Also, looking back @trammellâs takes have aged very well:
It is unlikely we are in the most important time in history
If not, it is good to save money for that time
Had Phil been listened to, then perhaps much of the FTX money would have been put aside, and things could have gone quite differently.
Unless you explicitly warn your donors that youâre going to sit on their money and do nothing with it, you might anger them by employing this strategy, such that they wonât donate to you again. (I donât know if SBF would have noticed or cared because he couldnât even sit through a meeting or an interview without playing a video game, but what applies to SBF doesnât apply to most large donors.)
Also, if there is a most important time in history, and if we can ever know weâre in the most important time in history while weâre in it, it might be 100 years or 1,000 years from now, and obviously holding onto money that long is a silly strategy. (Especially if you think weâre going to start having 10% economic growth within 50 years due to AI, but even if you donât.)
As a donor, I want to donate to charities that can âbeat the marketâ in terms of their impact, i.e., the impact they create by spending the money now is big enough that it is bigger than the effects of investing the money and spending it in 5 years. I would be furious if I found out the charities I donate to were employing the invest-and-wait strategy. I can invest my own money or give it to someone who will spend it.
I donât think trying to invest for a long time is obviously a silly strategy. But I agree that people or groups of people should decide for themselves whether they want to try to do that with their money, and a charity fundraising this year would be betraying their donorsâ trust if their plan was actually to invest it for a long time.
My intuition about patient philanthropy is this: if I have $1 million that I can spend philanthropically now or I can invest it for 100 years at a 7% CAGR and grow it to $868 million in 2126, I think spending the $1 million in 2026 will have a bigger, better impact than the $868 million in 2126.
Gross world product per capita (PPP) is around $24,000 now. Itâs forecasted to grow at 2% a year. At 2% a year for 100 years, it will be $174,000 in 2126. So, the world on average will be much wealthier than the wealthiest nations today. The U.S. GDP per capita (PPP) is $90,000, Norwayâs is $107,000 â Iâm ignoring tax havens with distorted stats.
Why should the poor people of today give to the rich people of the future? How is that cost-effective?
The difference between the GiveWell estimate of the cost to save a life and the estimated statistical cost of saving a life in the U.S. is $3,500 vs. $9 million, so a ~2,500x difference. $1 million now could save 285 lives. $868 million in 2126 could save 96 lives â if we think poorer countries will have catch-up growth that brings them up to $90,000+ in GDP per capita (PPP).
The poorest countries may not have catch-up growth, and may not even grow commensurately with the world on average, but in that case, it makes it even more important to spend the $1 million on the poorest countries now to try to make sure that growth happens. Stimulating economic growth in sub-Saharan African countries where growth has been stagnant may be one of the most important global moral priorities. Thinking about 100 years in the future only makes it feel more urgent, if anything.
Plus, the risk that a foundation trying to invest money for 100 years doesnât make it to 2126 seems high.
If you factor in the possibility of transformative technologies like much more advanced AI and robotics, biotech, and so on, and/âor the possibility much faster per capita economic growth over the next 100 years, the case for spending now rather than waiting a century gets even stronger.
I think the case for waiting is stronger, not weaker, if you think the chance that poor countries wonât have exhibited catch-up growth by 2126 is non-negligible. If they havenât exhibited catch-up growth by 2126, I expect $868 million then is much more likely to trigger it than $1 million today.
But the opportunity cost of not spending the $1 million today â the lost intervening 100 years of economic growth â is surely much more than $867 million? That is, surely itâs at least 1,000x better to stimulate faster economic growth in the poorest countries today than it is to do it 100 years from now.
Didnât you stipulate it would be at least 100 years in the scenario weâre imagining? Surely itâs worth spending at least 1,000x more resources to end global poverty 100 years sooner? (Otherwise, why not wait 1,000 years or 10,000 years to donate your first dollar to global poverty, if all that matters is the CAGR of your investments?)
I donât follow your questions. Weâre comparing spending now to induce some chance of growth starting now with spending later to induce some chance of growth starting later, right? To make the scenario precise, say
The country is currently stagnant, and its people collectively enjoy â1 util per yearâ. Absent your intervention, it will stay stagnant for 200y.
Spending $1m now has a 1% chance of kicking off catch-up growth.
Investing it for 100y before spending has a 4% chance of kicking off catch-up growth then (because $868m>>$1m). The money wonât be lost in the meantime (or, we can say that the chance it gets lost is incorporated into the 4%).
In either case, the catch-up will be immediate and bring them to a state where they permanently collectively enjoy â2 utils per yearâ.
In this case, the expected utility produced by spending now is 1%x(2-1)x200 = 2 utils. The expected utility produced by spending in 100y is 4%x(2-1)x100 = 4 utils.
The gap can be arbitrarily large if we imagine that the default is stagnation for a longer period of time than 200y (or arbitrarily negative if we imagine that it was close to 100y), and this is true regardless of how much money the beneficiaries wind up with (due to the growth) is producing the gap between the 2 utils and the 1 util.
Do you really, actually, in practice, recommend that everyone in the world delays all spending on global poverty/âglobal health for 100+ years? As in, the Against Malaria Foundation should stop procuring anti-malarial bednets and just invest all its funds in the Vanguard FTSE Global All Cap Index Fund instead? Partners in Health should wind down its hospitals and become a repository for index funds? If not, why not?
With the closest thing we have to real numbers (that Iâve been able to figure out, so far, anyway), my back-of-the-envelope calculation above found that it was ~3x as cost-effective to donate money now than to invest and wait 100 years. Do you find that rough math at all convincing?
I donât know how to quantify the economic growth question with anything approaching real numbers. It would probably be a back-of-the-envelope calculation with a lot more steps and a lot more uncertainty than even the non-rigorous calculation I did above. There are many complicated considerations that canât be mathematically modelled.
For example: if wealthy people in wealthy countries have ~1,000x more resources in 100 years, it seems like the marginal cost-effectiveness of any one patient philanthropic foundation on global poverty would decline commensurately, since, all else being equal, youâd think overall giving to global poverty would increase ~1,000x. And as giving increased, youâd think the low-hanging fruit would get picked, economic growth would be stimulated, and global poverty would become incrementally more and more solved, such that the remaining opportunities to give would be much less cost-effective than the ones you started with 100 years ago.
If you think thereâs at least an, I donât know, 5% chance of transformative AI within the next 100 years, that also changes things. Because transformative AI would cause rapid economic growth all over the planet, and then the marginal cost-effectiveness of your philanthropic funds in 2126 will really have decreased. But of course the invention of transformative AI is impossible to forecast.
You can imagine similar things for other speculative futuristic technologies. If it becomes vastly cheaper to prevent and treat all infectious diseases due to new technologies or biotechnologies, or, say, someone figures out how to wipe out all mosquitoes using a gene drive or something, and countries with high rates of mosquito-borne illness decide to wipe them out, then the cost-effectiveness of any money you were investing long-term to spend on infectious diseases later will drop dramatically.
To simplify it: if you have $1 million earmarked for malaria invested until 2126, and then in 2076 someone finds a super cheap way to quickly eradicate malaria worldwide, then your $1 million is now worthless. By spending it in 2026, you could have saved 285 lives, but now you can save zero lives.
The cost-effectiveness of the spending by whoever does the super cheap way to quickly eradicate malaria is through the roof, but the cost-effectiveness of everyone elseâs dollars earmarked for malaria drops like a stone. So, if youâre not the lucky philanthropist who funds that specific thing, youâve made a terrible cost-effectiveness trade-off.
No: I think that people should delay spending on global poverty/âhealth on the current margin, not that optimal total global poverty/âhealth spending today would be 0.
But thatâs a big question, and I thought we were just trying to make progress on it by focusing one one narrow angle here: namely whether or not it is in some sense âat least 1,000x better to stimulate faster economic growth in the poorest countries today than it is to do it 100 years from nowâ. I think that, conditional on a country not having caught up in 100 years, thereâs a decent chance it will still not have caught up in 200 years; and that in this case, when one thinks it through, initiating catch-up in 100 years is at least half as good as doing so today, more or less.
Option A. I donate all $10 billion now through GiveDirectly. It is disbursed to poor people who invest it in the Vanguard FTSE Global All Cap Index Fund and earn a 7% CAGR. In 2126, the poor peopleâs portfolios will have collectively grown to $8.68 trillion.
Option B. I invest all $10 billion in the Vanguard FTSE Global All Cap Index Fund for 100 years. In 2126, I have $8.68 trillion. I then disburse all the money to poor people through GiveDirectly.
Option B clearly provides no advantage to the poor people over Option A. On the other hand, it sure seems like Option A provides an advantage to the poor people over Option B.
If a philanthropist has $10 billion, I think they should prefer to arrange for Option A to happen rather than opt for Option B. But there may be other options that offer even more advantages to the poor people than Option A. So, they should seek out those options and choose an even better one, if they can.
To the extent Option B looks like it has higher impact, thatâs just an artefact of how we might decide to do the accounting, rather than a true reflection of the causality involved or whatâs morally best â or what the recipients of the aid would rationally prefer.
I donât think Option A is available in practice: I think the recipients will tend save too little of the money. Thatâs the primary argument by which I have argued for Option B over giving now (see e.g. here).
But with all respect, it seems to me that you got a bit confused a few comments back about how to frame the question of when itâs best to spend on an effort to spur catch-up growth, and when that was made clear, instead of acknowledging it, youâve kept trying to turn the subject to the question of when to give more generally. Maybe thatâs not how you see it, but given that thatâs how it seems to me, I hope itâs understandable if I say I find it frustrating and would rather not continue to engage.
I think it depends on the time horizon. If catch-up growth is not near-guaranteed in 100 years, I think waiting 100 years is probably better than spending now. If it is near-guaranteed, I think that the case for waiting 100 years ambiguous, but there is some longer period of time which would be better.
Since we have no real numbers for that narrow angle and it involves important factors we canât mathematically model, I donât know if we can settle that narrow question.
But what about the other narrow question: that if you assume the poorest countries will grow to a per capita GDP thatâs ~50% of the per capita GWP in 100 years, which we assume will continue to grow by 2% annually over that timespan, the cost-effectiveness of saving a life by donating to GiveWellâs top charities today is ~3x higher than investing for 100 years and giving in 2126? Does that sound convincing at all to you?
The most arbitrary/âmost uncertain part of this calculation is how the per capita GDP of the poorest countries will compare to the global average over the very long-term.
By the way, how did you determine that the current margin is either just enough or too much giving on global poverty to be optimal? Why isnât the margin at which delaying is the right move a 10x higher or 10x lower level of aggregate spending? Or 100x higher/âlower? How does one determine that? Is there a quantitative, empirical argument based on real data?
Unless you explicitly warn your donors that youâre going to sit on their money and do nothing with it, you might anger them by employing this strategy, such that they wonât donate to you again. (I donât know if SBF would have noticed or cared because he couldnât even sit through a meeting or an interview without playing a video game, but what applies to SBF doesnât apply to most large donors.)
Also, if there is a most important time in history, and if we can ever know weâre in the most important time in history while weâre in it, it might be 100 years or 1,000 years from now, and obviously holding onto money that long is a silly strategy. (Especially if you think weâre going to start having 10% economic growth within 50 years due to AI, but even if you donât.)
As a donor, I want to donate to charities that can âbeat the marketâ in terms of their impact, i.e., the impact they create by spending the money now is big enough that it is bigger than the effects of investing the money and spending it in 5 years. I would be furious if I found out the charities I donate to were employing the invest-and-wait strategy. I can invest my own money or give it to someone who will spend it.
I donât think trying to invest for a long time is obviously a silly strategy. But I agree that people or groups of people should decide for themselves whether they want to try to do that with their money, and a charity fundraising this year would be betraying their donorsâ trust if their plan was actually to invest it for a long time.
My intuition about patient philanthropy is this: if I have $1 million that I can spend philanthropically now or I can invest it for 100 years at a 7% CAGR and grow it to $868 million in 2126, I think spending the $1 million in 2026 will have a bigger, better impact than the $868 million in 2126.
Gross world product per capita (PPP) is around $24,000 now. Itâs forecasted to grow at 2% a year. At 2% a year for 100 years, it will be $174,000 in 2126. So, the world on average will be much wealthier than the wealthiest nations today. The U.S. GDP per capita (PPP) is $90,000, Norwayâs is $107,000 â Iâm ignoring tax havens with distorted stats.
Why should the poor people of today give to the rich people of the future? How is that cost-effective?
The difference between the GiveWell estimate of the cost to save a life and the estimated statistical cost of saving a life in the U.S. is $3,500 vs. $9 million, so a ~2,500x difference. $1 million now could save 285 lives. $868 million in 2126 could save 96 lives â if we think poorer countries will have catch-up growth that brings them up to $90,000+ in GDP per capita (PPP).
The poorest countries may not have catch-up growth, and may not even grow commensurately with the world on average, but in that case, it makes it even more important to spend the $1 million on the poorest countries now to try to make sure that growth happens. Stimulating economic growth in sub-Saharan African countries where growth has been stagnant may be one of the most important global moral priorities. Thinking about 100 years in the future only makes it feel more urgent, if anything.
Plus, the risk that a foundation trying to invest money for 100 years doesnât make it to 2126 seems high.
If you factor in the possibility of transformative technologies like much more advanced AI and robotics, biotech, and so on, and/âor the possibility much faster per capita economic growth over the next 100 years, the case for spending now rather than waiting a century gets even stronger.
I think the case for waiting is stronger, not weaker, if you think the chance that poor countries wonât have exhibited catch-up growth by 2126 is non-negligible. If they havenât exhibited catch-up growth by 2126, I expect $868 million then is much more likely to trigger it than $1 million today.
But the opportunity cost of not spending the $1 million today â the lost intervening 100 years of economic growth â is surely much more than $867 million? That is, surely itâs at least 1,000x better to stimulate faster economic growth in the poorest countries today than it is to do it 100 years from now.
That depends on how long it would have stayed poor without the intervention!
Didnât you stipulate it would be at least 100 years in the scenario weâre imagining? Surely itâs worth spending at least 1,000x more resources to end global poverty 100 years sooner? (Otherwise, why not wait 1,000 years or 10,000 years to donate your first dollar to global poverty, if all that matters is the CAGR of your investments?)
The returns certainly arenât all that matter.
I donât follow your questions. Weâre comparing spending now to induce some chance of growth starting now with spending later to induce some chance of growth starting later, right? To make the scenario precise, say
The country is currently stagnant, and its people collectively enjoy â1 util per yearâ. Absent your intervention, it will stay stagnant for 200y.
Spending $1m now has a 1% chance of kicking off catch-up growth.
Investing it for 100y before spending has a 4% chance of kicking off catch-up growth then (because $868m>>$1m). The money wonât be lost in the meantime (or, we can say that the chance it gets lost is incorporated into the 4%).
In either case, the catch-up will be immediate and bring them to a state where they permanently collectively enjoy â2 utils per yearâ.
In this case, the expected utility produced by spending now is 1%x(2-1)x200 = 2 utils.
The expected utility produced by spending in 100y is 4%x(2-1)x100 = 4 utils.
The gap can be arbitrarily large if we imagine that the default is stagnation for a longer period of time than 200y (or arbitrarily negative if we imagine that it was close to 100y), and this is true regardless of how much money the beneficiaries wind up with (due to the growth) is producing the gap between the 2 utils and the 1 util.
Do you really, actually, in practice, recommend that everyone in the world delays all spending on global poverty/âglobal health for 100+ years? As in, the Against Malaria Foundation should stop procuring anti-malarial bednets and just invest all its funds in the Vanguard FTSE Global All Cap Index Fund instead? Partners in Health should wind down its hospitals and become a repository for index funds? If not, why not?
With the closest thing we have to real numbers (that Iâve been able to figure out, so far, anyway), my back-of-the-envelope calculation above found that it was ~3x as cost-effective to donate money now than to invest and wait 100 years. Do you find that rough math at all convincing?
I donât know how to quantify the economic growth question with anything approaching real numbers. It would probably be a back-of-the-envelope calculation with a lot more steps and a lot more uncertainty than even the non-rigorous calculation I did above. There are many complicated considerations that canât be mathematically modelled.
For example: if wealthy people in wealthy countries have ~1,000x more resources in 100 years, it seems like the marginal cost-effectiveness of any one patient philanthropic foundation on global poverty would decline commensurately, since, all else being equal, youâd think overall giving to global poverty would increase ~1,000x. And as giving increased, youâd think the low-hanging fruit would get picked, economic growth would be stimulated, and global poverty would become incrementally more and more solved, such that the remaining opportunities to give would be much less cost-effective than the ones you started with 100 years ago.
If you think thereâs at least an, I donât know, 5% chance of transformative AI within the next 100 years, that also changes things. Because transformative AI would cause rapid economic growth all over the planet, and then the marginal cost-effectiveness of your philanthropic funds in 2126 will really have decreased. But of course the invention of transformative AI is impossible to forecast.
You can imagine similar things for other speculative futuristic technologies. If it becomes vastly cheaper to prevent and treat all infectious diseases due to new technologies or biotechnologies, or, say, someone figures out how to wipe out all mosquitoes using a gene drive or something, and countries with high rates of mosquito-borne illness decide to wipe them out, then the cost-effectiveness of any money you were investing long-term to spend on infectious diseases later will drop dramatically.
To simplify it: if you have $1 million earmarked for malaria invested until 2126, and then in 2076 someone finds a super cheap way to quickly eradicate malaria worldwide, then your $1 million is now worthless. By spending it in 2026, you could have saved 285 lives, but now you can save zero lives.
The cost-effectiveness of the spending by whoever does the super cheap way to quickly eradicate malaria is through the roof, but the cost-effectiveness of everyone elseâs dollars earmarked for malaria drops like a stone. So, if youâre not the lucky philanthropist who funds that specific thing, youâve made a terrible cost-effectiveness trade-off.
No: I think that people should delay spending on global poverty/âhealth on the current margin, not that optimal total global poverty/âhealth spending today would be 0.
But thatâs a big question, and I thought we were just trying to make progress on it by focusing one one narrow angle here: namely whether or not it is in some sense âat least 1,000x better to stimulate faster economic growth in the poorest countries today than it is to do it 100 years from nowâ. I think that, conditional on a country not having caught up in 100 years, thereâs a decent chance it will still not have caught up in 200 years; and that in this case, when one thinks it through, initiating catch-up in 100 years is at least half as good as doing so today, more or less.
I thought of a way to sketch this out.
Letâs say I have $10 billion to donate.
Option A. I donate all $10 billion now through GiveDirectly. It is disbursed to poor people who invest it in the Vanguard FTSE Global All Cap Index Fund and earn a 7% CAGR. In 2126, the poor peopleâs portfolios will have collectively grown to $8.68 trillion.
Option B. I invest all $10 billion in the Vanguard FTSE Global All Cap Index Fund for 100 years. In 2126, I have $8.68 trillion. I then disburse all the money to poor people through GiveDirectly.
Option B clearly provides no advantage to the poor people over Option A. On the other hand, it sure seems like Option A provides an advantage to the poor people over Option B.
If a philanthropist has $10 billion, I think they should prefer to arrange for Option A to happen rather than opt for Option B. But there may be other options that offer even more advantages to the poor people than Option A. So, they should seek out those options and choose an even better one, if they can.
To the extent Option B looks like it has higher impact, thatâs just an artefact of how we might decide to do the accounting, rather than a true reflection of the causality involved or whatâs morally best â or what the recipients of the aid would rationally prefer.
I donât think Option A is available in practice: I think the recipients will tend save too little of the money. Thatâs the primary argument by which I have argued for Option B over giving now (see e.g. here).
But with all respect, it seems to me that you got a bit confused a few comments back about how to frame the question of when itâs best to spend on an effort to spur catch-up growth, and when that was made clear, instead of acknowledging it, youâve kept trying to turn the subject to the question of when to give more generally. Maybe thatâs not how you see it, but given that thatâs how it seems to me, I hope itâs understandable if I say I find it frustrating and would rather not continue to engage.
Would you mind addressing the argument that patient philanthropy is empirically ~3x less cost-effective than donating now?
I think it depends on the time horizon. If catch-up growth is not near-guaranteed in 100 years, I think waiting 100 years is probably better than spending now. If it is near-guaranteed, I think that the case for waiting 100 years ambiguous, but there is some longer period of time which would be better.
Since we have no real numbers for that narrow angle and it involves important factors we canât mathematically model, I donât know if we can settle that narrow question.
But what about the other narrow question: that if you assume the poorest countries will grow to a per capita GDP thatâs ~50% of the per capita GWP in 100 years, which we assume will continue to grow by 2% annually over that timespan, the cost-effectiveness of saving a life by donating to GiveWellâs top charities today is ~3x higher than investing for 100 years and giving in 2126? Does that sound convincing at all to you?
The most arbitrary/âmost uncertain part of this calculation is how the per capita GDP of the poorest countries will compare to the global average over the very long-term.
By the way, how did you determine that the current margin is either just enough or too much giving on global poverty to be optimal? Why isnât the margin at which delaying is the right move a 10x higher or 10x lower level of aggregate spending? Or 100x higher/âlower? How does one determine that? Is there a quantitative, empirical argument based on real data?