Impatient Idealism

Humans have long lives. We are unusually dependent on our parents when young, and we then slowly gain competence over a lifetime, usually reaching peak productivity in our forties and fifties. Most of the time we are aware of this. For example, we count on our peak earning years by taking out loans as young students, and later saving for retirement. And we prefer leaders at those peak ages.

But when people get idealistic, they tend to forget this. Young idealists often ask me and others what they can do to most help the world. Which is a fine question. But such folks tend to be impatient – they want to know how to most help the world in the next few years, not over their lifetime. So when they consider joining an idealistic project, they focus more on whether the project will succeed than on what skills and contacts they would acquire.

Yet young folks shouldn’t expect to have their biggest influence when young. Yes young folks have higher variance, and so sometimes get very lucky, but they should expect to prepare and learn while young, and then have their biggest influence in their peak years. Why such a short term focus? Especially since idealism should if anything induce a far view. Yes young folks are often short-sighted, but why be more so about altruism than about school, relationships, etc.?

This seems related to the puzzle of why people don’t leverage the power of compound interest to donate to help the future needy, instead of today’s needy. Some argue that the future won’t have any needy, or that helping today’s needy automatically helps future needy, at a rate growing faster than investment rates of return. I’m pretty skeptical about both of these claims.

One plausible explanation is that a habit of extra youthful altruism evolved as a way to signal one’s attractiveness to potential associates. People tend more to form associations when young, associations that they tend more to rely on when old. And potential associates like to see altruism, because it correlates with generosity and cooperation (as near-far theory predicts). But if you save money to help the future needy, or if you invest now in skills useful in future idealistic projects, that is less clearly a signal of altruism, because you might later change your mind and use that money or those skills for other purposes.

So to signal your youthful idealism to potential associates, you must spend the money and time now, even if such spending is less effective toward the idealistic cause. But hey, at least the cause gets something.

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  • Robert Easton

    I do not find this “why people don’t leverage the power of compound interest” issue to be a “puzzle”. Real interest rates have been 0 or worse for four years now. S&P 500 is still where it was in 1999 (and that’s nominal). I see no evidence 90s growth rates are coming back.

    The investment in human capital issue is more interesting (although perhaps just by being harder to measure). What kind of things are you recommending to young people? A lot of things can be done more productively when young than when middle age. Young people have more physical strength and fewer commitments. Productivity for many things may peak young because of the lower commitments. A regular 40 hour a week desk job fits in well with other commitments but that doesn’t mean everything does.

  • Michael Vassar

    I agree with your basic conclusions, but add that your older self, being like other older people, is all but sure to not focus on your chosen cause. If you think that this is because they know more, you should focus on helping them, but if you think that they have different values, you should express your values now. 

    I also think it’s very unlikely that compound interest is a good way to help the distant future.  Most sensible people, IMHO, have long assumed that scientific (and math?) research is the best way to help the distant future, though I don’t think that this is the case currently.

    • I don’t think that this is the case currently

      Because it might bring forth an unsafe AI?

      • dmytryl

        The irony is that the only people deliberately working on unsafe AI is the friendly AI crowd. Apparently the way to work on unsafe AI is to shout that your original dull idea with the friendly variation of impossible magical components that your original dull idea requires is the only way, while everyone else’s approaches (that you are too dull to actually understand) are, by the way of pure sophistry, incredibly dangerous too – after all the dull idea is pure genius and therefore any workable design must follow dull idea, and must require magical impossible component but nobody’s concerned with the safety of magical impossible component.

        Then the supporters – people that do not understand the topic think they have a better clue because they are listening to the ‘right’ person, never mind that the clue is necessary for choosing the ‘right’ person and they have none. (Now this is pure illogic. You can’t defer clue to guru in the same way how you can defer clue to consensus)

      • Michael Vassar

        This is an interesting sounding story about something that might happen.  It also seems that it might happen that when thousands of pages are written on a topic by a large variety of intelligent and in some cases highly credible people, those pages include logic, not just assertions about the greatness of a guru.  

        Is there an argument available supporting your interpretation of the situation Dmytryl, or are you recommending that people don’t need arguments because they can instead defer clue to you?  

      • dmytryl

        Michael Vassar:I’d suggest you consider the majority and larger variety of intelligent people which aren’t exactly on the lookout for something like SI to donate to. There’s failure rate, you know. It also “might happen” that the majority is correct and minority is wrong.

        With regards to the ‘logic’ that is included among assumptions, it’s sophistry via definition of what intelligence is (‘utility maximization’) and subsequent confusion (other people don’t define intelligence this way or have other meaning for utility).

  • Guest

    I invest in my future by drinking a lot of alcohol; this way I can impress important allies with my drinking abilities in the future!

  • Robert Koslover

    Regarding idealism, it typically takes a good number of years of experiencing life as an adult to cause a person to accept the painful reality that he/she is, most probably, not going to be able to change the world in any significant way.  (Now, that may not be true for occasional bright stars, but it is true for most people).

    Regarding compound interest, it seems to me that only works if the economy is growing (since in effect, you are earning interest only by effectively loaning your wealth to others, who then invest it in increasing the actual productivity of the economy, and who pay you back (i.e., the interest you earn) as their investments pay off). For a stagnant (or worse, declining) economy, it seems to me that there is no trivial way to invest your money and have it compound meaningfully (i.e., actually increase in buying power) over time.  People building real-world wealth is essential for real interest to be paid and to compound.  If no real wealth is created, the no real interest can be paid.

    • Most ancient societies had land rent to buy ratios, and rates of return on loans, far above their growth rates.

      • Carl Shulman

        Microfinance and poor-country moneylenders also charge high interest rates. They don’t earn comparably rates of return on their business as a whole. For smaller transaction amounts, the transaction costs make up a larger portion of the deal, and this is priced into interest rates. Also nominal interest rates do not take into account default and expropriation risk (which were traditionally very serious problems).

      • We have good data at least on England, and the rates of land expropriation there were too low to explain the difference between growth and rental interest rates.

      • Robert Koslover

         OK.  1. Your argument makes sense. 2. I accept that I was in mistaken to tie the mere existence of value-generating interest rates to overall economic growth.  I suppose that all one really needs to have a positive rate of return is the existence of an economy and the wisdom to make the right investments.  Now, in regard to the latter, I do think we can agree that accumulating actual wealth via compound interest (on money deposited in a bank, for example) requires that someone, somewhere, generates that real-world wealth.  After all, if everyone on Earth put money into the banks and then went into hibernation for 20 years, and then we all woke up and computed the interest that we had all “earned,” we could probably all agree that we have bigger numbers in our bank accounts than before, but none of us would actually be any richer.

  • dmytryl

    I think a good deal of idealism is just a product of immature narcissism – over-focus on the self and over-reflection, as well as psychological need for validation. People usually grow out of that.

    • Regardless of the psychodynamics, it’s a necessary engine for major social change. Did you know that over 50% of the Bolsheviks in Russia at the time of the October Revolution were 17 or under?

      What I find disconcerting is today’s youth who express their “idealism” by picking the best charity to contribute to.

      • dmytryl

         > Did you know that over 50% of the Bolsheviks in Russia at the time of the October Revolution were 17 or under?


        >What I find disconcerting is today’s youth who express their “idealism” by picking the best charity to contribute to.

        What do you mean? Youth joining peace corps? That’s good and probably helps, but how common it is and is it, actually, idealism?

      • Bguerrero

         “Did you know that over 50% of the Bolsheviks in Russia at the time of the October Revolution were 17 or under?”

        That explains a great deal.

      • Julia Wise

        How would you prefer they express their idealism, or even their “idealism”?

  • And potential associates like to see altruism, because it correlates with generosity and cooperation (as near-far theory predicts).

    I’m embarrassed to say I don’t see how near-far theory predicts that altruism correlates with generosity and cooperation. 

  • ryancarey

    Good post. Two reasons to be hastily altruistic are:
    1. precomitting to act on your values by not giving yourself a fall-back plan
    2. the haste consideration – – which I would define as the observed radically high rate of return on investment of altruistic time. (The invested time is returned not to you, but through others standing up and assisting to perform your role)

    • The high rate of return claimed via converting others to your altruism is much like the high rate claimed in pyramid schemes – hard to believe in both cases.

      • John Maxwell IV

        If the expected number of people that a multi-level marketer converted to their scheme was less than one, we wouldn’t have heard of multi-level marketing.

        Probably a good way to think about both topics is there’s some portion of the population that’s receptive to conversion attempts, but unless you have contacts in that demographic or you have a way to form such contacts, you won’t have much luck.  (Converting others to effective altruism is also a bit easier, because you can do things that are more like mass marketing, e.g. leaving blog comments.)

  • Ben

    I am confused what criteria you would use to decide to donate a later time , instead of simply repeating the present calculation to leverage compound interest. Does “later” ever come? 

    • If you think of your personal monitoring as a complement to your donations, you might want it to be spend before you die, so you can personally monitor your charities. Else you might instruct your charity fund to grow until it seems that worthy causes are about to run out, or investments no longer grow.

  • John Maxwell IV

    Young people have a pretty near-term focus in general.  Why do you think so many college students take out large loans for degrees in impractical fields?

    Also, years of peak productivity depend heavily on what occupation you’re in, if I recall correctly.

    • Young people have a pretty near-term focus in general.

      Interesting point, as it is in tension with youthful idealism. Youth are impulsive. But in their idealism, they also seem more inclined than older people to far-mode. This produces a modal mismatch (  ) between the timescale and the granularity of their thinking.

      Young people’s movements (Occupy?) may thus represent the hard-to-find Demagogism of the left. (  )

  • Ongd00

    Which of the following has a greater impact on your quality of life: graduating from Harvard at 20 or winning a Nobel Prize at 70?

    Altruism is a lot more rewarding if you can see its benefits immediately. Also, these early benefits can influence life trajectory in ways other than signalling (eg by reinforcing commitment to a cause).

  • Cambias

    Isn’t this kind of long-term benefit thinking exactly what philanthropists like Carnegie, Ford, Rockefeller and Hughes were trying to do with their mega-foundations? In other words, it has been tried, and with great success.

    • Spending the interest on a large endowment on charity is different than growing the investment.

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  • Petar Subotic

    Impatience comes from a realization that the current state of affairs does not reflect a society that is remotely sustainable nor does it offer hope for realignment; it seems to get worse every year. Primordial needs trump all others, especially the need for a long term strategy. 

    Don’t consider our resistance to playing gambits and establishing credibility / influence as a flawed tactic, we simply feel such delays are too costly. 

    If older generations were a bit more idealistic, more impatient, more instinctive in their time, perhaps we wouldn’t have so much to worry about.

  • Dsadsa

    There’s also the possibility that you spend 20-30 years doing things you don’t like thinking it will eventually be something you like but then turn out to be wrong about it all and never getting the reward.

    Also, 50 year old you might be a sell out, especially if he spent 30 years practicing selling out everyday.

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  • Alex Flint

    If you fear that your values will drift as you get older then you should act sooner even if you could, in principle, do more good later. In practice value drift seems very common indeed. 

    Acting now may also decrease value drift as you reinforce your values with actions.

  • I’m glad George Lucas and Bill Gates and Warren Buffet took your advice. OH WAIT.

  • Drewfus

    I would like to see old people given the option to “leverage the power of compound interest to donate to help the future needy” via a federal government scheme that offers these people a 100% subsidized trust in their name and commencing at $50,000 (or double that in the case of a couple). The cost? Forgoing Medicare entitlements for the remainder of their lives.

  • VV

    Are you forgetting discounting, in particular hyperbolic discounting?

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