We Don’t Donate To The Distant Future; Do We Care?

We Don’t Donate To The Distant Future; Do We Care? Robin Hanson George Mason University

Global Warming Discount Debate • Economists: • Use market interest rates to discount future • Summarizes billions of choices trading stuff now for stuff later • At those rates, distant future hardly matter • Moral philosophers: • Say morality requires zero discount of future • Many say agree, but matching acts rarer

Ben Franklin’s 200 year gift • Most famous of US, Poor Richard’s Almanac • 1785 French satire mocked US optimism: “Fortunate Richard” will left $ to pay in 500yr • Franklin left £1000 ea. to Philly, Boston Died 1790, funds grew, in 1990 paid 2.3,5M$, x 35, 76 inflation-adjusted gains 1.8, 2.2%/yr return, below market rates • No known copy-cats – why, if we care?

Supply & Demand Of Investment P Demand Supply = projects could invest in = folks willing to save interest rate Q amount invested

Interest Rates Components • Inflation – After correct, is “real” interest • Default Risk – Stolen, taxed, not repaid • Existential Risk – No one is there • Risk-Adjust – Want $ more in bad times • Increasing Income – $ helps less if richer • Discount Rate – care less for future folk • Care less as future creatures differ more

Interest Rate History Land rent, secured loans: • Sumer/Babylon 20-25% 3000-1900BC, 10-25% 1900-700BC, 16-20% 600BC • Greece 9-10% 600-200BC • Roman Egypt 9-12% 0-300AD • Ottoman Empire 10-20% 600AD • South India 15%, 900AD, >10%,1540 • England, Flanders, France, Germany, Italy 9.5-11%, 1200-1350 • England 5-6%, 1400-1650, 4-5% 1650-1850, 2-4% 1850-2000

Investment Security • Wealth buildups long a tempting target • At 5%: 1.05500 = 4x109, 1.055000 = 10105 ! • E.g., Jewish Jubilee institutionalized grab • But England property secure since 1200 • Risk there was kids refuse to save • Law prevents trusts instructed to save! • Distaste for “dead hands” control living • Discourages trade of helping future for ancestor respect/remember

Evolved Discount Rates • Any sexual species that can save • ½ per generation (~2.5%/yr) • Nomadic forager humans (~4M-10Kya) • Little physical capital could accumulate • Norms hate dominance, material inequalities • Norms to help, but for complex context • Change since farming • More: accept, inequality, secure property • Longer time horizon?

If Care, Then Help • If many people act morally • And if many of them believe: • Moral people care nearly-equally about distant-future folks (all else equal) • If care, then help if (utility) cost low, help big • Investing now to give later helps lots • Investments don’t hurt others in meanwhile • Then many will donate to future folk No donors => no one acts moral and think future counts same?

Cost To Help Falls (e.g., 2%/yr)

No-Donate Excuses • Lack idea, law, infrastructure; money offends • Franklin showed how • We help in other ways, e.g., clean planet • Why not both? If not other, really think more donate? • Funds might get stolen • Even so, good mean return, gains to thief count • They might be richer than us • All of them? Sure? Huge lever helps even rich • Eventually old funds dominate, lower interest • Yes this sets limit, but why so far from limit?

Other Ways To Help • Kind act that influences future insufficient • Strong temptation to wishful thinking • Aid someone today, they might aid future • But they usually don’t help this much • Imagine you wanted to help someone on Earth today, but knew little about them • Cash is robust answer • We know little about distant descendants

Also Problem For Economists • Economic welfare ≠ moral good • Time-translate invariant rel. wt. => exp(±r*t) • Infer what folks want from their acts • What they want can include morality • Scale to cash, add to get total cash equiv. • Max welfare even if not win-win in each case • Approx. way to find total win-win deals • Positive interest => help past is huge gain • Can satisfy their prefs even if they dead • Sign of fail to enforce deals across time

Ancestor Whorship?

An Instructive Analogy • Big fraction of new college students want to major in international business, development, or politics, “to help poor” • Give less time to charities than in classes • Give less value in $ than in time • Most $ to governments, projects, vs. cash directly to poor Humans built to fake far concern while really develop skills, network, keep control, be seen?

FAR Two Minds • Near: few, detail • Far: many, sparse • Categorize, analogize • See Liberman & Trope Science 21Nov ‘08 • “Abstract/concrete”; distinct brain hardware? • Differing emphasis of decide vs. impress • Far more for impress, & these decisions: • Talk, lead, control, moral/norm NEAR

Near Far here, now, me, us; pictures; sex, temptation; means; careful analysis; uncertain, theory/trend-breaking atypical likely real local events; concrete, context-dependent, detailed, incidental features; feasible safe acts; secondary local practical concerns; socially close folks with unstable traits in small groups; follower, under power; there, then, them; words; love, self-control, endurance; ends; creative analogy; over-confident; theory/trend-following typical unlikely unreal global events; abstract, schematic, context-free, core, coarse, goal-related features; desirable risk-taking acts, central global symbolic ideal moral concerns; socially distant folks with stable traits in big groups; leader, in power;

Summary • Market interest rates give huge leverage to help distant future • If we cared in the slightest, we’d donate • We think we care, but we don’t donate • Franklin did, but to affirm US optimism • Explain?: like Africa, future in far mode • Feel moral, think we care • Diverted to talk, network, control, large orgs. • Away from give cash directly to individuals

We Don’t Donate To The Distant Future; Do We Care?