I don’t think that’s how DAFs work? I believe the DAF legally owns the money and can do anything they want with it. You can ask them to donate the money to a different DAF that you created, but they have the right to refuse to do that.
MichaelDickens
Karma: 4,640
Donor-Advised Funds vs. Taxable Accounts for Patient Donors
The answer sort of depends on what you mean by moonshot, but under one reasonable definition, it’s actually the opposite: investing in potential moonshots would have resulted in worse performance than an index fund. Or to put it another way, boring companies tend to outperform exciting companies.
You can divide stocks into two types: growth stocks and value stocks. Value stocks are cheaply priced relative to their fundamentals (e.g., they have a low price to earnings or price to sales ratio) because the market expects these companies to be “boring” and not show good earnings growth. Growth stocks are priced expensively because the market expects them to grow. This sounds basically like what you’re talking about with “moonshot” companies. If you wanted to systematically invest in moonshots, you could maybe buy the 10% most expensive stocks, because these are the ones the market believes have the most upside potential. But if you did that historically, you would’ve underperformed the market by a lot—something on the order of 5 percentage points per year. The seminal paper on this is Fama & French (1992), The Cross-Section of Expected Stock Returns.
In theory, savvy investors could identify the most promising publicly-traded growth companies and outperform the market by buying them. But studies on fund managers have found that pretty much nobody can do this.
IMO the ulcer index is the best measure of volatility that matches what people intuitively care about. It essentially measures the frequency and severity of drawdowns (the linked page explains it in more detail).
I didn’t discuss the ulcer index in this post because in theory, investors with isoelastic utility should care about standard deviation, not drawdowns, and I lean toward the belief that people’s focus on drawdowns is somewhat irrational (although probably somewhat justified by the fact that most asset returns are left-skewed). But broadly speaking, if you use the ulcer index as your measure of risk, concentrating in a small number of assets looks even worse than if you use standard deviation, so the case for diversification is even stronger.
Even if you can beat the market by buying a basket of houses (which I’m not sure is true), buying a single house has probably 2-3x the risk of the broad real estate market and 3-4x the risk of the global market portfolio, assuming real estate works similarly to stocks (which is probably a reasonable assumption). So it still seems like a bad idea, for the reasons discussed in the essay.
It might make sense if a bunch of individual EAs buy real estate such that the overall portfolio is well-diversified. I don’t expect this to happen in practice, because EAs are geographically concentrated in a small number of cities, so if people own investment properties in the cities where they live, the overall EA real estate portfolio will be too concentrated in those cities.
The Risk of Concentrating Wealth in a Single Asset
One concern I have with the Community Foundation in Boulder is it’s not clear how committed they are to letting donors direct money however they want. Unlike the national DAF providers (Schwab, Vanguard, Fidelity), it seems like there’s a decent chance they will at some point change their mind and decide you are only allowed to give to the causes that they like. How are you thinking about that risk?
I haven’t really thought about it, but it seems to me that if an empirical claim implies an implausible normative claim, that lowers my subjective probability of the empirical claim.
Cool! Does that mean you’re overweighting emerging markets?
How did you estimate the expected return in a DAF vs. unconstrained?
Yes
Probably the easiest way to do this is to give to a donor-advised fund, and then instruct the fund to give to the EA Fund. Even for charities that can accept stock, my experience has been that donating through a donor-advised fund is much easier (it requires less paperwork).
If there is a non-trivial possibility that a zero discount rate is correct, then the case with a zero discount rate dominates expected value calculations. See https://scholar.harvard.edu/files/weitzman/files/why_far-distant_future.pdf
IMO the best type of positive comment adds something new on top of the original post, by extending it or by providing new and relevant information. This is more difficult than generic praise, but I don’t think it’s particularly harder than criticism.
GiveWell’s full cost-effectiveness calculations are available here: https://www.givewell.org/how-we-work/our-criteria/cost-effectiveness/cost-effectiveness-models
Harris is a marmite figure—in my experience people love him or hate him.
My guess is people who like Sam Harris are disproportionately likely to be potentially interested in EA.
I pretty much agree with your OP. Regarding that post in particular, I am uncertain about whether it’s a good or bad post. It’s bad in the sense that its author doesn’t seem to have a great grasp of longtermism, and the post basically doesn’t move the conversation forward at all. It’s good in the sense that it’s engaging with an important question, and the author clearly put some effort into it. I don’t know how to balance these considerations.
“Are Ideas Getting Harder to Find?” (Bloom et al.) seems to me to suggest that ideas are actually surprisingly easy to find.
The paper looks at the difficulty of finding new ideas in a variety of fields. It finds that in all cases, effort on finding new ideas is growing exponentially over time, while new ideas are growing exponentially but at a lower rate. (For a summary, see Table 7 on page 31.) This is framed as a surprising and bad thing.
But it actually seems surprisingly good to me. My intuition is that the number of ideas should grow logarithmically with effort, or possibly even sub-logarithmically. If effort is growing exponentially, we’d expect to see linear or sub-linear growth in ideas. But instead we see exponential growth in ideas.
I don’t have a great understanding of the math used in this paper, so I might be misinterpreting something.
Worth remembering that, especially today, there are hundreds of thousands to millions of other highly intelligent and resourceful people trying to do the exact same thing. So you need to have a reason to believe you can do a better job than they can.