Jones, Beckstead, & I

Nick Beckstead talked with Garett Jones and I on long run consequences of growth. One point is worth emphasizing: if long run growth matters more than today’s suffering, directly helping those suffering today is unlikely to be the best strategy. From Beckstead’s summary:

What are the long-run consequences of helping people in the developing world, e.g. through donating to GiveDirectly?

If the argument for doing this is that it helps with long-run growth, it’s implausible. It seems very unlikely that donations to GiveDirectly are the best way to speed up economic growth. Improvements in the institutions that hold back innovation would seem more plausible.

Programs like GiveDirectly may have some indirect effects on governance, which could in turn have
effects on long-run growth. For example, people who are suffering less because they are less poor might vote better. We should not assume, in general, that any way of helping people has [predictable] long-run consequences on growth. … [Also,] sending resources from high-growth nations to low-growth nations would be bad for long-term growth. (more)

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  • CarlShulman

    Garett Jones, not Garret Jones, no?

    • http://overcomingbias.com RobinHanson

      Oops; fixed.

      • CarlShulman

        Also, in the notes you seem to say that GiveDirectly seems not particularly helpful for growth, and then go onto say that transfers from high growth to low growth regions would tend to be bad for overall growth.

        But growth rates in Africa and India and much of the developing world have been faster than US and EU growth rates of late, haven’t they? So that would seem to count in favor of GiveDirectly’s transfers (although they would probably pale in comparison to some more targeted ways of improving growth). Did the connotation get flipped in the note-taking?

      • http://overcomingbias.com RobinHanson

        Yes if African and India are growing faster, that would argue for transfers to them from other nations.

      • CarlShulman

        Although perhaps even more to China.

      • oldoddjobs

        Has it been established that GiveDirectly is responsible for growth rates in the developing world?

  • Anon

    “Nick talked with Jones and *me* on ….”

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      Why, when you correct errors in spelling, do you keep them in grammar? I think it’s a near-mode bias!

  • http://juridicalcoherence.blogspot.com/ Stephen Diamond

    I don’t understand why you’re so intellectually involved with charities but never donate to them.

    • oldoddjobs

      Does everyone who takes a scholarly interest in something have to participate? Why?

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        No, but it becomes curious when the topic is boring.

  • B_For_Bandana

    Robin, you say in the article,

    > The key question is what processes growth speeds up more than which other processes. If all processes were sped up equally, there wouldn’t be any significant consequences. If some things are sped up more than others, there may be more significant consequences.

    So which processes are the best ones? A typical middle-class First Worlder has many choices of how to spend disposable income, including:

    1. Charity for the very poor, like GiveDirectly. This could lead to more innovation via flow-through effects. (You say this is unlikely. Why?)

    2. More personal consumption — nicer car, longer vacations, eating out more. This uses the market to reward the best innovators, at least in the area of consumer products.

    3. Improve institutions that hold back innovation. (Which are these, and how do I know for sure? How to improve them?)

    4. Donate directly to institutions that do innovation, like research universities and think tanks.

    5. Have more kids, to keep population growing.

    In your estimation, which of those is the right way in speed long-term growth? Or is there another answer not listed there? Or are you currently uncertain?

    • http://overcomingbias.com RobinHanson

      #3,4 seem most promising, as they are most directly related to the main cause of growth. #5 also seems promising, given current fertility trends.

      • B_For_Bandana

        My layperson’s intuition says #1 is at least somewhat promising. Poor societies have low-hanging fruit in that cheap interventions could result in huge gains in productivity. And in fact fastest-growing countries today are some of the poorest.

        Plus, and this is relevant for low-information donors, helping poor people is very simple, but my #3 and #4 are very complicated. I can be pretty sure that AMF and GiveDirectly have pretty much the results they say they do. If I give to them, at least some poor people will be helped, in simple, understandable, substantive ways. But I am not sure at all how to encourage innovation. If I go in ill-informed, it is very likely all my time and money will be wasted.

        Your meta-point, which is that if we were real utilitarians, we would care much more about speeding growth than about helping current poor people, is well taken. I agree with your argument there. But how can you be sure that helping poor people isn’t the best way to speed growth? Other than a cynical assumption that that would be just too convenient?

        If this is a very stupid question, at least I have provided you with a useful insight into the mindset of the people you need to convince…

  • http://asymptosis.com Steve Roth

    Abba Lerner: “In the long run, we’re always in the short run.”

    Given radical uncertainty and “unintended [unpredictable] consequences,” isn’t the only reasonable approach to concentrate on short-term aggregate utility? IOW, redistribution.

    • Rob

      Given radical uncertainty and “unintended [unpredictable] consequences,” you also won’t know whether the short term improvements you work on improve the long-run, or make it worse.

      We always have to make our best guesses.

  • IMASBA

    Helping poor nations spreads the growth around which can markedly increase utility (because there are diminishing returns in the relationship between life expectancy and happiness with purchasing power). It may take away resources from innovation in the rich countries but there’s so much low hanging fruit in the poor nations that can speed up growth and in the long term helping poor nations will add more minds to the quest for innovation. The help wouldn’t even have to be very efficient because not that much is actually needed (most change will come from attitudes) and the part that is “wasted” does get spend somewhere, it’s not shot into the sun.

  • Kyle

    There is pretty good evidence that the ROI of the money donated to GiveDirectly has very high ROI, above 20% it seems. I would think that’s a pretty strong indication that the money given is in fact extremely efficient.