You're about to brush your teeth but you're all out of toothpaste, so you walk over to the drugstore. They're out of your favorite toothpaste too, but there's a shampoo available for the same price. On the efficient market hypothesis, you expect that the market prices already contain all relevant information about the products, so you have no reason to think the shampoo is less valuable to you. So you buy it, go home, and wash your hair.

What's wrong with this story?

The problem is that you're using a marginalist heuristic. The efficient market hypothesis applies to markets in which people have roughly the same preferences. Everyone wants roughly the same thing from their financial investments - to make more money. So at any given level of risk, you should expect to evaluate tradeoffs the same as anyone else does.

In the case of the drugstore, you have a lot of information about whether you prefer shampoo or toothpaste, that is unlikely to be reflected in the price. The efficient market hypothesis suggests that you shouldn't expect to get a much better deal in a nearby store, but not that you should be indifferent between all similarly priced goods. You value toothpaste over shampoo a lot more than any price difference is likely to reflect, because you have what is called an inframarginal preference: you need toothpaste, and you've already got enough shampoo.

Critch just reposted an old argument in favor of voting, by doing a back of the envelope calculation of its expected impact. The model is perfectly fine, but to estimate the value, he uses a related cost. I don't think this seems like a reasonable thing to do if you're not making the shampoo-for-toothpaste error. Continue reading →

In my prior post on this topic, I laid out seven distinct arguments for limiting Good Ventures funding to the GiveWell top charities. In this post, I explore the first of these:

Good Ventures can find better opportunities to do good than other GiveWell donors can, because it is willing to accept more unconventional recommendations from the Open Philanthropy Project.

I'll start by breaking this up into two claims (disjunctions inside disjunctions!): a bold-sounding claim that the Open Philanthropy Project's impact will be world-historically big, and a milder-sounding claim that it can merely do better than other GiveWell donors.

The bold claim seems largely inconsistent with GiveWell's and the Open Philanthropy Project's public statements, but their behavior sometimes seems consistent with believing it. However, if the bold claim is true, it suggests that the correct allocation from Good Ventures to the GiveWell top charities is zero. In addition, as a bold claim, the burden of evidence ought to be fairly high. As things currently stand, the Open Philanthropy Project is not even claiming that this is true, much less providing us with reason to believe it.

The mild claim sounds much less arrogant, is plausibly consistent with GiveWell's public statements, and is consistent with partial funding of the GiveWell top charities. However, the mild claim, when used as a justification for partial funding of the GiveWell top charities, implies some combination of the following undesirable properties.

• Other GiveWell donors' next-best options are worthless.
• Good Ventures and other GiveWell donors have an adversarial relationship, and GiveWell is taking Good Ventures's side.

Continue reading →