The Nonlinear Library EA - Robust longterm comparisons by Toby Ord
May 15, 2024
11:24
Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Robust longterm comparisons, published by Toby Ord on May 15, 2024 on The Effective Altruism Forum.
(Cross-posted from http://www.tobyord.com/writing/robust-longterm-comparisons )
The choice of discount rate is crucially important when comparing options that could affect our entire future. Except when it isn't. Can we tease out a class of comparisons that everyone can agree on regardless of their views on discounting?
Some of the actions we can take today may have longterm effects - permanent changes to humanity's longterm trajectory. For example, we may take risks that could lead to human extinction. Or we might irreversibly destroy parts of our environment, creating permanent reductions in the quality of life.
Evaluating and comparing such effects is usually extremely sensitive to what economists call the pure rate of time preference, denoted ρ. This is a way of encapsulating how much less we should value a benefit simply because it occurs at a later time.
There are other components of the overall discount rate that adjust for the fact that an extra dollar is worth less when people are richer, that later benefits may be less likely to occur - or that the entire society may have ceased to exist by then. But the pure rate of time preference is the amount by which we should discount future benefits even after all those things have been accounted for.
Most attempts to evaluate or compare options with longterm effects get caught up in intractable disagreements about ρ. Philosophers almost uniformly think ρ should be set to zero, with any bias towards the present being seen as unfair. That is my usual approach, and I've developed a framework for making longterm comparisons without any pure time preference. While some prominent economists agree that ρ should be zero, the default in economic analysis is to use a higher rate, such as 1% per year.
The difference between a rate of 0% and 1% is small for most things economists evaluate, where the time horizon is a generation or less. But it makes a world of difference to the value of longterm effects. For example, ρ = 1% implies that a stream of damages starting in 500 years time and lasting a billion years is less bad than a single year of such damages today.
So when you see a big disagreement on how to make a tradeoff between, say, economic benefits and existential risk, you can almost always pinpoint the source to a disagreement about ρ.
This is why it was so surprising to read Charles Jones's recent paper: 'The AI Dilemma: Growth versus Existential Risk'. In his examination of whether and when the economic gains from developing advanced AI could outweigh the resulting existential risk, the rate of pure time preference just cancels out. The value of ρ plays no role in his primary model. There were many other results in the paper, but it was this detail that grabbed my attention.
Here was a question about trading off risk of human extinction against improved economic consumption that economists and philosophers might actually be able to agree on. After all, even better than picking the correct level of ρ, deriving the correct conclusion, and yet still having half the readers ignore your findings, is if there is a way of conducting the analysis such that you are not only correct - but that everyone else can see that too.
Might we be able to generalise this happy result further?
Is there are broader range of long run effects in which the discount rate still cancels out?
Are there other disputed parameters (empirical or normative) that also cancel out in those cases?
What I found is that this can indeed be greatly generalised, creating a domain in which we can robustly compare long run effects - where the comparisons are completely unaffected by different assumptions about discounting.
Let's start by considering a basic model w...
(Cross-posted from http://www.tobyord.com/writing/robust-longterm-comparisons )
The choice of discount rate is crucially important when comparing options that could affect our entire future. Except when it isn't. Can we tease out a class of comparisons that everyone can agree on regardless of their views on discounting?
Some of the actions we can take today may have longterm effects - permanent changes to humanity's longterm trajectory. For example, we may take risks that could lead to human extinction. Or we might irreversibly destroy parts of our environment, creating permanent reductions in the quality of life.
Evaluating and comparing such effects is usually extremely sensitive to what economists call the pure rate of time preference, denoted ρ. This is a way of encapsulating how much less we should value a benefit simply because it occurs at a later time.
There are other components of the overall discount rate that adjust for the fact that an extra dollar is worth less when people are richer, that later benefits may be less likely to occur - or that the entire society may have ceased to exist by then. But the pure rate of time preference is the amount by which we should discount future benefits even after all those things have been accounted for.
Most attempts to evaluate or compare options with longterm effects get caught up in intractable disagreements about ρ. Philosophers almost uniformly think ρ should be set to zero, with any bias towards the present being seen as unfair. That is my usual approach, and I've developed a framework for making longterm comparisons without any pure time preference. While some prominent economists agree that ρ should be zero, the default in economic analysis is to use a higher rate, such as 1% per year.
The difference between a rate of 0% and 1% is small for most things economists evaluate, where the time horizon is a generation or less. But it makes a world of difference to the value of longterm effects. For example, ρ = 1% implies that a stream of damages starting in 500 years time and lasting a billion years is less bad than a single year of such damages today.
So when you see a big disagreement on how to make a tradeoff between, say, economic benefits and existential risk, you can almost always pinpoint the source to a disagreement about ρ.
This is why it was so surprising to read Charles Jones's recent paper: 'The AI Dilemma: Growth versus Existential Risk'. In his examination of whether and when the economic gains from developing advanced AI could outweigh the resulting existential risk, the rate of pure time preference just cancels out. The value of ρ plays no role in his primary model. There were many other results in the paper, but it was this detail that grabbed my attention.
Here was a question about trading off risk of human extinction against improved economic consumption that economists and philosophers might actually be able to agree on. After all, even better than picking the correct level of ρ, deriving the correct conclusion, and yet still having half the readers ignore your findings, is if there is a way of conducting the analysis such that you are not only correct - but that everyone else can see that too.
Might we be able to generalise this happy result further?
Is there are broader range of long run effects in which the discount rate still cancels out?
Are there other disputed parameters (empirical or normative) that also cancel out in those cases?
What I found is that this can indeed be greatly generalised, creating a domain in which we can robustly compare long run effects - where the comparisons are completely unaffected by different assumptions about discounting.
Let's start by considering a basic model w...