Overcoming Bias

Share this post

How to Not Spend Money

www.overcomingbias.com

Discover more from Overcoming Bias

This is a blog on why we believe and do what we do, why we pretend otherwise, how we might do better, and what our descendants might do, if they don't all die.
Over 11,000 subscribers
Continue reading
Sign in

How to Not Spend Money

David J. Balan
Jan 19, 2007
Share this post

How to Not Spend Money

www.overcomingbias.com
3
Share

Suppose you’re rich, but you’re the kind of rich person who reads Peter Singer; you believe that one person is morally entitled to consume only so much, regardless of how much money they have. Good for you! How should you go about restraining your consumption? Should you look through your budget for expenses that seem particularly wasteful and eliminate those? I say no. The thing to do is simply to give away to charity whatever money you have in excess of what, by your lights, is a justifiable amount to spend on yourself, and then buy whatever bundle of goods makes you happiest subject to the constraint that you have only that amount to spend, just like a person who actually had that amount of money all along would do. If you just look for extravagances to cut, you’re likely to end up spending the savings on something else, and if you don’t you will probably have ended up buying the “wrong” bundle of goods and services.

Share this post

How to Not Spend Money

www.overcomingbias.com
3
Share
3 Comments
Share this discussion

How to Not Spend Money

www.overcomingbias.com
Overcoming Bias Commenter
May 15

H Andersson: you are right, but that just affects your decision about how much you can justify consuming.

Chi: You are right that you might want to have insurance against future income reductions, and there really isn't a market for such insurance (for the standard economist reasons of moral hazard and adverse selection), so you might well want to have some precautionary savings. So setting your money aside and giving it away later on is fine. But there is the danger that you will be tempted to spend it, or that your heirs will try to get their hands on more of it than you wanted them to get and less will go to charity.

Expand full comment
Reply
Share
Overcoming Bias Commenter
May 15

Why not put the money away in savings, and donate the whole well-invested pile at the end of your life (someone with this mindset is *clearly* smarter than the average investor, right?)? If you assume that there are others in the generation before you that took this tack, you less the damage of delaying immediate charity for the poor, and you have money in case your life is threatened or you change your mind.

Expand full comment
Reply
Share
1 more comment...
Top
New
Community

No posts

Ready for more?

© 2023 Robin Hanson
Privacy ∙ Terms ∙ Collection notice
Start WritingGet the app
Substack is the home for great writing