Dustin comments on [LINK] Cochrane on Existential Risk - Less Wrong

0 Post author: Salemicus 20 August 2013 10:42PM

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Comment author: gwern 21 August 2013 12:17:57AM *  6 points [-]

Indeed. (Fun for commenters: come up with more. Asteroid impact. Banking system collapse. Massive crop failure from virus or bacteria. Antibiotic resistsance....) If we treat all threats this way, we spend 10 times GDP. It's a interesting case of framing bias. If you worry only about climate, it seems sensible to pay a pretty stiff price to avoid a small uncertain catastrophe. But if you worry about small uncertain catastrophes, you spend all you have and more, and it's not clear that climate is the highest on the list.

This seems like a very strange thing for an economics professor to say.

Suppose we make an isomorphic argument:

"Of course, one can buy insurance against, say, a car crash. Shouldn't we pay a bit more car insurance now, though the best guess is that it's not a worthwhile investment, as insurance against such tail risks? But the problem is, we could buy insurance against our house burning down, homeowner's insurance against being robbed, our iPod breaking, our husband dying (or our wife, or our children, or our pets), travel insurance about our upcoming vacation, insurance against losing our job, catastrophic health insurance, legal liability insurance, longevity insurance... (Commenters, have fun listing others.) But if we treat risks this way, we'll wind up spending 10 times our annual income on insuring against risks! It's an interesting case of framing bias: it may sound rational to insure against a house fire or a car crash or an income-earner dying unexpectedly, you spend all you have and more, so it's not clear that car crash insurance is highest on the list."

Doesn't sound quite so clever that time around, does it? But all I did was take the framework of his argument: "if one invests in insurance against X, then because there are also risks Y, Z, A, B, C, which are equally rational to invest in, one will also invest in risks Y...C, and if one invested against all those risks, one will wind up broke; any investment where one winds up broke is a bad investment; QED, investing in insurance against X is a bad investment." and substitute in different, uncontroversial, forms of insurance and risk.

What makes the difference? Why does his framing seem so different from my framing?

Well, it could be that the argument is fallacious in equating risks. Maybe banking system collapse has a different risk from crop collapse which has a different risk from asteroid impact, and really, we don't care about some of them and so we would not invest in those, leaving us not bankrupt but optimally insured. In which case his argument boils down to 'we should invest in climate change protection iff it's the investment which highest marginal returns', which is boringly obvious and not insightful at all because it means that all we need to discuss is the object-level discussion about where climate change belongs on "the list", and there's not a meta-level objection to investing against existential risks at all as the post is being presented as.

Comment author: Dustin 21 August 2013 12:40:33AM *  0 points [-]

(admittedly, I just skimmed the blog post, so I can be easily convinced my tentative position here is wrong)

I'm not sure I see any difference between your proposed isomorphic argument and his argument.

Assuming our level of certainty about risks we can insure against is the same as our level of (un)certainty about existential risks, and assuming the "spending 10 times our annual income" is accurate for both...the arguments sound exactly as "clever" as each other.

I also am not sure I agree with the "boringly obvious and not insightful at all" part. Or rather, I agree that it should be boringly obvious, but given our current obsession with climate change, is it boringly obvious to most people? Or rather, I suppose, the real question is do most people need the question phrased to them in this way to see it?

I guess what I'm saying is that it doesn't seem implausible to me is that if you asked a representative sample of people if climate change protection was important to invest in they would say yes and vote for that. And then if you made the boringly obvious argument about determining where it belongs on the list of important things, they'd also say yes and vote for that.

Comment author: gwern 21 August 2013 01:14:38AM *  5 points [-]

I'm not sure I see any difference between your proposed isomorphic argument and his argument.

Good, then my isomorphism succeeded. Typically, people try to deny that the underlying logic is the same.

the arguments sound exactly as "clever" as each other.

They do? So if you agree that things like car or health or house insurance are irrational, did you run out and cancel every form of insurance you have and advise your family and friends to cancel their insurance too?

I guess what I'm saying is that it doesn't seem implausible to me is that if you asked a representative sample of people if climate change protection was important to invest in they would say yes and vote for that. And then if you made the boringly obvious argument about determining where it belongs on the list of important things, they'd also say yes and vote for that.

But note that thinking climate change is a big enough risk to invest against has nothing at all to do with his little argument about 'oh there so so many risks what are we to do we can't consume insurance against them all'. Pointing out that there are a lot of options cannot be an argument against picking a subset of options; here's another version: "this restaurant offers 20 forms of cheesecake for dessert, but if I ordered a slice of 1 then why not order all 20, but then, why I would run out of cash and be arrested and get fat too! So it seems rational to not order any cheesecake at all." Why not just order 1 or 2 of the slices you like best... Arguing about whether you like the strawberry cheesecake better than the chocolate is a completely different argument which has nothing to do with there being 20 possible slices rather than, say, 5.

Comment author: Dustin 21 August 2013 09:34:56PM *  0 points [-]

Good, then my isomorphism succeeded. Typically, people try to deny that the underlying logic is the same. Not in the way I think you think. They do? So if you agree that things like car or health or house insurance are irrational, did you run out and cancel every form of insurance you have and advise your family and friends to cancel their insurance too?

No, because we can quantify the risks and costs of those things and make good decisions about their worth.

In other words, if I assume that you intended that, for the sake of your argument, that we have the same amount of knowledge about insurance as we do about these existential risks, then the two arguments seem exactly as clever as each other: neither are terribly clever because they both point out that we need more information and well...duh. (However, see my argument about just how obvious "duh" things actually are.)

If I don't assume that you intended that, for the sake of your isomorphism, that we have the same amount of knowledge about insurance as we do about these existential risks, then the two arguments aren't so isomorphic.

But note that thinking climate change is a big enough risk to invest against has nothing at all to do with his little argument about 'oh there so so many risks what are we to do we can't consume insurance against them all'.

If this is the argument Cochrane is endorsing, I don't support it, but that's not exactly what I got out of his post. Lumifer's reading is closer to what I got.

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