Ancestor Worship is Efficient

Maybe not “worship” exactly, but at least great respect and deference.  By “efficient” I mean that it increases economists’ standard “cost-benefit” concept of welfare.  That is: as usually estimated, the benefits of deferring greatly to distant ancestors far outweigh its costs.  And while this does suggest that we should defer more to ancestors, it also shows just how much distorted prices can break economists’ favorite tools.

The economic welfare of a proposed change is the benefits minus the costs of that change, translated into cash terms, though of course changes don’t have to actually be cash transactions.  When available, market prices are commonly accepted as estimates of the benefits and costs of things gained and lost.  Economic welfare is a powerful heuristic for finding win-win deals: in many kinds of situations, the strategy of consistently making the changes that increase economic welfare tends to be usefully close to an actual win-win deal that gives most everyone more of what they want.

The efficient ancestor worship problem arises from two key facts:

  1. Economic welfare cares not about giving people experiences but about satisfying their preferences, i.e., giving them what they want.  And even long dead people still have (or “had” if you prefer) preferences that we could now better satisfy.  If we do something a dead person would have wanted, that counts as a benefit.
  2. At standard market interest rates, the magic of compound interest quickly gives astronomical priority to the preferences of folks who lived long ago.  For example, in historical records near risk-free interest rates (e.g., land rents over prices) consistently exceeded 9%/yr from 3000BC to 1350AD, for a total factor of over 10162.

Together, these facts suggest we would increase economic welfare if we spent less than 10162 dollars today to do anything for which a 3000BC ancestor would have been willing to pay a dollar (equivalent in their currency).

Clearly we would quickly bankrupt ourselves if we tried to implement such “efficient” changes, and doing so would not be remotely close to a win-win deal with our ancestors.  What goes wrong here?

Our contract law system refuses to enforce many win-win deals between distant generations.  Many folks would be willing to create trusts that accumulated funds long after their death and then paid distant descendants (perhaps indirectly) to do things like remember their ancestor’s name, pray to his gods, etc.  Unless stolen, such funds would eventually come to dominate the world economy and dramatically lower interest rates.  With lower interest rates, economic efficiency would count the preferences of distant ancestors as far less valuable, and as a bonus businesses and governments would have far stronger incentives to attend to the interests of distant future folks, such as via global warming policies.

But we in fact refuse to enforce a great many such long term deals.  For example:

The rule against perpetuities at common law … prevents a person from putting qualifications and criteria in his will that will continue to control or affect the distribution of assets long after he has died, a concept often referred to as control by the “dead hand.”

Our unthinkingly repugnance at being controlled by the dead, and our eagerness to grab their resources, prevents us from enforcing long-term win-win deals.  This refusal to enforce deals increases interest rates, which distorts all our trade-offs across time, bringing economic welfare estimates into stark conflict with intuitive moral judgments about time trades (as in global warming), which then encourages people to turn to non-economic frameworks for policy analysis.

When policy distorts prices, it distorts calculation of economic welfare, which encourages people to ignore economic welfare when choosing policy, which reduces their reluctance to intervene to further distort prices, which leads to a sad spiral of increasing confusion.  Please, let’s enforce long-term win-win deals!

Added: A fascinating alternate history might start from a year 1300 English legal precedent enabling flexible growing long term trusts.  By 1800 early trusts grew a billion-fold, and trusts dominate the economy.  What else changed?!

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  • Matthew

    Interestingly, their is a Charity-to-charity exception. I take this as another example of religions not planning as well as they could for the future.

    • anon

      Very good pont. An ancestor can influence the future as much as he wants as long as the standard for charitable contributions is met. This seems to get rid of the worst problems with perpetuities (such as incomplete information and changing circumstances, as well as the incentive to steal the perpetuity’s assets) while still enabling the most advantageous deals.

    • Charities face other barriers to accumulating wealth. In the US most big charities are constrained to spend a certain fraction of their endowment each year. Not sure about the exact rules.

  • Phil

    I always thought the “dead hand” law was to avoid having society governed by the wishes of “people” who can’t change their minds.

    In 1955, if I put together a fund to promote racial segregation in Alabama, that would have been a fairly mainstream fund. If I died, and left millions of dollars to put pro-segregation ads in Alabama newspapers in perpetuity, and the courts enforced that, I wind up acting as a zombie who won’t change his mind in the face of enormous social pressure. Because, if I were alive, there’s no way I’d still be placing those ads. I’d be shamed, or run out of town, or killed.

    And suppose my will spent less than the income of the trust, so that the balance grew and grew. In 200 years, it would be buying every second page of the paper (assuming newspapers still existed).

    Also, the facts on the ground may change. What if someone leaves billions of dollars to persuade people to act against global warming … and then there’s a global cooling crisis? What if someone had left money in support of DEsegregation, which has already been achieved? Does the money have to be thrown away to continue to promote desegregation, as demanded in the trust?

    What happens with the law now? Don’t the deceased’s wishes get enforced for 20 years or so, at which point the trustees take over? That seems like a fair compromise: you get what you want for two decades, at which point you might have changed your priorities anyway if you had lived. Then, someone who’s alive and has a conscience takes over, someone you’ve chosen. Not unreasonable.

    As a separate issue, I wonder what would have happened if the law had been Robin’s way in 1810. How much money would be floating around, and what kinds of causes would they be promoting?

  • Robert Koslover

    Forgive me for sounding snarky, but might the forcefulness of your arguments on this topic be (even if only subconsciously) related to your very real personal desire to ensure that your contract for cryonic preservation will be legally enforced long after you are “dead?” Not that there’s anything wrong with that… but it seemed like a notable omission.

  • Misterxrboto

    Economic welfare cares not about giving people experiences but about satisfying their preferences, i.e., giving them what they want. And even long dead people still have (or “had” if you prefer) preferences that we could now better satisfy. If we do something a dead person would have wanted, that counts as a benefit.

    the only way this makes sense is if it’s with tongue firmly planted in cheek.

  • Carl Shulman


    Great post.


    Good catch.

  • Phil, the dead will trade-off the mistakes from overly specific instructions against the risks of giving agents too much discretion. Not obvious we see any overall bias in such trades.

    Robert, yes cryo contracts might help, though I’m less worried there.
    Mister; I’m serious.
    Carl, thanks.

    • Phil

      >”Not obvious we see any overall bias in such trades.”

      I disagree.

      For instance, I think people might use the specificity to signal. A pro-segregationist seeking office in a pro-segregationist time would leave his money to segregation in perpetuity and publicize the fact, in order to advertise his bona-fides. If he dies before the election, then he obtains something he didn’t really want.

      Or, some people prefer notoriety to justice. Issuing racist propaganda forever is one way to get your name known. You can’t do it when you’re alive, because you’ll get lynched. But dead? You get all the benefits without the costs. That can’t be efficient, can it?

      Or, suppose an anti-Semite starting a fund to be critical of Jews (in some legal manner, of course), without bothering to think that, someday, he might have changed his mind, or, that others would have pressured him to change it — or not caring. Don’t we all have biases in favor of our own, current, opinions? I am sure if you asked me to predict what percentage of my beliefs I would change over the next 40 years, I would *underestimate* it. Isn’t that the whole point of overcoming bias, that there’s a lot of bias to overcome? I’m appalled at some of the things I very, very strongly believed 20 years ago.

      I bet we all underestimate how much our views will change in the future, especially since our views are so affected by other people’s views. I think the mistakes would go way, way, way in the direction of too-specific instructions.

      • I don’t think your “pressure” argument really works here. I may be thinking more about Eliezer’s CEV argument than Robin’s counter-factual, in which case I hope Robin corrects me. “Pressure” involves other people who have conflicting preferences, if they can offer the dead person a dead it might be efficient for him to trade. If it’s not a trade, they are merely going to decrease his utility with no compensation. It is more efficient from the dead man’s perspective to be immune from such pressure (anonymity on the internet is analogous). A different case is where the dead person merely had incomplete information and if he had seen the long-term consequences of his actions he would have acted differently, which we may assume doesn’t apply to your “not caring” scenario. Using Caplan’s consumer satisfaction standard we might ask whether the dead person would still make the same decision if he could time-travel ahead to see the consequences and then travel back (no cheating by attempting to gain info through cancelled deals!). Hanson has mentioned that free speech can be inefficient because many people may care more strongly about preventing atheist (for example) speech than atheists themselves care, so he may take the opinions of “pressurers” into account. A way to get around that may be to have more detailed wills: conditions may be cancelled IN EXCHANGE for something else.

  • “as usually estimated, the benefits of deferring greatly to distant ancestors far outweigh its costs.”

    I suppose this might be true, but only if the utility, from the satisfying of the ancient want, compounded through the ages.

    If I choose to leave funds in my will to build a monument to me, the benefit accrues to me, now, in the form of “satisfaction” in knowing that I will be remembered. When I pass on, the subsequently built monument has no ability to give me any additional benefit, because I am no longer able to receive it.

    A future relative that builds a monument to me confers no benefit on me. I disagree with your fact that this would have constituted a “benefit”. If this “fact” is not true, the whole argument is lost

  • It seems to me that the common sense presumption should be that the dead do not experience utility. As far as we know they don’t feel, think, want, or have needs. I’m wondering where is your argument where you overturn that presumption. Is it based on your belief that death is temporary because -INSERT FUTURISTIC ARGUMENT ABOUT COMPUTERS, SIMULATIONS, INFINITE MULTIVERSES HERE- ?

  • CraigM

    Let’s look at this simplistically. The issue seems to be that the assets of the dead grow faster than the assets of the living – otherwise, trusts would not grow to dominate the economy. There are a number of reasons for this, most obviously that the dead don’t spend a lot of money on housing or luxuries, they don’t require a lot of calories or medical care, or otherwise contribute to the demand that drives our economy. On the plus side, the dead pollute very little…

    If we looked at this a from a simple partial equilibrium perspective, the obvious prescription for economic growth would be auto-genocide, the elimination of the species homo sapiens -in the limit, if we were all dead, then our assets would grow so much faster and we would all be better off… oops, this scenario involves a division by zero, in addition to ignoring the likelihood that in scenarios which are distant from the status quo the differences are unlikely to be linear continuations of existing trends…. if there were no living people, the assets of the dead would not be growing.

    The obvious truth is that trusts, the assets of the dead, benefit from what in this framework are positive externalities provided by the living, and in a fair pigouvian world there should be taxes which transfer wealth from the dead to the living such that the latter do not grow to dominate the economy. Since formulating a policy which could dynamically respond to the changing parameters of this problem would be extremely difficult, we are more or less left with the choices of taxing the dead at a rate of 0 or 100%. It is clear that 0% leads to perverse results, so the rule against perpetuities is as good as we can practically do.


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  • Steven Schreiber

    I think the other commenters are right: deferring to the dead would produce a lot of disastrous results.

    There are already natural experiments in the long-term preferences sets of ancient individuals enabled through the Catholic Church during periods when people felt that certain features of the world were sufficiently immutable. Lots of people gave their wealth to military orders to forever fight against Islam or Christian heresies. Thankfully, most of those orders were dissolved or evolved into mere monasteries as political pressure mounted or their assets were seized.

    • Are you here endorsing the massacre of the Templars?

  • Vladimir M.

    Robin Hanson:

    A fascinating alternate history might start from a year 1300 English legal precedent enabling flexible growing long term trusts. By 1800 early trusts grew a billion-fold, and trusts dominate the economy. What else changed?!

    Well, you sort of answered this question when you said (emphasis mine): “Unless stolen, such funds would eventually come to dominate….”

    Periods longer than a few generations in which land and stuff don’t get stolen or destroyed on a large scale are the exception rather than the rule in human history. And when an institution, or a distinctly recognizable group of institutions, amasses wealth beyond a certain relative scale without wielding any significant military power, the chances of violent expropriation become very high. (It doesn’t even have to be a major social upheaval — punitive taxation and wresting control by increasingly intrusive regulation can do the job without people thinking that anything unusual is going on.) So, basically, even if there was no common-law rule against perpetuities, other less formal social mechanisms would guarantee that long-term trusts would get pillaged long before they could grow to such fantastic sizes.

    In your concrete example of England, I’d say that somewhere half along the way, an enterprising monarch would probably embark on a major campaign to pillage this wealth for himself and his cronies, kind of like Henry VIII did with the English monasteries.

    • JenniferRM

      I wonder if there is a geographic bias operating here? In the western hemisphere, economic “future history” may be less subject to military considerations than might be expected.

      The eastern hemisphere’s history is built on tens of thousands of years of very local cultural isolation (due to high transport and communication costs) and organized imperial theft and genocide (the back and form of local governments fighting one another after the development of agriculture). In that context, the point seems totally valid.

      But the western hemisphere (admittedly due to genocidal military conquest) is now dramatically more homogeneous and has many fewer independent polities. Assuming industrial civilization persists at roughly current levels for another 1000 years (which is admittedly very unlikely) I could imagine property rights over large fortunes being stable here, especially in the northern hemisphere where Mexico, the US, and Canada form a relatively simply “three body problem” that might actually be amenable to taming by (1) consistently subsidized transportation, (2) encouragement of cultural merging rather than separation, and (3) the avoidance of arms races.

      Basically, the western hemisphere had a wave of genocide when it was colonized by Europeans… but the result may have been to install a historically atypical mass culture at a time when unusual conditions (cheap transport and communications) made it more likely that this (relative) “human monoculture” could survive with political and economic continuity intact for much longer than otherwise expected. Robin, being American, may have historical assumptions in line with such expectations of continuity… whereas if he was from Alsace-Lorraine, he might have different assumptions…

      Robin, care to weigh in?

    • Land and other property has been pretty secure in England since 1200.

      • Vladimir M.

        Well, for one, the members of English monasteries in the 1530s would have begged to disagree. What reason is there to think that these hypothetical trusts would be able to grow to such vast sizes without attracting the same sort of unwanted attention?

  • Vladimir M.


    As a separate issue, I wonder what would have happened if the law had been Robin’s way in 1810. How much money would be floating around, and what kinds of causes would they be promoting?

    Assuming they would have grown to a really remarkable size, I think these funds would have faced even worse prospects with the redistributionist agitation during the last two centuries than with Henry VIII. Not to even mention Conquest’s Second Law.

  • Dre

    As a non-economist, this seems like a reducto ad absurdum of economic utility. As others here have said, by any intuitive definition of utility the dead cannot experience it. I assume that utility has something to do with patterns of information processing like we find in the brain. As the brains of the dead do not process information, they cannot gain utility. You also seem to have forgotten a discount rate, although I don’t think it would be 9%.

    • Doug S.

      Are you really indifferent between the world coming to an end five seconds after you die and the world not coming to an end five seconds after you die?

      • John

        I can’t answer for Dre, but personally, while I’m not currently indifferent between your two scenarios, I can say with near certainty that, after I die, I will be.

    • Jess Riedel

      To join Doug S. and add another counter-example:

      Do you think it unreasonable that someone prefer the real world to an indistinguishable simulation which would lead to identical brain experiences?

      • Dre

        In reply to Doug’s comment, I agree with John. I can currently experience utility at the low chance that the world will end and at lowering that chance. I cannot experience disutility at the time after my death. I can currently have preferences about future states of the universe, but I cannot have any utility after I’m dead.

        Jess, we could (for some values of could) currently be living in a handful of ‘fake’ worlds (simulation, Cartesian evil demon, solipsistic hallucination). As long as we cannot tell the difference, we cannot have different utilities in the two situations. I say this as a physicalist, if they are absolutely indistinguishable (to us) they are identical (to us). I can (do) value living in a real universe and would not willingly enter a simulated universe (in general). This is a statement about my current preferences over future states, not preferences I will have in the future after I am gone.
        Or a different interpretation of Jess’s comment (I don’t know which is correct); if someone forces my brain patterns into some state (say the state it is in now), at that time I will be experiencing the same utility that I am now. Again, I say this as a physicalist; there is no spirit floating above my mind checking my utility function. I currently do not value that state as highly as the free state, but that is a statement about my current state, not the future state.
        That was kind of rambling, sorry, I guess my point is that I can currently have preferences over the probabilities for the future, but cannot experience utility at that future time if I am dead.

  • RickRussellTX

    First time visitor, came over from Karl Smith’s _Modeled Behavior_…

    “Our unthinkingly repugnance at being controlled by the dead, and our eagerness to grab their resources, prevents us from enforcing long-term win-win deals.”

    …”grab their resources”…

    Is there any society or legal system that allows the dead to own capital, or have a controlling interest in a business, or… ???

    How would that work? I can’t really envision a legal construct that would make this possible.

    I mean, you can endow living agents with your ownership rights, but that’s just plain old inheritance, and it seems like you’re talking about some other kind of resource ownership by the dead?

    Again, what sort of construct do you have in mind?


  • This story seems wrong to me, but I can’t work out exactly why. Here are the intuition breakers.

    1) If we think Cobb-Douglas represents a reasonable approximation of the economy wide production function then payments to risk-free capital are a small fraction of the total. How can trusts come to dominate in this environment?

    2) Won’t payment have to be made to an increasing number of descendant working for an increasing wage and being funded by lower interest rates.

    3) At each point in time there would be lower consumption levels further raising the price of ancestor worship.

    4) Perhaps this is subsumed in the effect above but it seems I would have to be paid enough to compensate me for my leisure but also my forgone work which could have led to the establishment of a larger trust to ensure my wishes are carried out.

    I think the way this works out is that in a world where land commanded such high payments the returns to capital would be low and sharply increasing savings would quickly drive the interest rate down.

    • There is no requirement that trusts investments be risk-free. Yes interest rates would fall eventually; that is the point.

      • But lets follow that conclusion through. Lower interest rates mean that ancestors have less leverage over descendants. Thus, there is a strong self-tempering mechanism here.

        It would be like saying given the current price the market for X would be so much bigger if we could expand the number of customers. However, if the number of customers expands then the price will rise and that will choke back demand.

        So, we are thinking of much smaller effects than a world dominated by ancestor trusts.

  • Vadim

    The rule against perpetuities has little to do moral repugnance at dead hand control and everything to do with economic efficiency. Dead hand control destroys efficiency by restraining fee alienability of property. Property encumbered by dead hand cannot be freely transferred and thus put to its most productive uses.

  • Proper Dave


    You are making a big assertion here. The trusts will not transfer the trillions “from the past”. It will in effect only concentrate future wealth into the trusts that would have otherwise existed no?

    Ok so you say that it will introduce an “efficiency” by lowering interest rates. But cannot this also be a distortion, a savings glut produced by the trusts, with money chasing increasing crap investments?

    I think this scenario sounds very familiar…

  • Douglas Knight

    Can trusts achieve the observed risk-free rate over the long term? Franklin’s trusts only managed their moderate returns by using donated labor. Effectively, he instructed his worshipers to give to Boston and Philadelphia.

  • tom

    1. Don’t you really have a perfect as the enemy of the good problem? The rule against perpetuities and its variants may represent a balancing that gives trustors control for as long as you could hope a society in the future would allow it. If trusts were unlimited and if they grew even at rates much lower than your guess, they would be targetted with punitive taxation as Vladimir mentions above. How to fund health care? I know! That dead rich guy has a lot of money while poor people are going without Tamoxifin and Minoxidil!

    2. Your dead hand returns seem to be based on no taxation and (since you go back to 3000 BC) no regime change/confiscation, which wasn’t true for the living or the dead. England is probably the only example that comes close to not having a regime change in recent history, and I bet that if you looked at taxation on living English people throughout the past thousand years it would at times have been extraordinarily high and would have eaten up your dead guys’ principal.

    3. You ask “What else changed?” Over many generations, living rich people would have stayed organized to defend the interests of dead rich people over the shorter-term interests of the living rich, in service of their goal of having their own dead hands rule in the future. So I’d say you would need an entire–and powerful–class of wealthy people to stay in control of the laws and to be ruling for the benefit not just of themselves but of others like them in the past and future. That starts to sound like lots of conspiracy theories with the Illuminati, the Jews, the Pope, the Queen, and Henry Kissinger.

    4. How is your idea of trusts different from primogeniture/royal succession writ broad? The Queen still owns lots and lots of English land; the Vatican too. Are they good evidence for your ideas? I think they are not because they have both required fresh ‘donations’ beyond income on existing assets.

  • Vilhelm S

    You seem to claim that allowing long-term trusts would lead to win-win deals with the past, but I can’t quite see how that follows.

    Usually, enforced contracts increase efficiency because if two parties spot a win-win deal, they are able to commit to it. Conversely they will not commit unless the deal is win-win, since it would not be in the interests of at least one of them. So the efficiency of contracts depends on both parties having veto power.

    But your scenario is different: a change of laws to recognize trusts amounts to simply taking a bunch of stuff (all assets in the year 2200) and reallocating them from one party (the people of 2200) to another party (the people of 2010). The people of 2200 are not consenting to this, because they are not here now. Why should we think that such a reallocation would be a Pareto improvement?

  • Psychohistorian

    Let me tell you a story. Fifteen thousand years ago, there was a large tribe of people whose sole religion, their one true passion, was to see that, in fifteen thousand years, Robin Hanson would give me all of his money and property.

    Here’s the question: whether they never existed, or whether they’re just all dead, what difference should that make in RH’s decision? His actions cannot provide them with direct satisfaction, and they’ll never know what he did, but he would be fulfilling their one great aspiration. Even if giving up all his property distracts him from his effort to continuously breed so as to satisfy the wants of the non-existent, it should still be a net win.

  • ad

    By 1800 early trusts grew a billion-fold, and trusts dominate the economy.

    The trusts assets are quietly leached away by the trustees. Does this remind anyone of the Anthony Trollope novella “The Warden”?

    And Richard Dawkins pointed out in The God Delusion that his college at Cambridge was originally founded mainly to pray for the soul of its founder, Bishop Wycome of Winchester in 1379. Originally it had ten chaplains who produced a constant stream of prayers for him. Now there is one chaplain. And two prayers a year.

    • For those curious:

      > “As recently as 1903, Pope Pius X was still able to tabulate the number of days’ remission from purgatory that each rank in the hierarchy was entitled to grant: cardinals two hundred days, archbishops a hundred days, bishops a mere fifty days. By his time, however, indulgences were no longer sold directly for money. Even in the Middle Ages, money was not the only currency in which you could buy parole from purgatory. You could pay in prayers too, either your own before death or the prayers of others on your behalf, after your death. And money could buy prayers. If you were rich, you could lay down provision for your soul in perpetuity. My own Oxford College, New College, was founded in 1379 (it was new then) by one of that century’s great philanthropists, William of Wykeham, Bishop of Winchester. A medieval bishop could become the Bill Gates of the age, controlling the equivalent of the information highway (to God), and amassing huge riches. His diocese was exceptionally large, and Wykeham used his wealth and influence to found two great educational establishments, one in Winchester and one in Oxford. Education was important to Wykeham, but, in the words of the official New College history, published in 1979 to mark the sixth centenary, the fundamental purpose of the college was ‘as a great chantry to make intercession for the repose of his soul. He provided for the service of the chapel by ten chaplains, three clerks and sixteen choristers, and he ordered that they alone were to be retained if the college’s income failed.’ Wykeham left New College in the hands of the Fellowship, a self-electing body which has been continuously in existence like a single organism for more than six hundred years. Presumably he trusted us to continue to pray for his soul through the centuries.
      > Today the college has only one chaplain* and no clerks, and the steady century-by-century torrent of prayers for Wykeham in purgatory has dwindled to a trickle of two prayers per year. The choristers alone go from strength to strength and their music is, indeed, magical. Even I feel a twinge of guilt, as a member of that Fellowship, for a trust betrayed. In the understanding of his own time, Wykeham was doing the equivalent of a rich man today making a large down payment to a cryogenics company which guarantees to freeze your body and keep it insulated from earthquakes, civil disorder, nuclear war and other hazards, until some future time when medical science has learned how to unfreeze it and cure whatever disease it was dying of. Are we later Fellows of New College reneging on a contract with our Founder? If so, we are in good company. Hundreds of medieval benefactors died trusting that their heirs, well paid to do so, would pray for them in purgatory. I can’t help wondering what proportion of Europe’s medieval treasures of art and architecture started out as down payments on eternity, in trusts now betrayed.”

      The cryonics comparison is disquieting; it’s one thing when we’re ripping off those stupid gullible theists…

      • Alex Mackenzie

        Personally,, if I signed up for Cryonics, and then future generations discovered with certainty that it was impossible to bring me back to life (my brain had degraded enough that sufficient information wasn’t available, or maybe they discover that souls exist or something), I would consider it entirely reasonable for them to dispose of my body and turn the resources towards something else.

        The “with certainty” part makes the comparison slightly harder, since while we haven’t found any evidence to support the idea that an afterlife exists, we haven’t found any evidence disproving it either…
        In this case though, I get the impression that the modern Catholic Church most likely no longer supports the idea that prayers can reduce time in purgatory, which could be construed as a “discovery” of new “evidence” that prayers no longer reduce time in purgatory.

  • Tracy W

    So you are saying that the British lawyers and judges who developed the law against perpetuities were merely acting out of “unthinking repugnance” and a desire to steal the dead’s resources? A brave claim to make, that other people are not merely being irrational but unthinking.

    It may not be *obvious* that the dead will persistently make the wrong trade-off between flexibility and putting their preferences into trusts, but plenty of non-obvious things are true (eg refrigerators manage to cool things). If the experience of a number of lawyers and judges over a massive variety of trial cases is that old trusts keep causing problems by being inflexibile when asset use needs to change, then a rule against perpetuaties is not unthinking repugnance. It might still be wrong, but my Bayesian priors are with the British common law system on this point. The prosperity of the UK and its offshoots (USA, Canada, Australia, NZ) doesn’t match with a hypothesis that the English system was being run by fools.

  • Tim Tyler

    Re: “Many folks would be willing to create trusts that accumulated funds long after their death and then paid distant descendants (perhaps indirectly) to do things like remember their ancestor’s name, pray to his gods, etc.”

    Which folks are those? Such a policy makes little sense to me. Why not just give the resources to your direct descendants – as most biological systems who contribute resources to future generations do?

  • eddie

    You can’t contract with people that will live in the future.

    What you can do is decide what resources future people will have by deciding how much you will consume today versus saving or investing. Whatever you don’t consume before you die will become someone else’s.

    Robin supposes that there are win-win deals to be made between the generations, if only the future could be committed to agreeing to the present’s desires. “I won’t chop down the forest and use it to make fires to keep me warm; instead, I’ll leave the trees for your own use after I die… but only if you promise to cut a few of them down and use them to build totem poles with my face on them.” But this isn’t a win-win deal; it’s not a deal at all. The future doesn’t get to reject the offer or negotiate on the price. The present does whatever they want, and the future gets what they get.

    That means we can’t take advantage of markets and price discovery mechanisms to determine what the efficient trades are. The best we can do is to make those trades in which the resources donated to the future are very large and the costs imposed on the future are very small, so as to ensure that the trade is actually beneficial to the future. The limit case here, of course, is intergenerational altruism, where resources are donated to the future for free. This happens all the time. But suppose we’d like to increase this on the margin? Can the future “offer” something to the present in order to find more win-win “deals”?

    Would paying people in the future to carry out the wishes of the present increase the amount of donation from the present to the future? Will you get more donations to a fund that says “Save our grandchildren and have your name carved on a monument” than one that just says “Save our grandchildren”? And if so, do we need stronger inter-generational commitment mechanisms to enable those win-win trades?

    I’m inclined to think that the amount of gains to be made here is small, at best, and might even be negative. First off, I think the value to the present of “leave a bunch of money to my descendents” is much, much greater than the value to the present of “have my descendents remember my name” (or worship my god, or be vegetarian, or structure their society according to the dictates of my favorite socio-political theory). In other words, I doubt there’s a lot of win-win trades being left on the table due to lack of enforcement mechanisms, at least relative to the size of the altruistic trades which require no such mechanisms. Second, I think the existing enforcement mechanisms we already have in place do well to enforce those trades where the cost to the future is small (e.g. erecting a monument, writing someone’s name in a book someplace) while ignoring those that would be very costly (e.g. holding on to outdated and obviously erroneous beliefs). Since the present is very, very likely to have erroneous estimates of the cost to the future of their demands, this selective abrogation of the “terms” of the “contract” by the future actually serves to improve efficiency, not reduce it.

    I suspect.

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  • casebash

    There seems to be some confusion here between utility and cash. Let’s suppose you’d be willing to donate one ancient monetary unit towards a compounding charity in 3000BC if we agree to perform actions in the distant future where you knowing that these actions will be performed give you one utility at the time you create the fund. If it could compound as claimed (imagine no-one stole the money), then we’d still come out ahead even if it took an absurdly large amount of money to produce that one utility.

    The problem is that utility doesn’t compound. One utility now is the same as one utility later. Any future interest deductions come from the odds being that you won’t actually receive the one utility later, say if you die or the company goes out of business.

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