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Daniel Greco's avatar

Super sympathetic to the spirit of these examples, but it's my nature to pick nits.

On IVT, don't you think a lot of people are intuitively modeling these systems as discontinuous? I think cases you identify as failures to appreciate the IVT are really cases where you think people are wrongly modeling continuous systems as if they were discontinuous.

And on the taxation point, i'm not sure how rare it is for effective marginal tax rates to be greater than a hundred percent. When it happens, the main culprit is benefits that sharply cut off once you're above a given income threshold. I think it's generally recognized that that's a bad way to design benefit programs, but that doesn't mean it doesn't happen.

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Roman's Attic's avatar

“Example 2: People often have the intuition that altruists should be more careful with their money and more risk-sensitive than selfish people, even though the opposite is true. Altruistic people care about global welfare, so zoomed out, almost any individual altruist’s donation budget is linearly good for the world at large.”

There’s a pretty good post on the EA forum arguing that altruists should still be risk averse investors (https://forum.effectivealtruism.org/posts/cf8Dth9vpxX9ptgma/against-much-financial-risk-tolerance) . It says a lot of things, but one of the main arguments I retained from it was that the success of your investments are not fully independent of the success of other donors in the market, meaning that if the stock market performs poorly, all donors who keep their investments in stocks will be able to donate less. If this were to happen, there would be a greater marginal benefit to your smaller dollar amount being donated, meaning that risk-averse savings can be higher in expected utility.

I’m not an expert in the math here, but I think the optimal way to invest is to be exactly as risk-averse as you should be if you were the sole donor for global charities, assuming that every other donor follows that same pattern. If people are skewed toward personal EV maxing or risk aversion, you should take your risks in a way such that it moves the total market risk level towards the optimal level.

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