Dagon comments on Open thread, Jul. 18 - Jul. 24, 2016 - Less Wrong

3 Post author: MrMind 18 July 2016 07:17AM

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Comment author: AstraSequi 18 July 2016 06:05:42PM *  1 point [-]

I have some questions on discounting. There are a lot, so I'm fine with comments that don't answer everything (although I'd appreciate it if they do!) I'm also interested in recommendations for a detailed intuitive discussion on discounting, ala EY on Bayes' Theorem.

  • Why do people focus on hyperbolic and exponential? Aren't there other options?
  • Is the primary difference between them the time consistency?
  • Are any types of non-exponential discounting time-consistent?
  • What would it mean to be an exponential discounter? Is it achievable, and if so how?
  • What about different values for the exponent? Is there any way to distinguish between them? What would affect the choice?
  • Does it make sense to have different discounting functions in different circumstances?
  • Why should we discount in the first place?

On a personal level, my intuition is not to discount at all, i.e. my happiness in 50 years is worth exactly the same as my happiness in the present. I'll take $50 right now over $60 next year because I'm accounting for the possibility that I won't receive it, and because I won't have to plan for receiving it either. But if the choice is between receiving it in the mail tomorrow or in 50 years (assuming it's adjusted for inflation, I believe I'm equally likely to receive it in both cases, I don't need the money to survive, there are no opportunity costs, etc), then I don't see much of a difference.

  • Is this irrational?
  • Or is the purpose of discounting to reflect the fact that those assumptions I made won't generally hold?
  • The strongest counterargument I can think of is that I might die and not be able to receive the benefits. My response is that if I die I won't be around to care (anthropic principle). Does that make sense? (The discussions I've seen seem to assume that the person will be alive at both timepoints in any case, so it's also possible this should just be put with the other assumptions.)
  • If given the choice between something bad happening now and in 10 years, I'd rather go through it now (assume there are no permanent effects, I'll be equally prepared, I'll forget about the choice so anticipation doesn't play a role, etc). Does that mean I'm "negative discounting"? Is that irrational?
  • I find that increasing the length of time I anticipate something (like buying a book I really want, and then deliberately not reading it for a year) usually increases the amount of happiness I can get from it. Is that a common experience? Could that explain any of my preferences?
Comment author: Dagon 18 July 2016 11:24:30PM 2 points [-]

my intuition is not to discount at all, i.e. my happiness in 50 years is worth exactly the same as my happiness in the present.

If you separate utility discount into uncertainty (which isn't actually a discount of a world state, it's weighting across world-states and should be separately calculated by any rational agent anyway) and time preference, it's pretty reasonable to have no utility discount rate.

It's also reasonable to discount a bit based on diffusion of identity. The thing that calls itself me next year is slightly less me than the thing that calls itself me next week. I do, in fact, care more about near-future me than about far-future me ,in the same way that I care a bit more about my brother than I do about a stranger in a faraway land. Somewhat counteracting this is that I expect further-future me to be smarter and more self aware, so his desires are probably better, in some sense. Depending on your theory of ego value, you can justify a relatively steep discount rate or a negative one.

Hyperbolic discounting is still irrational, as it's self-inconsistent.

Comment author: AstraSequi 19 July 2016 05:45:53AM 1 point [-]

Thanks for that – the point that I’m separating out uncertainty helped clarify some things about how I’m thinking of this.

So is time inconsistency the only way that a discount function can be self-inconsistent? Is there any reason other than self-inconsistency that we could call a discount function irrational?

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