfectly competitive market, that would imply very little about its effectiveness. The first welfare theorem says that perfect competition gets you a Pareto-efficient outcome, but Pareto-efficient outcomes can be almost arbitrarily bad. “The king owns literally everything” is Pareto-efficient. The second welfare theorem is where all the oomph comes from: given perfect competition, you can reach any point on the Pareto-frontier—by redistributing resources and then letting the market reequilibrate. But EA is not a state and cannot carry out redistribution, so this gets us nothing.