I don’t follow your questions. We’re 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 “1 util per year”. 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 won’t 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 “2 utils per year”.
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/global 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 I’ve 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 don’t 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 can’t 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, you’d think overall giving to global poverty would increase ~1,000x. And as giving increased, you’d 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 there’s at least an, I don’t 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 else’s dollars earmarked for malaria drops like a stone. So, if you’re not the lucky philanthropist who funds that specific thing, you’ve made a terrible cost-effectiveness trade-off.
No: I think that people should delay spending on global poverty/health on the current margin, not that optimal total global poverty/health spending today would be 0.
But that’s 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 “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”. I think that, conditional on a country not having caught up in 100 years, there’s 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 people’s 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, that’s just an artefact of how we might decide to do the accounting, rather than a true reflection of the causality involved or what’s morally best — or what the recipients of the aid would rationally prefer.
I don’t think Option A is available in practice: I think the recipients will tend save too little of the money. That’s 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 it’s best to spend on an effort to spur catch-up growth, and when that was made clear, instead of acknowledging it, you’ve kept trying to turn the subject to the question of when to give more generally. Maybe that’s not how you see it, but given that that’s how it seems to me, I hope it’s 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.
Full-length post here. Feel free to comment if you want or not comment if you don’t want.
I didn’t understand your argument about economic growth above. I was hoping you’d give an argument based on empirical data or forecasts rather than a purely theoretical argument. So, I wasn’t convinced by that. But I acknowledge there is high uncertainty with regard to future growth, and the wisdom of patient philanthropy partly depends on assumptions about growth.
Since we have no real numbers for that narrow angle and it involves important factors we can’t mathematically model, I don’t 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 that’s ~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 GiveWell’s 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/most 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 isn’t the margin at which delaying is the right move a 10x higher or 10x lower level of aggregate spending? Or 100x higher/lower? How does one determine that? Is there a quantitative, empirical argument based on real data?
The returns certainly aren’t all that matter.
I don’t follow your questions. We’re 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 “1 util per year”. 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 won’t 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 “2 utils per year”.
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/global 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 I’ve 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 don’t 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 can’t 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, you’d think overall giving to global poverty would increase ~1,000x. And as giving increased, you’d 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 there’s at least an, I don’t 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 else’s dollars earmarked for malaria drops like a stone. So, if you’re not the lucky philanthropist who funds that specific thing, you’ve made a terrible cost-effectiveness trade-off.
No: I think that people should delay spending on global poverty/health on the current margin, not that optimal total global poverty/health spending today would be 0.
But that’s 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 “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”. I think that, conditional on a country not having caught up in 100 years, there’s 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.
Let’s 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 people’s 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, that’s just an artefact of how we might decide to do the accounting, rather than a true reflection of the causality involved or what’s morally best — or what the recipients of the aid would rationally prefer.
I don’t think Option A is available in practice: I think the recipients will tend save too little of the money. That’s 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 it’s best to spend on an effort to spur catch-up growth, and when that was made clear, instead of acknowledging it, you’ve kept trying to turn the subject to the question of when to give more generally. Maybe that’s not how you see it, but given that that’s how it seems to me, I hope it’s 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.
Full-length post here. Feel free to comment if you want or not comment if you don’t want.
I didn’t understand your argument about economic growth above. I was hoping you’d give an argument based on empirical data or forecasts rather than a purely theoretical argument. So, I wasn’t convinced by that. But I acknowledge there is high uncertainty with regard to future growth, and the wisdom of patient philanthropy partly depends on assumptions about growth.
Since we have no real numbers for that narrow angle and it involves important factors we can’t mathematically model, I don’t 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 that’s ~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 GiveWell’s 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/most 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 isn’t the margin at which delaying is the right move a 10x higher or 10x lower level of aggregate spending? Or 100x higher/lower? How does one determine that? Is there a quantitative, empirical argument based on real data?