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Rain comments on Tallinn-Evans $125,000 Singularity Challenge - Less Wrong
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I just put in 2700 USD, the current balance of my bank account, and I'll find some way to put in more by the end of the challenge.
I just put in another 850 USD.
Not that I don't think your donation is admirable, but I'm curious how you are able to donate your entire bank account without running the risk of not being able to respond to a black-swan event appropriately and your future well-being and ability to donate to SIAI being compromised?
Do you think it's rational in general for people to donate all their savings to the SIAI?
I have a high limit credit card which I pay off every month, no other form of debt, no expenses until my next paycheck, a very secure, well-paying job with good health insurance, significant savings in the form of stocks and bonds, and several family members and friends who would be willing to help me in the event of some catastrophe.
I prepare and structure my life such that I can take action without fear. I attribute most of this to reading the book Your Money Or Your Life while I was in college. My only regret is that I can afford to give more, but fail to have the cash on hand due to lifestyle expenditures and saving for my own personal future.
Thanks for the reply. Bravo on structuring your life the way you have!
Have a reliable source of income and an overdraft available.
I don't think those two alone are sufficient for it to be rational.
I work for a mid-sized (in the thousands of employees), very successful, privately held company with a long, stable history, and I feel very secure in my job. I would say I have a reliable source of income, but even so, I wouldn't estimate the probability of finding myself suddenly and unexpectedly out of work in the next year at less than 1%, and if somebody has school loans, a mortgage, etc., then in that situation, it seems more rational to have at least enough cash to stay afloat for a few months or so (or have stocks, etc., that could be sold if necessary) while finding a new job.
They are sufficient to make the "entire bank account" factor irrelevant and the important consideration the $2,700 as an absolute figure. "Zero" is no longer an absolute cutoff and instead a point at which costs potentially increase.
Okay, let's think this through with a particular case.
Assume only your two factors: John has a reliable source of income and overdraft protection on an account. Since you assert that those two factors are sufficient, we can suppose John doesn't have any line of credit, doesn't own anything valuable that could be converted to cash, doesn't know anybody that could give him a loan or a job, etc
John donates all his savings, and loses his job the next day. He has overdraft protection on his empty bank account, which will save him from some fees when he starts bouncing checks, but the overdraft protection will expire pretty quickly once checks start bouncing.
Things will spiral out of control quickly unless John is able to get another source of income sufficient to cover his recurring expenses or there is some other compensating factor than the two you mentioned (which shows they are not sufficient). Or do you think he's doing okay a month later when the overdraft protection is no longer in effect, he has tons of bills due, needs to pay his rent, still hasn't found a job, has run out of food, etc.? And if he hasn't found work within a few months more -- which is quite possible -- he'll be evicted from his home and his credit will be ruined from not having paid any of his bills for several months.
ETA: the point isn't that all of that will happen or is even likely to happen, but that a bank account represents some amount of time that the person can stay afloat while they're looking for work. It greatly increases the likelihood that they will find a new source of income before they hit the catastrophe point of being evicted and having their credit ruined.
It looks to me like you're ignoring the "reliable" bit in "reliable source of income".
There's no such thing as "reliable" at that level.
No, I'm not. I'm assuming that even if one has a reliable source of income, one still might lose that source of income. Maybe you're interpreting 'reliable' as 'certain' or something very close to that.
To give some numbers, I would consider a source for which there is a 1% to 3% chance of losing it within 1 year as a reliable source, and my point remains that in that situation, with no other compensating factors than overdraft protection on a bank account, it is not rational to donate all your savings to charity.
And so John bets his current lifestyle that he won't lose his job. That bet looks like:
97%: SIAI gets 2700 dollars. (27 utils)
3%: SIAI gets 2700 dollars, hardship for John. (neg 300 utils)
The bet you're recommending is:
97%: Savings continue to grow (1 util)
3%: Savings wiped out to prevent hardship for John. (0 util)
The first bet comes out at E(util): 17.19, the second at 0.97 utils.
You need to be very very risk-averse for the second option to be preferable. So risk-averse that I would not consider you rational (foregoing 16.22 utils to avoid a 3% chance of neg 300 utils?)
Er, you've implied the level of risk aversion by assigning utils, so of course it would be irrational to act more risk averse than John actually is, but it's a weird way to phrase it. If John were more risk averse, the utils for hardship might be considerably lower.
The question, of course comes down to what utils are reasonable to assign. I too could choose numbers that would make either option look better than the other.
There's also a wide range of available options between the two extremes you consider, and risk aversion should make one of them preferable..
Yeah; I would think that generic health problems alone would be in that area of probability.
Wow. I'm impressed. This kind of gesture brings back memories of parable that still prompts a surge of positive affect in me, that of the widow donating everything she had (Mark 12:40-44). It also flagrantly violates related hyperbolic exhortation "do not let the left hand know what the right hand is doing". Since that is message that I now dismiss as socially, psychologically and politically naive your public your public declaration seems beneficial. There are half a dozen factors of influence that you just invoked and some of them I can feel operating on myself even now.
/munches popcorn
Bravo! That's hardcore.
Way to pay it forward!
Tammy