Marginal Charity

People often ask: where can I get the best bang for my buck in charity? The above diagram shows where.

We make many choices, both as individuals and as organizations; we choose prices, qualities, locations, etc. We often make such choices to maximize some sort of private gain, shown in red. Such private choices also usually have effects on the gain of the rest of the world, shown in black. In general the social gain curve peaks at a different point than the private gain curve, because there are usually many market failures associated with our choices. (As the absolute curve heights are irrelevant, I’ve arbitrarily let them intersect where private gain peaks.)

At the choice that maximizes private value, a small change in the direction of raising social gain, as shown by the yellow arrow, comes at only a tiny loss in private gain. In fact, in the limit of going to the exact private gain maximizing choice, the ratio of the rates of change of social gain and private loss approaches infinity!

The lesson: if you aren’t already doing it, by far the most cost-effective way to help the world is to shade your selfish choices just a little in the direction of making the world a better place. If you have market power when you sell a product, lower your price just a tad. If you have market power when you sell your labor, lower your wage a bit. Instead of choosing the profit-maximizing quality for your product or labor, increase that quality a little. If twenty floors would be the most profitable height for your apartment complex, add one more floor. And so on. (And maybe learn some econ, so you can better see which direction is good.)

Yes, you usually aren’t sure what is your best selfish choice; your choice might already be accidentally helping the world at a bigger personal cost than you intended. But you might also be accidentally hurting both you and the world. If you are now doing your best guess way to help yourself, shift just a bit toward helping the world; on average that will cost you very little and give the world a lot.

Yes it is harder to pay others to take this approach. If you tried to pay an apartment builder to add one floor beyond the twenty they’d otherwise build, they’ll probably quickly learn to lie and say that nineteen floors is what maximizes their profits. So this approach tends to be limited to choices where you are the insider who knows the internal best estimates, or where you trust an insider not to lie to you. Still, most of us make selfish choices all the time, so we should all have lots of opportunities to apply this method.

If this is such an easy way to help the world, why haven’t you heard about it before? Why isn’t this a standard part of everyone’s education? I’d guess it is because it is hard to show that you are helping the world via this method. And people care a lot more about seeming to help, than about actually helping. Also, even if this could be made visible, we are usually much more eager to show we’ve paid a high cost than to show we’ve achieved a big social gain; it is the cost that makes for a credible costly signal of our virtue. Finally, this can’t be the basis of an inspiring hero story; it is something that many folks can each do a little, not something that one person can do a lot.

(I doubt I’m original here; this point seems pretty obvious given basic optimization theory. But I didn’t see anywhere else I could link to that makes this point.)

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  • Richard Chappell

    If you have market power when you sell a product, lower your price just a tad.

    I’m confused. What’s the reason for thinking that this is better than taking your profits and donating them to a completely different sector (e.g. third-world vaccines)?

    • Robin Hanson

      By shaving your price, you might only lose a penny as you give them a dollar in value. By donating your profits, you’ll have to sacrifice a dollar (or more) to get a dollar to them to spend.

      • dmytryl

        This needs to be stressed more. That you are discussing e.g. profit vs price curve of your product. Minor decreases in price are sometimes almost completely compensated for by increased sales, so dropping the price a little, around the top of the income vs price curve, generates a lot of extra value in those circumstances (and externalities such as ‘creating jobs’). This is one of common arguments in favour of greater efficacy of socialism/communism over capitalism.

        The stereotypical example is burning the sugar because the price vs income peaked at the point where you don’t sell off all your sugar. There’s a more modern example, burning off the regions of an otherwise totally fine microchip such as the GPU (Often, literally, using a laser or a current pulse, entire extra manufacturing step!), because that’s optimal for your profits. More subtle examples involve the cases where nothing had been burnt, such as your example. The government supported monopoly is a very awful way to reward technological development, it’s just that we don’t know any other way.

      • Richard Chappell

        Robin: So, you’re assuming that money has fixed utility, such that a dollar benefit to wealthy Americans does as much good as a dollar benefit to the global poor?  That seems a very strong (and obviously false) assumption.

        (Put another way: if I can either generate a dollar for a poor person, or a hundred dollars for a rich person, it could easily be the case that the former is better. It’s weird that you don’t even address the diminishing marginal utility of money, when this seems the most obvious objection to the line of argument you’re trying to make here.)

      • http://overcomingbias.com RobinHanson

        The basic argument in the post doesn’t at all depend on how one compares the units in which private gains and social gain are measured. How much social gain will come from any particular private sacrifice will of course depend on the relative units, but the basic idea that the ratio of gain to sacrifice approaches infinity near the private max doesn’t so depend. My more specific suggestions about which directions to push prices, qualities, and locations may depend on such assumptions, depending on the context. But you can disagree with how I estimate social gain and still agree with the basic point of the post.

    • Michael Vassar

      For the same reason that it’s not necessarily more efficient for governments to raise taxes to pay for third world vaccines and other high-margin benefits for the poor.  Now, if vaccines etc really are a super-cheap way to help the poor, exactly how much more money *should* be spent on them?  

      50K people dye daily.  If, being fantastically generous to the charitable world, 40% of them could be saved for $2K each, that would be a call for $40M/day of efficient charitable spending, or $15B/year, just 5% of total US giving. 

      http://www.nptrust.org/philanthropic-resources/charitable-giving-statistics 

      • http://jessriedel.myopenid.com/ Jess Riedel

        I think it’s closer to 150k people who die daily worldwide.  Maybe you meant in the 3rd world?

      • dmytryl

        Also, to save N people from a disease you need to vaccinate M>>N people. To save N people from being killed by other people, you need to improve the laws and law enforcement for M>>N people. And so on. The number of people that die daily is not relevant to the calculation unless its some specific issue you can cheaply identify and reach (starvation?).

    • Simon Lambert

       If your current current profits are maximized by the current price, there might be only a very tiny expected loss of profits from a slight price drop (due to increased sales almost canceling out the per unit profit reduction) so you can potentially benefit your customers much more than you lose yourself.

      On the other hand, this comment makes me reconsider what Robin says above in response to Guest that “If you have empathy then that is part of your preferences and is included in your maximization.” If indeed you are already strongly adjusting your prices  out of empathy for your customers, then you might already be at a price point where any further price cuts harm you (before considering your utility gains from empathy) almost as much as they benefit your customers. In that case, it might well be an overall utility gain to donate to a completely different sector.

  • DavidBernstein

    But if I’m building a brand-new apartment building, why would I want to give “charity” to someone who is already wealthy enough to pay rent in a brand-new apartment building?

    • Robin Hanson

      In that case your charity goes to the local city, by increasing externalities of agglomeration. It doesn’t go to the residents. The people who live on that last floor will interact with many others, to their mutual benefit.

      • DavidBernstein

        Robin, it seems to me that you are confusing “charity” with “doing things that help other people.”  Not the same thing.

      • http://juridicalcoherence.blogspot.com/ srdiamond

        Robin, it seems to me that you are confusing “charity” with “doing things that help other people.”  Not the same thing.

        It’s the same thing to a utilitarian.

  • Punit

    I must’ve missed something very obvious here. I don’t find any support for the model being presented in the graph. And the rest of the article makes no sense if you can agree on the underlying axiom the arguments are based on.

    • Punit

      $!#$%%#$^ proof read comment before hitting publish.
      “if  you *can’t* agree on the underlying axiom…”

      • Amplitude

        It doesn’t really make sense to me, either. For one thing, it assumes that maximizing one’s own benefit has a non-detrimental effect on public benefit. 

  • Ely Spears

    If you are participating in a very competitive market this form of charity my lead to being outcompeted by rivals and forced to close shop. Consider modern tech giants who tend to hoard cash rather than even reinvesting. One common theory for this is that in such industries, where intangibles like branding play a big role, even a slight whiff of financial distress can destroy the firm. How much worse if the firm isknowingly engaging in “frivolous” inefficient or suboptimal actions, like building a suboptimal extra floor for the agglomerative benefit of those nearby (competitors!)?

    I’m not saying your idea is bad. But even aside from the well known signaling inefficiencies that motivate most charitable donations (charitable donations are not about charity any more than politics is about policy), there seems to be real market features that prevent marginal charity like this. Much better to let the business just be a business and then extract some chunk of private wealth for charity. Since it would be hard to use that chunk to pay others to implement marginal charity for the reasons you list, we fall right back to the equilibrium we’re in now.

    • Robin Hanson

      If you are at a point on your private payoff curve where there’s a wall falling vertically down a long ways, then of course you can’t move cheaply in that direction. I’d question though how sure you can be that you are at such a wall.

      • Ely Spears

        Pressure from shareholders might make you always overestimate the wall. There’s a lot of personal career risk if you don’t over estimate the wall, which for almost any person will outweigh whatever extra social gain comes fit the slight nudge to suboptimality.

      • Ely Spears

        And in a typical worker’s case, just replace shareholders with dependents, like immediately family, or other socio-legal obligations.

        Another aspect is the liquidity of charity. If I learn a private donation is not doing any good, or my circumstances change and I can no longer afford much charity, I can simply stop taking private money and using it for charity. But if I’ve entered an employment contract for less wage than I could have earned, or I’ve built too many floors on my building, I cannot very easily convert those situations into more personal wage or more rent profit. If a given person doesn’t wish to think very hard about long term private ability to afford donations, they might pay a charity liquidity fee in terms of less effective giving, but low barrier to turn off the giving when needed.

      • Robin Hanson

        The argument applies to short term reversible decisions just as well as to long term commitment decisions.

  • Michael Vassar

    This is a very important point.  Learning economics and shading personal choices in this manner is trivially higher EV than other approaches once some margin of effective giving is reached.  On those grounds, I would tend to endorse it as by far the most ethical charitable behavior to endorse, as the alternative involves trying to build propaganda campaigns that can only, if successful, overshoot, given that memes aren’t self-steering agents of human utility.  

    The only plausible question as to whether this is the unique correct thing to do is that of whether under current conditions there might be some high margin use of discretionary charitable spending.  My guess though is that once you include search costs (Givewell isn’t free, and it’s management are sacrificing most of their income potential) we aren’t under that margin (Gates doesn’t seem to think we are).

    • Ely Spears

      These marginal methods are very low liquidity though. You also have to worry about whether your situation is changing rapidly before locking yourself in to giving in these ways. Risk averse people might even get significant negative utils from the committal nature of giving in this way. People seem to prefer giving from a faucet that can be throttled back or even turned off. This might be less efficient from some perspectives, but people may just be unwilling to do without the liquidity.

  • http://twan.home.fmf.nl Twan van Laarhoven

    When you decide to work for a slightly lower wage, the other party in the employment contract is not society, but rather some corporation. Why would working for the slightly lower wage be better than working for the higher wage and donating the difference to GiveWell?

    • Robin Hanson

      The firm is part of the world, and gains to its shareholders count as gains to the world.

      • http://twan.home.fmf.nl Twan van Laarhoven

        But I am part of the world too; and by that argument my gains also count as gains to the world.

      • Stephen Diamond

        Yes, but the whole point is that your loss is much less than their gain. David Friedman explains the reasoning in response to Punit.

      • VV

        @google-f26939f398e5b2e21ea353b06370c426:disqus

        the whole point is that your loss is much less than their gain

        I don’t see how this can be possible, assuming that your employers are richer than you, and that the utility of money is sublinear.

      • http://juridicalcoherence.blogspot.com/ srdiamond

        VV:

        I don’t see how this can be possible, assuming that your employers are richer than you, and that the utility of money is sublinear.

        The point is that if you decrease your demands slightly enough, it can always dominate, provided only that the declining utility of money is finite.

        Robin’s analysis is very far-mode. It’s a mistake to make specific near-mode assumptions about how the effect is realized. A near-mode analysis is necessary to determine who realizes the additional utility or even to know which way to shade your efforts. 

        Perhaps one objection might be that we don’t have good information regarding the slope of the social curve. A charity monger could argue that with charity, you know you’re doing good; applying Robin’s theorem, you may be doing bad when you think you’re doing good. (But perhaps questions regarding unknown externalities apply equally to the effects of private charities.)

      • dmytryl

        srdiamond:

        But there’s a huge caveat here: that the function is differentiable at it’s maximum. I don’t think that would be true. I expect, in virtually all circumstances, some fairly rough, broken up curve, the maximum being non-differentiable, with high, opposite sign derivatives from the either side. A little math can be a dangerous thing, especially coupled with abstract thinking. I am selling actual products, I know that lowering the price by miniscule amounts won’t help the sales except for some special points.

      • VV

         I love to see total utilitarian ethics in action. You are effectively arguing in favor of an “utility monster” scenario: http://en.wikipedia.org/wiki/Utility_monster

    • AspiringRationalist

      Decreasing the price of labor increases demand, which reduces unemployment and increases total production, so in that sense you would be doing good to broader society, not just your employer and its shareholders.  Probably a lot less than by donating that extra amount to GiveWell, though.

      • Stephen Diamond

        Decreasing the price of labor increases demand, which reduces unemployment and increases total production, so in that sense you would be doing good to broader society, not just your employer and its shareholders.

        This isn’t necessarily true (post-Keynes) when applied to the whole economy.

  • http://juridicalcoherence.blogspot.com/ srdiamond

    Interestingly, this is the reverse of what the charity-mongers do: price gouge, super-exploit, and then pay penance in private charity.

    • dmytryl

      It would dramatically depend to the product you’re selling. If you’re selling a luxury to the rich, charging less for it than the ideal ain’t going to help anyone. The rich you are selling to will be able to turn more labour into luxuries, that’s about it.

  • http://profiles.google.com/prakash.chandrashekar Prakash Chandrashekar

    Interesting point. Reminds me of what an uncle told me. Take that little extra step. 

    Do you think one could extend this idea to interpersonal relationships? 
    Take a second longer to respond before snapping off a reply. Take a minute to analyse what value you will be offering to someone before initiating a conversation to get information for yourself. Or are these examples something else altogether?

    • Michael Vassar

      No, these are perfect examples.  Thanks!

  • http://profiles.google.com/daviddfriedman David Friedman

    An example for me would be not worrying about whether I am somewhat overpaying the people who come once a week to clean my house. It would take some effort to find the exact privately optimal price, so the net benefit to me would be small. And they are people I approve of–hard working immigrants–so if they are a little richer and I a little poorer, that (in my judgement) makes the world a slightly better place. One can generalize that to a policy of being generous to those one thinks deserve it.

    In response to Punit’s puzzlement, Robin’s graph has the pattern one would expect, given continuous functions. When you are at the maximum of a curve, the derivative is zero, so a small change has a very small effect. Unless the other curve, which you are not maximizing, just happens to have its maximum at the same point, his conclusion follows.

    • Punit

      Actually, my puzzlement arose more from the relative placement of the private and social gain curves and the relationships between them.

      If we take the graph to be valid (which I am not convinced it is) then the rest of the article just follows.

      I think a lot of the other commentators are also similarly finding it difficult to believe.

      • Stephen Diamond

        Well, what about the relative placement? David Friedman generalized it without geometry.

        I don’t think you can avoid the conclusion except by maintaining that markets are perfectly efficient.

        I suppose one other attempted line of refutation is to claim that the social curve is below the private curve at the right side of the intersection. Robin tacitly responds to that objection by allowing that one must learn some economics to apply the principles.

      • Guest

        “I suppose one other attempted line of refutation is to claim that the social curve is below the private curve at the right side of the intersection.”

        This is not unrealistic, since not all interactions used for selfish gain are voluntary. Extracting small personal gain by inflicting negative utility on non-consenting others is very common. (non-human animals, human children, human slaves etc.)

      • Robin Hanson

        If the social curve slopes the other way, then you should shade your action in the other direction.

      • VV

         @Guest indeed, Hanson assumes that the externalities of whatever economic activity you do are net positive. This is far from obvious.

      • http://juridicalcoherence.blogspot.com/ srdiamond

        VV:

        @Guest indeed, Hanson assumes that the externalities of whatever economic activity you do are net positive. This is far from obvious.

        Then the social curve would “slope the other way,” and you should “shade your efforts in the other direction.”

        Robin’s far-mode analysis doesn’t address what this means concretely: in essence, you “should” then price gouge–if just a bit.

        The reason I put “should” in scare quotes is that this recommendation derives from utilitarian premises–which I hold false. ( http://tinyurl.com/7dcbt7y  )

      • Simon Lambert

        I don’t see how you can possibly object to the diagram as unrealistic. For any given parameter, there will be a private gain maximum somewhere. If there are externalities, then the social gain will in general have a slope at this point.

        You might be confused by the fact that the diagram shows the private and social gains intersecting at the private gain maximum, but this is completely irrelevant. The social gain curve could be displaced up or down by any constant value without affecting the argument.

      • VV

         That’s a trivial point, but it doesn’t seem to be what Hanson is suggesting.

  • Guest

    Is is possible that people have always maxed out this lowest-hanging fruit, simply because their empathy bleeds over into their economic decisions? Then it can’t be a solution to the serious problems that this world clearly has.

    • Robin Hanson

      If you have empathy then that is part of your preferences and is included in your maximization. The argument still applies.

  • Douglas Knight

    Let me rephase: your normal work produces value. If you do more of it, you will produce more value for the world. You will probably have to reduce prices to do more. (But you producing more will only result in the world producing more if you have market power.)

    If your work has large positive externalities, such as the size of buildings, this is probably quite effective. If your work does not have externalities, you are effectively donating to your employer your time, denominated at your wage. This argument is denominated in dollars and does not take into account declining marginal value of wealth. If you base your charity on transferring money to the poor, especially the global poor, this argument may not be very relevant.

    • Stephen Diamond

      If you base your charity on transferring money to the poor, especially the global poor, this argument may not be very relevant.

      True, but most of the charity mongers are utilitarian rather than prioritarian. And many of them are willing to use market value to estimate utility.

      • VV

         But Hanson’s argument doesn’t seem to work even for a total utilitarian: if you accept to do the same work for a lower wage, you are effectively donating money to your employer.

        Suppose you work for Microsoft. Clearly the marginal utility Bill Gates gets from this money is way much less that the marginal utility you would get.

        The same applies to any situation where you don’t work for an employer that is poorer than you.

      • Guest

        I think the point is that near peak private gain, the ratio of private utility lost to public utility gained is near-infinite, and so (for a sufficiently tiny shift) that effect will always overwhelm any merely finite utility-per-money ratio.

        Getting the fine-tuning right while negotiating your salary is left as an exercise.

      • VV

         So if you are near your private peak profit and your donate a small amount of money to Bill Gates you increase public utility by an huge amount? That’s clearly impossible.

      • Guest (same as before)

        The ratio isn’t infinite because social utility is so large, it’s infinite because *private utility lost is near zero, simply because you are near the flat part of the private curve.*

        Maybe you’re having problems because most of us don’t have an optimal amount of money if constraints are no object; more is always better. But what Robin is talking about is your optimal point *given constraints.* E.g. say you are paid $20/hour and you can decide to work as much or as little as you want. You decide that 50 hours/week is about right; less and you aren’t making enough, more and you’re too exhausted to enjoy the extra take-home pay. Your utility as a function of hours worked then looks like the red curve above.

        Now say Bill your employer makes $25 revenue per hour you work. He clears $5 for every hour you work, so he’d like you to work as much as possible, but he’ll settle for 50 hours/week. His utility as a function of hours you work the looks like the black curve above.

        So Robin’s point is that for you, small deviations from 50 hours/week don’t matter too much, because we know from Newton and Leibniz that near an extremum the derivative is near zero. So an extra 25 minutes per week (5 minutes per day) is slightly more than you would prefer to work, but you are getting a little extra pay after all, so it’s only a miniscule loss for your overall utility. But Bill makes an extra $2.08/week, at absolutely zero cost to his utility. Thus if you want to increase the world’s total utility, a highly efficient way to do it is to work very slightly more than you would prefer.

        Note that this scheme is wrecked if you go too far from your optimum and private utility costs become noticeable. It only works very near the peak. Think of marginal charity as the ion drive of altruism: very weak but very efficient.

      • http://juridicalcoherence.blogspot.com/ srdiamond

        Correction. I wrote “True, but most of the charity mongers are utilitarian rather than prioritarian. And many of them are willing to use market value to estimate utility.”

        The second sentence is irrelevant. As Arch1 clarified, the second sentence is irrelevant.

        However, it remains true that satisfying the theorem needn’t satisfy a prioritarian. ( http://en.wikipedia.org/wiki/Prioritarianism   )

    • http://juridicalcoherence.blogspot.com/ srdiamond
      This argument is denominated in dollars and does not take into account declining marginal value of wealth. If you base your charity on transferring money to the poor, especially the global poor, this argument may not be very relevant.

      Revised response: If you’re concerned about charitably benefiting the international poor, you should consider the effect of your various transactions on their welfare and shade toward their benefit. Essentially, it’s just a matter of defining the “social” curve in terms of the welfare of the target group.

      • Mordatar

         Exactly. Most charity is specifically aimed at improving income distribution (giving to the deseving). That is implied by David Friedman’s argument, that he is willing to give more money then he would to hard working but somewhat poor people.

  • Sam

    Isn´t that the old idea of Adam Smith that private actions produce public benefits?

    • http://bur.sk/en Viliam Búr

      It’s a step beyond that. Adam Smith says that when you (legally) create 100 PU (private utility points) for yourself, as a side effect you also create 100 GU (global utility points) for the society. (Note: The values 100 PU and 100 GU are in different currencies, so the numbers are only coincidentally the same.)

      Robin Hanson says that if 100 PU is the maximum PU value you can make, there are probably many similar options which give you only 99 PU, an outcome which is not that different for you. However, some of those options (if you choose wisely) could create 99 PU for you and perhaps 120 GU for society.

      If this is true, then trading 1 PU for 20 GU could be the most cost-efficient charity for you.

      Most people think that to improve the world, you have to make big personal sacrifices. However, it’s the first small sacrifices, which are most cost-effective. This is often ignored, probably because the big sacrifices are better for signalling.

      • VV

        But that’s standard charity reasoning: instead of spending X euros to buy yourself that last 1 PU you give them to an effective charity to buy 20 AU (altruistic utility points, I prefer this term to global utility points since I’m not an utilitarian)

        What Hanson is actually claiming is that donating money to your employer (in the form of a lowered wage) or to your customers (in the form of lowered prices) is the most effective way to convert your last 1 PU to AUs. That a quite strong claim which needs a strong argument.

      • dmytryl

        I think it only holds in very specific circumstances. If you are selling something with huge margin, in some markets when you lower the price by 1%, this raises the sales by almost 1%, you get almost same revenue, you don’t lose 1%, you lose maybe 0.01% (assuming quadratic relation), but the customers do get benefit of 1% price decrease. With the wages it is dramatically different. You lower your wage by small amount, the corporation’s profit increases by that same small amount. With the luxury products, same story. Same if you work a little more and charge the same, or the variations thereof (work a little less and charge a little less, work a little more and charge a little more, et cetera, variations you aren’t even free to do anyway).

      • VV

         @google-8a859b151b507f070cefe46a035c0a99:disqus

        If you are selling something with huge margin, in some markets when you
        lower the price by 1%, this raises the sales by almost 1%, you get
        almost same revenue, you don’t lose 1%, you lose maybe 0.01% (assuming
        quadratic relation), but the customers do get benefit of 1% price
        decrease.

        I think this argument assumes that the product quantity is a continuous variable. If you wholesale commodities with an highly elastic demand this assumption might approximately hold.If you are a retailer, on the other hand, a price difference of 1% is unlikely to affect the quantity of product you sell by any significant extent: if Average Joe can afford to buy one unit of your product at 0.99*X $, he can probably also afford it at X $. So by lowering your price by %1 you are essentially donating 0.01*X $ to your customers.

  • Jacob Ian Stalk

    If this is such an easy way to help the world, why haven’t you heard about it before?

    We have. It’s called grace. It’s the primary conclusion of the Bible. 

    Why isn’t this a standard part of everyone’s education?

    Because the perpetually shallow “God is dead” crowd have successfully lobbied government to make it a crime to teach from the Bible in schools.

    I’d guess it is because it is hard to show that you are helping the world via this method.

    You’re damned right it’s hard. It took 1600 years of human experience to produce a book on how to do just that, yet those who criticise that book without having studied it still want to deprive others of its wisdom and substitute it with meaningless, unprofitable science fetishism packaged in the suffocating shrinkwrap of politically correct indeterminism. 

    Go figure.   

    • http://juridicalcoherence.blogspot.com/ srdiamond

      We have. It’s called grace. It’s the primary conclusion of the Bible.

      I’m no theologian–although I once did force myself to read the Bible cover to cover. But grace pertains to God doing this gratuitiously, doesn’t it? The Christian ethic is the Golden Rule, no? It’s instructive to compare it to Robin’s “nice person” theorem.

      The Golden Rule instructs to do to others as you would have them do to you. Robin’s theorem instructs to do better by others than you would have them do for you. It seems that the Bible doesn’t go far enough, and the implications of Robin’s theorem are better promoted in pre-Christian virtues like generosity and kindness.

      Culturally, we don’t accord much status to niceness. (And it’s been that way a long time.)

  • Arch1

    Some people are not getting that it’s all about the slopes of the respective curves near the max of the Private curve, not their values.  The slope of the Private curve is usually near zero in that region.  The slope of the Social curve is generally not near zero.  Given the definitions of the curves, this presents an opportunity to gain a lot of Social utility for very little reduction in Private utility.  Iterated over many decisions, much good can come of this for relatively little Private cost.
     
    1) Thanks very much for sharing this Robin.  I hope that it gets shared widely.
    2) Unless I’m missing something, it would be better if you moved the Social curve up or down so that the two curves don’t intersect at Private’s max.  As it is, this coincidence unnecessarily confuses the issue.

    • Robin Hanson

      I’ve added a parenthetical comment in the post about the arbitrary intersection point.

  • Nicholas Gruen

    Robin, 

    You seem to have uncovered the basic logic of Corporate Social Responsibility (CSR). Of course it can be promoted out of basically confused motives, but it can also be defended sensibly via the kind of logic you’ve set out. And if either customers or employees like the good that you’re doing, that marginal loss you take turns out to be a very effective investment in public or employee relations. 

    Thing is, CSR is often pretty useless because firms don’t ask how can they work on actions that have the steepest social benefit curve. Thus if a pharmaceutical company decides that as an expression of CSR it will have lower emissions and all its employees will recycle more paper it’s all pretty token and useless. But if it decides that it will sell at a lower price in some developing country markets, it could do a great deal of good. 

    Similarly some firms develop networks or capabilities that can be used at very low marginal costs for very socially worthwhile actions. I think Unilever gives itself the goal of saving thousands of lives each year in the developing world. It’s happy to sacrifice some profit but it’s not very much profit and a huge human benefit is generated (which of course might well end up more than recouping the short term costs of the action many times over as discussed above – re employee and public relations – not to mention government relations.

    Where firms have powerful IT capabilities, like Google, they can do immense good on their ear by, for instance allowing those networks to be used to host particular activities in emergencies for instance. 
      

  • FutilityMonster

    Aren’t you also imposing a large cost on your competitors? Surely you need to factor in their loss of utility. 

  • dmytryl

    I love the post but the graph may need better justification. The way I see it, consider e.g. iPod manufacturing. Minuscule fraction of the revenue goes into compensations to the Chinese factory workers that make such things. The corporate profits would barely be affected even by a relatively very huge increase in the wages.

    But at the same time, if I were to work at apple as software programmer, and if I were to charge less for my labour, that would not help anyone.

    • http://juridicalcoherence.blogspot.com/ srdiamond

      But at the same time, if I were to work at apple as software programmer, and if I were to charge less for my labour, that would not help anyone.

      If your salary depends in some part on your market power, you should agree to a salary shaded downward from what’s best for you unless–and this may be the point–the social curve slopes downward. Your point might be–I think, logically, must be–that Apple’s production, at the margin, is social harm more than social benefit. 

      • dmytryl

        If you were to charge a bit less for your labour, nothing about that curve applies – the slope is one – one dollar taken from yourself is one dollar given to Apple, and if you are at all more charitable than Apple – which seems easy to achieve, hell, I tip the waiter more (as a %) than Apple pays the assembly line workers – you should keep that dollar and use it yourself in more charitable fashion. The social value of the Apple needs not do social harm, it is enough that Apple doesn’t do social good.

        TBH, i generally hate it when people just draw some sort of smooth curve, and other half-educated folk go ahh and ohh and so on. Little math is dangerous thing.

        In case of Apple, the social good curve has smaller derivative at the point in question than your personal good curve. Which is not at the peak on the pay you are getting.

      • Stephen Diamond

        In case of Apple, the social good curve has smaller derivative at the point in question than your personal good curve. Which is not at the peak on the pay you are getting.

        The first sentence is equivalent, is it not, to saying that the social curve slopes the other way. Which means Apple production harms at the margin! (Increasing your pay would be a social good.)

        (Of course, if Apple neither helps nor harms, then too there’s no warrant for decreasing your salary. But what’s the likelihood that the market determining Apple production levels is perfectly efficient! If you think zero is likely, you probably aren’t getting the theorem.) 

        TBH, i generally hate it when people just draw some sort of smooth curve, and other half-educated folk go ahh and ohh and so on. Little math is dangerous thing.

        Hanson has a Masters in Physics from Chicago, so he probably knows some math. But too much math (in the sense of a determined near-mode focus) can  be a dangerous thing, too.I think you’re too focused on the “math.” The math is trivial once you see it. The problem everyone is having is they aren’t considering the economics–that you have to diagnose market failure and determine its direction to apply the theorem. There’s no direct market failure in direct wealth transfers, so if you think the programmer is just doing that, then the market is succeeding in perfectly guiding Apple production for the social good. (Unlikely, but logically consistent.)

         

      • dmytryl

         >The first sentence is equivalent, is it not, to saying that the social
        curve slopes the other way. Which means Apple production harms at the
        margin! (Increasing your pay would be a social good.)

        By the ‘social curve’ you mean the final sum of two curves or what?

        >Hanson has a Masters in Physics from Chicago, so he probably knows some math.

        Well, a physicist would be very prone to thinking in terms of smooth curves when the curves do not need to be smooth at all. E.g. your utility curve with regards to the money you demand from Apple would probably be rising with the slope not diminishing to zero, until the cut-off point where you can’t get the job, where you have a step where it goes down a lot.

        >But too much math (in the sense of a determined near-mode focus) can  be a dangerous thing, too.I think you’re too focused on the “math.”

        I think you’re too focussed on the near far thing, which is hardly a predictive theory in any case.

      • Stephen Diamond

        dmytryl:

        By the ‘social curve’ you mean the final sum of two curves or what?

        The one Hanson labeled “Social.” It does “include” the personal curve, in that you are part of society.

        your utility curve with regards to the money you demand from Apple would probably be rising with the slope not diminishing to zero, until the cut-off point where you can’t get the job, where you have a step where it goes down a lot.

        Then the “altruistic” thing for Apple to do is shade the programmer’s salary more generous. The programmer lacks the market power to shade his salary upward, and there’s certainly no argument that in every case (or in most cases) the employee is the one who should sacrifice.

        But in these situations, someone usually has market power. And his (corporations being people and all :)) curve–the one with market power, the one that counts in implementing the theorem–will be smooth in the usual case over the relevant domain–or so it seems to me.

      • dmytryl

        Stephen Diamond:Well, Apple could probably much better spend money on larger pay for factory workers than for the programmer…

  • David Barry

    Economics is not my native language, so perhaps I’m missing something.  But I don’t see why I’m currently at a point on my private gain curve where the derivative is zero.  I would gain substantial utility if my employer doubled my income, but that’s not a choice I have.  In other words, I’m at a maximum on the private gain curve, but it’s a maximum because it’s on the boundary of the domain, not because the slope is zero.

    And if the slope is non-zero, then it is not clear that the slope of the social gain is greater than the slope of my private gain.

    • http://juridicalcoherence.blogspot.com/ srdiamond

      But I don’t see why I’m currently at a point on my private gain curve where the derivative is zero.  I would gain substantial utility if my employer doubled my income, but that’s not a choice I have.  In other words, I’m at a maximum on the private gain curve, but it’s a maximum because it’s on the boundary of the domain, not because the slope is zero.

      The private gain curve applies to available choices. I think that’s why Robin limited the range of application to where you enjoy some market power. 

      But let’s say you’re negotiating your salary, and you make a salary demand lower than the greatest you get get–you don’t want to look greedy, say. Then, the recommendation is to shade it downward from what you would ask for if you considered only the advantages to yourself (your employer only to the extent it affects you). 

  • Michael

    By the way, I always thought (and practice) that the correct way to sell your labour cheaper is to consider your maximum obtainable wage+job pleasantnes, step this down a bit, and choose personally-acceptable employer with better positive externalities.
    I.e. work with nicer people even when the loss in money is not exactly offset by lower stress levels.

  • Drewfus

    “Why isn’t this a standard part of everyone’s education? I’d guess it is because it is hard to show that you are helping the world via this method. And people care a lot more about seeming to help, than about actually helping.”

    Consider that this desire to show may originate from an exogenous source, rather than being of endogenous origin. The exogenous source being a hypothetical pressure from society to fulfill one or more quotas – in this case, a charitable quota and possibly a visibility quota.

    The point perhaps being that any social level entity (like charity) that is of sufficient importance, is likely to be systematized to some extent, rather than just being ‘left to’ ‘the market’. Communism is essentially a quota-based system (at least in practice), and this seems to have some appeal to many people, and perhaps more out of an intuitive appeal that an inherent desire to do ‘good things’.

    The bottom line for this point of view being that charitable works have to be highly visible, and ‘in theory’ or ‘by calculation’ charity is not acceptable for quota fulfillment (although it might otherwise be appreciated by some).

    A benefit of the quota-fullfilment hypothesis is that it gives some structure that might be the basis for understanding why Darwinian evolved animals behave altruistically, in some contexts. I’ll have to think more about this.

  • dmytryl

    Also, I think that in most circumstances the curve would be not smooth, but more like this: http://dmytry.com/util_curve.png . Or even worse (and more annoying to draw) for the pricing of items in a shop, with pointy bumps of various kinds and so on. Likewise for personal money vs utility – the items are discrete, you have a very broken graph. And so on.

  • Roy Stogner

    This reasoning seems sound, but also seems to conflict with the fundamental theorems of welfare economics, in the simplified models where they apply: https://en.wikipedia.org/wiki/Fundamental_theorems_of_welfare_economics

    How does lowering my wages (and as the most immediate effect, increasing my production of whatever Widgets I’m best at) do more for the world than simply redistributing some of my wages (and as the most immediate effect, increasing demand for and thereby production of whatever Non-Widgets the rest of society would prefer to buy) instead?  The first-order effects seem to be better in the latter case, and in the simplified model, I’d expect the second-order effects to lead to the same final outcomes.

    In non-simplified models, where redistributing wages to my employer is *not* the same as redistributing wages to the most needy, it seems hard to argue that the former would be a better option.

    • http://overcomingbias.com RobinHanson

      Yes, a tax or subsidy that depends on your choice can of course change your private maximum point and get you to change your choice in exactly the same way that considerations of charity effect might. And if you think we have exactly the right systems of taxes and subsidies, you’ll think the social and private gains max at exactly the same point. But the question is: do you think that?

  • Carl Shulman

    A different way of thinking about this is in terms of diminishing marginal charitable returns across job actions: in a given job there are many actions which vary in their career cost and social impact. Some cost very little to you personally while providing more help to others, while others are more personally costly or less helpful to others.

    So, if previously you had been completely ignoring the possibility of changing actions in your job to increase externalities, there may still be “low-hanging fruit” there to pluck, which are worth looking for. That seems right, and very much worth doing.

    However, Robin’s argument for “cost-effectiveness approaching infinity,” relies on being able to take actions that differ only arbitrarily slightly from the private optimum, so that the slope of the function for private cost is still almost exactly zero. This seems dubious for two reasons.

    First, the actions we can take are not arbitrarily finely divisible. If the smallest unit of private cost you can take on is $1, it is unlikely that this will be matched with social benefits equal to what you could buy with $1,000,000.

    Second, there are fixed costs to engaging in such a strategy: time thinking about how to adjust behavior, application of attention, the opportunity costs of communicating the idea, etc. Any noticeable fixed cost means that the infinitesimal changes with supposedly cosmically high cost-effectiveness drop down to Earth.

    In general, if one can achieve apparently high cost-effectiveness only on an incredibly small scale before the opportunity is exhausted, it may not be worth bothering with after taking such costs into account, or not very important overall, i.e. the total effect of these low-hanging fruit job choice externalities may be very small relative to what can be bought with wages.

    • http://overcomingbias.com RobinHanson

      If we can categorize choices as big or small, based on their potential for impact within a reasonable range, then the fixed costs of thinking about a question are better dealt with by focusing on bigger questions. So there’s more potential for social gain from shading the height of the building than from shading the height of one particular step in it somewhere. 

    • http://juridicalcoherence.blogspot.com/ srdiamond

      First, the actions we can take are not arbitrarily finely divisible. If the smallest unit of private cost you can take on is $1,

      Seems an odd and contrived objection. Of course, sometimes our actions aren’t sufficiently divisible, but that’s hardly the usual case, as shown by the example. Why should $1 be the smallest unit of private cost? The example is pretty much its own refutation, in that money is precisely what allows for arbitrary divisibility.

      Second, there are fixed costs to engaging in such a strategy: time thinking

      Like there aren’t costs to endless rumination about GiveWell versus SIAI.

  • http://juridicalcoherence.blogspot.com/ srdiamond

    If this is such an easy way to help the world, why haven’t you heard about it before? Why isn’t this a standard part of everyone’s education? I’d guess it is because it is hard to show that you are helping the world via this method. And people care a lot more about seeming to help, than about actually helping.

    Implicitly following your theorem seems like an operational definition of being a “nice person.” I suppose we can infer that being a “nice person” conventionally receives too little moral weight.

    (Although, that’s only the case if the social curve typically slopes up. If someone thinks it more usually slopes down, it seems you then get an Ayn Randite kind of view of morality.)

  • Robert Koslover

    So, if applied to individuals, doesn’t this mean that everyone should be encouraged to work just a little harder, while accepting just a little lower salary.  Is that about right?  Well, given the incompetence of our present national and world leaders in their management (to put it nicely) of government spending, I expect that a pretty large fraction of the world’s population will be doing exactly that (and that’s if they are lucky) for the next several years, albeit involuntarily.

    • http://juridicalcoherence.blogspot.com/ srdiamond

      So, if applied to individuals, doesn’t this mean that everyone should be encouraged to work just a little harder, while accepting just a little lower salary.  Is that about right?

      Rightwing, maybe; you could have concluded as easily that employers should be encourage to pay a little more and require a little less work.

      Actually, more easily, in that employers often have market power.

      • Robert Koslover

        Thanks for your comment.  But please note my words,”if applied to individuals”.  I think you’ll agree that with that caveat, and noting that the vast majority of individuals are not “employers,” my interpretation is justified.

      • http://juridicalcoherence.blogspot.com/ srdiamond

         Leaving my nitpick aside, no, I don’t think your interpretation is justified.

        The correct interpretation makes your conclusion contingent on whether the externalities are positive or negative at the margin. Your interpretation is valid only where the externalities  are positive at the margin.

        I think one source of confusion is the usual confusion about marginal analysis. One is apt to think, “Of course most production carries positive externalities.” But this is less clearly true at the margin. Following dmitryl’s example of a programmer working for Apple, we can concede that Apple has produced many positive externalities while denying that, from a social standpoint, it’s better that Apple engineers accept slightly lower salary. (This might follow, for example, from  Keynesian macroeconomics–although I doubt you’re fond of that school.)

      • Robert Koslover

         Oh, I should also add, that any employer who chooses to “pay a little more and require a little less work” will very likely be making less profit while obtaining less labor from his/her employees, and thus may have no choice but to work harder himself/herself.  I.e., such an employer, would personally have to “work just a little harder, while accepting just a little lower salary.”  So it would seem that my assertion applies to employers too, and not just employees.

      • http://juridicalcoherence.blogspot.com/ srdiamond

         Well, either the employer pays the higher wage or the employee receives the lower wage. One helps and one hurts.

  • Stephen Diamond

    I think my argument that prioritarians would find Robin’s theorem irrelevant was wrong. A prioritarian would merely have a different social curve but the same formal considerations apply.

  • Tim Tyler

    This post is bizarre. Conventional wisdom is that the best way to help others is to accumulate resources and then donate them wisely. The idea that your customers are likely to be the most deserving recipients is pretty strange – in fact it makes no sense at all.
     

    • http://juridicalcoherence.blogspot.com/ srdiamond

      Conventional wisdom is that the best way to help others is to accumulate resources and then donate them wisely. The idea that your customers are likely to be the most deserving recipients is pretty strange

      The lesson is that conventional wisdom serves the interests of those who have accumulated resources and seek to display the fact by making salient costly sacrifices or justify their rapacity the same way.

      Again, there’s go to be a market failure–which usually means that more than just your customers will benefit from your sacrifice. But whether you should sacrifice for your customers or they for you is a question of contingent economics. But when you can figure out which way to go and how much, your sacrifices will be far more efficient than what the conventional wisdom sanctions.

      • Tim Tyler

        Donations typically benefit more than the direct recipients – no matter who they are.  The math here seems pretty clear: you can give slightly more effectively to your own customers, but your customers are likely to be nowhere near the most needy. I can see no coherent justification for the advice in this post – except that it’s what some folk might want to believe – or maybe it’s trolling.

      • http://juridicalcoherence.blogspot.com/ srdiamond

        The clear math is that you can give far more effectively to your own customers where there’s market failure favoring you. You might have to cut it very close over many occasions.  In donation, there’s no market involved in the transaction, hence no market failure to exploit..

        The premise so far is that the utiles of the needy are equally important as the utiles of the well off–while still allowing for diminishing utility with decreased neediness. (Keep your deviations from self-interest small enough, and you predominate over any diminished utility.)

        But let’s say you want to benefit the needy preferentially (which is contrary to utilitarianism, the dominant local ethical signal). Unless you are totally unconcerned with the utility of everyone, still you can use the diagram. If the utiles of the well-to-do exchange for the utiles of the needy at a 10 to 1 ratio, this ratio can be overcome by keeping the deviations from your self-interest small enough.

        But if you only care about the needy–perhaps a common position, but not locally–then you can still do use the diagram by drawing the social curve based on the needy alone.

        except that it’s what some folk might want to believe

        To the contrary, the ones who want to believe (in their own virtue) refuse to understand a demonstrable theorem, despite their sophistication.

  • http://juridicalcoherence.blogspot.com/ srdiamond

    And people care a lot more about seeming to help, than about actually helping. Also, even if this could be made visible, we are usually much more eager to show we’ve paid a high cost than to show we’ve achieved a big social gain; it is the cost that makes for a credible costly signal of our virtue.

    Unfortunately, they won’t admit that they want to signal their virtue; that would diminish the signal. The charity mongers have developed a set answer to why they give: “I give because I care about others.” Not satisfied to flaunt, they must also brag.

  • http://overcomingbias.com RobinHanson

    Real for profit firms quite often do elaborate calculations to find the choices that max profits, and then actually implement such numbers. 

  • http://www.facebook.com/yudkowsky Eliezer Yudkowsky

    I think the main thing this diagram ignores is gains from trade, professional specialization, and economies of scale.  Surely, if a hunter-gatherer society wants more food, the most effective way to do it would be to, on the margins of private action, do things that are likely to result in a few more buffalo roaming around?  Hunt more males and fewer females and children; scatter seeds as you walk; kill a boar rooting at a fruit tree?

    But actually none of this even remotely remotely remotely compares to how much food you can create by having professional farms with professionally bred plants and animals.

    Similarly for the hope that a marginal argument will show that the most marginally effective charity only requires a slight effort – it might be true in a world where there were no gains from trade, economies of scale, or professional specialization.  In this world, however, it is false.

    • http://overcomingbias.com RobinHanson

      I read you as suggesting 1) that there is only a small integral of the help you can give via this method, before the cost to help rises to noticeable levels, and 2) that the net value of this help is tiny compared to the gains we all get from trade, specialization, and scale economics. That point #2 seems overwhelmingly obvious. But on #1, the net help we actually give others, beyond agreeing to participate with them in an economy with specialization etc., is often pretty small, so it isn’t clear that this marginal help would be small relative to that typical help size.

      • http://juridicalcoherence.blogspot.com/ srdiamond

         But it’s really the reverse of Yudkowsky’s claim. Among foragers there are fewer externalities. Externalities take largely the form of increases in trade, specialization, and scale economics. These are precisely what supply the room to implement your theorem in practical decisions. They are multipliers rather than divisors.

  • VV

    I think Yudkowsky is trying to say that by using the marginal strategy suggested by Hanson, you can only get a small payoff in terms of altruistic utility, while by donating to an efficient charity they could achieve a larger benefit through professional specialization and economies of scale applied at a task with a large expected payoff.

    Obviously, he has a personal interest in arguing this, since he works for a charity that claim to provide a huge payoff (although they are actually a small-scale operation with questionable specialization), but the general argument seems to be correct.

    Your point is that professional specialization, economies of scale and trade efficiency also apply to your job, and probably more than to any charity, since your industry is probably bigger and more optimized at doing what it does than any charity. That’s correct, but still, if your job isn’t focused on an high altruistic utility payoff task, an efficient charity could in principle make a better use of your marginal resources.

    Of course, there are large uncertainties involved: finding a charity with an actually high expected altruisitc utility payoff might perhaps not be worth the effort. I suppose that if you wish to donate efficiently you’d better go for a charity that provides services that you can use and hence assess directly (e.g. the Wikimedia Foundation) rather than go for something that promises to help people far removed from you in space, time or social condition.

    • dmytryl

      Well, working for such a charity, he would have many ways in which he could convert small private gains into huge public and his future gains. For instance, when a person with not yet accomplished goals makes a dating profile, they do it very differently, especially if they are a public figure.

      edit: the threading is failing again. This was reply to VV’s comment http://www.overcomingbias.com/2012/11/marginal-charity.html#comment-722070281

    • Stephen Diamond

      That’s correct, but still, if your job isn’t focused on an high altruistic utility payoff task, an efficient charity could in principle make a better use of your marginal resources.

      We have a dearth of example in this discussion, but Robin provided one good one. If you build an extra floor on the apartment, you correct for a market failure that fails to reward agglomeration in proportion to its social value. The extent of the market failure is what determines the benefit from a given sacrifice at the margin, not the focus of the business. That is to say, it doesn’t appear to me that altruistic focus of the business predicts the value of shading away from self-interest.

      But if I’m right that degree of market failure is what determines the room for altruistic benefit by means of shading away from self-interest, then you might make the point that contributing to a charity is still more efficient this way: devote the same marginal resources to correcting a market failure more severe than the one you would correct by shading your personal interest.

      Does this alternative strategy disprove Robin’s claim that “by far the most cost-effective way to help the world is to shade your selfish choices just a little in the direction of making the world a better place”? What about the alternative strategy of aggregating your marginal resources? One practical point is that this isn’t easy to execute: you may be unlikely or it may be inefficient to take the time to contribute resources corresponding painlessly in small amounts to efficient causes. And if you contribute them all at once, it’s no longer painless. But I’m not sure this is the kind of “inefficiency” Robin intends. We’re focused more on the basic principles than the implementation.

      But one reason I see to maintain that Robin’s method is superior is to “look for charities that correct even worse market failures” is that we seem to find it   easy, with some economic theory and a little information, to decide where there’s a market failure when there’s an actual market that fails. (Or in my opinion, but probably not in Robin’s, where you have overall economic plan.) “Efficient charities” are demonstrably efficient mainly in the sense of having low administrative costs. How they contribute to the general state of “utility” is really unknown. Robin’s theory has the advantage of being implementable, whereas the consequences of a charity really involve complex uncontrolled interaction effects unmeasured by any market or central plan.

       

       

    • Stephen Diamond

      But from another perspective, there’s a market for charitable contributions. If we follow Robin, the market is status for money; in this market, it’s easy to diagnose the market failure. The market disfavors charities that are less respectable. So, if you’re determine to contribute to charity, one should (following Robin’s theorem) shade in the direction of disreputable charities that you have determined don’t deserve disrepute (from the standpoint of societal interest). You should sacrifice a little bit of status at the margin to correct the market failure resulting from signaling by contributing to the more prestigious charities.

      This market doesn’t help decide whether to contribute to charity, as its a market for contributions rather than benefits. But it should dictate shading toward disreputability by someone who is genuinely altruistic.

    • http://juridicalcoherence.blogspot.com/ srdiamond

      For instance, when a person with not yet accomplished goals makes a dating profile, they do it very differently, especially if they are a public figure.

      dmytryl’s somewhat obscure comment refers, I believe, to: http://lesswrong.com/lw/fh2/link_an_okcupid_profile_of_a_rationalist/

    • dmytryl

       srdiamond: yes, precisely.

      Sidenote: I wonder if social conventions exist to force agents to reveal their true beliefs by forcing agents to make tradeoff decisions of this kind.

    • VV

       @google-8a859b151b507f070cefe46a035c0a99:disqus Yes, signalling has to be costly in order to be effective.

    • dmytryl

      Well, I somewhat object to description of it as ‘signalling’. It’s just a trade-off that agents with different beliefs would resolve differently, without explicitly considering it as signalling*. For example, you claim there is a $1 million diamond in a locked box. Now you can’t sell this box for less than million minus reasonable box breaking fee, and if you do, it is pretty clear the box is empty. Refusal to sell the box for $1000 is only “signalling” from the perspective of those that know the box is empty.

      *Perhaps with the exception of cheaters that would resolve the tradeoffs in the ways indicative of cheating, but need to make their own signals that deceive almost nobody. I.e. the person with a (lack of) diamond in a box may be willing to sell it for $1000, but would want to do all sorts of talk and looks to deceive someone.

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  • Margin

    Another example:

    If you could either be productive or rent-seeking, and rent-seeking would be slightly better for you all factors considered, be productive instead.

    (This assumes that GDP will be used for what you think is good rather than evil; otherwise just flip the argument)

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