Cross-posted to the Effective Altruism Forum.

Summary: We should reduce existential risk in the long term, not merely over the next century. We might best do this by developing longtermist institutions¹ that will operate to keep existential risk persistently low.

Confidence: Unlikely.

This essay was inspired by a blog post and paper² by Tom Sittler on long-term existential risk.

Civilization could continue to exist for billions (or even trillions) of years. To achieve our full potential, we must avoid existential catastrophe not just this century, but in all centuries to come. Most work on x-risk focuses on near-term risks, and might not do much to help over long time horizons. Longtermist institutional reform could ensure civilization continues to prioritize x-risk reduction well into the future.

This argument depends on three key assumptions, which I will justify in this essay:

1. The long-term probability of existential catastrophe matters more than the short-term probability.
2. Most efforts to reduce x-risk will probably only have an effect on the short term.
3. Longtermist institutional reform has a better chance of permanently reducing x-risk.

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Summary: The most dangerous existential risks appear to be the ones that we only became aware of recently. As technology advances, new existential risks appear. Extrapolating this trend, there might exist even worse risks that we haven’t discovered yet.

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Cross-posted to the Effective Altruism Forum.

Summary

• How we should spend our philanthropic resources over time depends on how much we discount the future. A higher discount rate means we should spend more now; a lower discount rate tells us to spend less now and more later.
• We (probably) should not assign less moral value to future beings, but we should still discount the future based on the possibility of extinction, expropriation, value drift, or changes in philanthropic opportunities.
• According to the Ramsey model, if we estimate the discount rate based on those four factors, that tells us how quickly we should consume our resources¹.
• We can decrease the discount rate, most notably by reducing existential risk and guarding against value drift. We still have a lot to learn about the best ways to do this.
• According to a simple model, improving our estimate of the discount rate might be the top effective altruist priority.

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Summary

Previously, we talked about how much leverage altruists should use. We looked at estimates of optimal leverage based on future projected returns, but this required making certain assumptions about how asset prices behave.

In many ways, theoretical asset pricing models do not reflect how investments behave in practice. These models may overestimate how much leverage to use. We can learn something about the extent of this overestimation by backtesting leveraged portfolios on historical price data.

In the backtests I performed, theoretically-optimal leverage according to the Samuelson share usually did not differ much from empirically optimal leverage according to backtests. However, the Samuelson share overestimated optimal leverage more often than it underestimated, and following the Samuelson share would have occasionally resulted in bankruptcy.

After performing this analysis, I am now somewhat more confident that it makes sense for altruists to apply substantial leverage to their altruistic portfolios, although probably less than the Samuelson share. However, investors should ensure they understand what that entails—in backtests, optimally-leveraged portfolios usually encountered >90% drawdowns at some points.

Disclaimer: This should not be taken as investment advice. Any given portfolio results are hypothetical and do not represent returns achieved by an actual investor.

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Cross-posted to the Effective Altruism Forum.

Last updated 2020-05-17.

Summary

Philanthropic investors probably have greater risk tolerance than self-interested ones. Altruists can use leverage—borrowing money to invest—to increase the expected utility of their portfolios. They may wish to lever their portfolios at much higher ratios than self-interested investors—likely 2:1 to 3:1, and perhaps much higher (practical concerns notwithstanding).

Unlike normal investors, altruists care about reducing their correlations with other investors, so they should heavily tilt their portfolios toward uncorrelated assets.

This essay will discuss:

1. Traditional vs. altruistic investing
2. Basic arguments for using leverage
3. Appropriate levels of risk for altruists
4. The importance of uncorrelated assets, and where investors might be able to find them
5. Potential changes for philanthropic behavior

Disclaimer: This should not be taken as investment advice. This content is for informational purposes only. Any given portfolio results are hypothetical and do not represent returns achieved by an actual investor.

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In an early draft of a paper, Philip Trammell points out two mistakes in my essay on giving now vs. later. And since writing it, I have identified a third mistake.

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Epistemic status: I don’t really understand Kantian deontology.

Summary: According to the rules of Kantian deontology, an action must be impermissible if it has any probability of resulting in an impermissible outcome. But all actions have some probability of resulting in such an outcome. Therefore, all actions are impermissible.

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Altruists often would like to get good predictions on questions that don’t necessarily have great market significance. For example:

• Will a replication of a study of cash transfers show similar results?
• How much money will GiveWell move in the next five years?
• If cultured meat were price-competitive, what percent of consumers would prefer to buy it over conventional meat?

If a donor would like to give money to help make better predictions, how can they do that?

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Update 2020-01-04: This essay contains a number of important mistakes. See Correction on Giving Now vs. Later.

Disclaimer: I am not an investment advisor and nothing in this essay serves as investment advice.

Introduction

Robin Hanson: If More Now, Less Later

The rate of return on investment historically has been higher than the growth rate–or, as they say, r > g. If you save your money to donate later, you can earn enough interest on it that you eventually have the funds to donate a greater amount. Because r > g, you should invest your money for as long as you can before donating¹–or so the argument goes.

Traditionally, we’d apply a discount rate of g to future donations, because that’s the rate at which people get richer and therefore the rate at which money becomes less valuable for them. But this ignores some important factors that affect how much we should discount future donations, and we can create a much more detailed estimate. This essay will explore that in detail. Exactly what factors determine the investment rate of return and the discount rate on poverty alleviation? Can we gain any information about which is likely greater?

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Some people have observed that small and large donors follow different giving patterns. Small donors who give out of their salary—that is, most people—tend to donate money more or less as soon as they earn it (usually within a year). Large donors—e.g., extremely wealthy people and foundations—tend to slowly distribute their money and hold on to most of it¹. For example, large foundations typically donate little more than the legally required 5% of assets each year. Why do they behave differently?

I don’t believe this difference is surprising, and actually it’s not really even a difference.

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