Note: I am cross-posting this GiveWell Blog post, after consulting a couple of community members, because it is relevant to many topics discussed on Less Wrong, particularly efficient charity/optimal philanthropy and Pascal's Mugging. The post includes a proposed "solution" to the dilemma posed by Pascal's Mugging that has not been proposed before as far as I know. It is longer than usual for a Less Wrong post, so I have put everything but the summary below the fold. Also, note that I use the term "expected value" because it is more generic than "expected utility"; the arguments here pertain to estimating the expected value of any quantity, not just utility.
While some people feel that GiveWell puts too much emphasis on the measurable and quantifiable, there are others who go further than we do in quantification, and justify their giving (or other) decisions based on fully explicit expected-value formulas. The latter group tends to critique us - or at least disagree with us - based on our preference for strong evidence over high apparent "expected value," and based on the heavy role of non-formalized intuition in our decisionmaking. This post is directed at the latter group.
We believe that people in this group are often making a fundamental mistake, one that we have long had intuitive objections to but have recently developed a more formal (though still fairly rough) critique of. The mistake (we believe) is estimating the "expected value" of a donation (or other action) based solely on a fully explicit, quantified formula, many of whose inputs are guesses or very rough estimates. We believe that any estimate along these lines needs to be adjusted using a "Bayesian prior"; that this adjustment can rarely be made (reasonably) using an explicit, formal calculation; and that most attempts to do the latter, even when they seem to be making very conservative downward adjustments to the expected value of an opportunity, are not making nearly large enough downward adjustments to be consistent with the proper Bayesian approach.
This view of ours illustrates why - while we seek to ground our recommendations in relevant facts, calculations and quantifications to the extent possible - every recommendation we make incorporates many different forms of evidence and involves a strong dose of intuition. And we generally prefer to give where we have strong evidence that donations can do a lot of good rather than where we have weak evidence that donations can do far more good - a preference that I believe is inconsistent with the approach of giving based on explicit expected-value formulas (at least those that (a) have significant room for error (b) do not incorporate Bayesian adjustments, which are very rare in these analyses and very difficult to do both formally and reasonably).
The rest of this post will:
- Lay out the "explicit expected value formula" approach to giving, which we oppose, and give examples.
- Give the intuitive objections we've long had to this approach, i.e., ways in which it seems intuitively problematic.
- Give a clean example of how a Bayesian adjustment can be done, and can be an improvement on the "explicit expected value formula" approach.
- Present a versatile formula for making and illustrating Bayesian adjustments that can be applied to charity cost-effectiveness estimates.
- Show how a Bayesian adjustment avoids the Pascal's Mugging problem that those who rely on explicit expected value calculations seem prone to.
- Discuss how one can properly apply Bayesian adjustments in other cases, where less information is available.
- Conclude with the following takeaways:
- Any approach to decision-making that relies only on rough estimates of expected value - and does not incorporate preferences for better-grounded estimates over shakier estimates - is flawed.
- When aiming to maximize expected positive impact, it is not advisable to make giving decisions based fully on explicit formulas. Proper Bayesian adjustments are important and are usually overly difficult to formalize.
- The above point is a general defense of resisting arguments that both (a) seem intuitively problematic (b) have thin evidential support and/or room for significant error.
Not a big deal, but for me your "more" links don't seem to be doing anything. Firefox 12 here.
EDIT: Yup, it's fixed. :)
Thanks for pointing this out. The links now work, though only from the permalink version of the page (not from the list of new posts).