Hi Karthik, thanks for writing this! I appreciate the precision; I wish I saw more content like this. But if you’ll allow me to object:
I feel there’s a bit of tension in you stating that “I don’t think we should sidestep the philosophical aspect of this debate” while later concluding that “Worldview diversification is a useful and practical way for the EA community to make decisions.” Insofar as we are interested in a normatively satisfying foundation for diversifying donations (as a marginal funder), one would presumably need an argument in favour of something like minmax regret or risk aversion—on altruistic grounds.
Your results are microfoundations, as you write. Similarly, risk lovingness microfounds the prediction that a person will buy tickets for lotteries with negative monetary expectations. But that doesn’t imply that the person should do so. Likewise with risk aversion and diversification.
I think the important question here is whether e.g. risk aversion w.r.t. value created is reasonable.
In economics we’re used to treating basically any functional form for utility as permissible, so this is somewhat strange, but here we’re thinking about normative ethics rather than consumption choices. While it seems natural to exhibit diminishing marginal utility in consumption (hence risk aversion), it’s a bit more strange to say that one values additional wellbeing less the more lives have already been benefited. After all, the new beneficiary values it just as much as the previous one, and altruism is meant to be about them.
Here’s a thought experiment that brings out the counter-intuitiveness. Suppose you could pick either (i) a lottery giving a 60% chance of helping two people or else nobody, or (ii) a 100% chance of helping just one person but the lucky person is chosen by a fair coin. Then sufficient risk aversion will lead you to choose (ii) even though all potential beneficiaries prefer (i).
These aren’t meant as particularly good arguments for risk neutrality w.r.t terminal value; just pointers to the kind of considerations I think are more relevant to thinking about the reasonableness of altruistically-motivated funding diversification. There are others too, though (example: phil version / econ version; accessible summary here).
Thanks for the thoughtful reply!
I understand you don’t want to debate risk attitudes, but I hope it’s alright that I try to expand on my thought just a bit to make sure I get it accross well—no need to respond.
To be clear: I think risk aversion is entirely fine. My utility in apples is concave, of course. That’s not really up for ‘debate’. Likewise for other consumption preferences.
But ethics seems different. Philosophers debate what’s permissible, mandatory, etc. in the context of ethics (not so much in the context of consumption). The EA enterprise is partly a result of this.
And choosing between uncertain altruistic interventions is of course in part a problem of ethics. Risk preferences w.r.t. wellbeing in the world make moral recommendations independently of empirical facts. This is why I see them as more up for debate. (Here’s a great overview of such debates.)
We often argue about the mertis of ethical views under certainty: should our social welfare function concavify individual utilities before adding them up (prioritarianism) or not (utilitarianism)? Similarly, under uncertainty, we may ask: should our social welfare function concavify the sum of individual utilities (moral risk aversion) or not (moral risk neutrality)?
These are the sorts of questions I meant were relevant; I agree risk aversion per se is completely unproblematic.
By the way, this is irrelevant to the methodological point above, but I’ll point out the interesting fact that risk aversion alone doesn’t get rid of the problem of the St Petersburg paradox:
A (1/2)n chance of winning £2n with linear utility:
∑∞n=1(12)n×2n=∞.
A (1/2)n chance of winning winning £22n with log utility: ∑∞n=1(12)n×ln(22n)=ln(2)∑∞n=1(12)n×2n=∞.