Thanks a lot to Scott for working with us on this! I've been a longtime fan of the concept of impact certs (I think my friends are fed up hearing about me pitch them on "THE solution to public goods funding"); it's a huge privilege to be able to help kickstart this ecosystem. Let me know if you have any questions about the Manifund platform~
Pitch me. I am very interested to know why this is seen as the solution, since to me it seems that we have a lot of evidence already that monetising charities and turning them into businesses means the donations/money tends to flow towards the administrative costs etc. and a lot less gets applied to the actual aims of the charity.
If I get funded for $1 million dollars by investors, my project is so successful it generates $5 million dollars of social good, the grant committee gives me $5 million and I have to turn over that $5 million to my investors for their profit, instead of further ploughing it into more projects, how has this solved the problem of public goods funding? Profit-seeking investors will only go for sure things. Many social problems and needs are not sure things, are money sinks, and will never generate a profit, but they are also genuine needs that do need funding. If impact certificates completely replace all other means of public goods funding (e.g. no more government funding), then what happens to the real needs that aren't profitable?
In your example - I completely agree that it would be good for charity founders who have made successful projects to have money to plough into more projects. An impact cert allows for this by giving founders the choice of how much of the total project shares to keep vs sell as part of fundraising - so perhaps if the founder had sold 50% of the certs for 1m instead, then when the project is bought for 5m they walk away with 2.5m to further invest.
I think it's not quite the case that investors only go for sure things - almost the opposite, investors take on risk in expectation of making net positive returns. Meanwhile, it's philanthropic donors who want to purchase "sure things", eg a guarantee that X lives have been saved or Y tons of carbon have been sequestered.
I'm of course very uncertain that impact certs should replace every other funding source. The mechanism is basically untested! So for now, I think the most important thing is to get real world usage of these things and see how well it plays out - what we are hoping to accomplish with this test.
If you have the time, I'd love to hop on a video call and chat more about certs (also open offer to anyone reading this!): https://calendly.com/austinchen/manifold
Yes, it will enable wealthy donors to endow chantries where the socially meritorious can perform works of mercy in order to earn impact certificates which can then be sold on to provide alms for the needy project-devisers who have no funding of their own. All will acknowledge in their annual financial report the beneficence of the original donors, whose social credit score will accrue increases according as the impacts accrue, thus lessening the period of their purgation for being filthy moneybags in the first place seeing as how "there is no ethical consumption under capitalism".
I'm glad to see you all returning to the 13th century model 😁
I'm not saying funding projects is bad. I don't see how this works, though; if I'm looking for funding, I get the money *after* my project is successful.
While this will certainly help to cut down on wasteful or failed projects eating funding that could better have gone elsewhere, it seems to put a roadblock in the way. If I need the money, I can't do the project. If I don't do the project, I don't get the social impact certificate to exchange for funding.
What this seems to do is select for projects that already have money in the bank or funding in place, which seems to defeat the aim of "getting funding to those that need it". If they have the money, they don't need to apply for this grant.
So the end result seems to be: sell the rights to someone who will provide funding, then collect when your project is successful. I don't know if making a business out of charitable work is a good idea. I've seen too many government-backed attempts at "let's make X function like private business!" that flounder because the work *isnt'* a business, that is why there are no private companies already doing it.
Presumably the idea is that if, as someone else has given as an example, if Good Cause gets $5,000 in funding from Investor who then 'owns' the impact certificate once it's won, and the cause has done so well it gets $10,000 of the grant, the Investor will then virtuously use that extra $5,000 not as profit but to fund *two* projects instead of one in the next round.
But I see no reason why an Investor might not decide to make a business of this, and keep the extra above the $5,000 funding when repaid - be that $100 or $5,000. Naturally, the risk is that Good Cause will sink like a lead balloon, taking the initial $5,000 funding with it, so Investor will want *something* to pay him for the risk, besides the Halo of Social Impact Virtue from being able to claim "Yes, 'twas me what fed the hungry" with the certificate handed over by Good Cause (with "by providing initial funding" in *very* small print on their website, advertising, and PR releases).
>But I see no reason why an Investor might not decide to make a business of this, and keep the extra above the $5,000 funding when repaid - be that $100 or $5,000. Naturally, the risk is that Good Cause will sink like a lead balloon, taking the initial $5,000 funding with it, so Investor will want *something* to pay him for the risk, besides the Halo of Social Impact Virtue from being able to claim "Yes, 'twas me what fed the hungry"
I think this is exactly how it's supposed to work. The investor is getting rewarded for managing risk - he needs to put in the money up front, and face the risk that Scott might not give him anything if the charity fails. But if the charity is really awesome, Scott might pay him more money than he put in. Scott is the one who ends up getting the "I fed the hungry" certificate at the end - he buys it off the investor once he's confirmed that the hungry did get fed and he got his money's worth.
The system basically allows Scott to trade money for certainty - he has to put in more money than he would if he funded the charity directly, since he needs to promise enough money that the investor could turn a profit, but in exchange Scott doesn't take on any risk, since he doesn't pay until the charity finishes its work.
But sometimes the charitable work that most needs to be done is never going to be profitable. It's socially necessary, but you won't make money out of it. So incentivising charity to be money-making means the kinds of problems we've already seen: charities becoming 'professional' which means hiring on outsiders from the world of private business, which means "we need to pay comparable salaries to get a good CEO" which ends up with "80% of donations go to paying salaries and perks, 10% go to running the organisation, and 10% if that goes to the actual work we are supposed to be funding".
The investor's profit doesn't come from the charity itself, it comes from Scott saying "Wow, this was really important charitable work that needed doing, have a bunch of money!" If the charity sends only 10% of the money to the actual work, presumably Scott won't be impressed and won't pay much money.
I suppose it's possible that the charity ends up optimized for impressing Scott rather than for doing their work, but that's equally a problem if Scott funds them directly.
Sorry if this sounds rude, but you're leaving snarky comments disagreeing with something when you literally don't understand the most rudimentary aspects of how it works.
If you did understand impact markets at all, you would know that they have *nothing to do with charitable work being directly profitable*
The impact markets MAKE this work profitable by providing *extrenal* financial reward for correct 'investment' in charitable projects that achieve some agreed upon *social goals*.
If you fund a malaria charity project whose agreed upon goal was to reduce malaria infections by 10%, and the project does reduce malaria infections by 10% or more, you make a profit not because less malria infections provides a direct financial dividend. You make a profit because the impact market funders agreed to give you this money if you funded a successful charitable project.
>problems we've already seen: charities becoming 'professional' which means hiring on outsiders from the world of private business, which means "we need to pay comparable salaries to get a good CEO" which ends up with "80% of donations go to paying salaries and perks, 10% go to running the organisation, and 10% if that goes to the actual work we are supposed to be
It's absolutely not like that, it's about outsourcing the risk of funding ineffective projects to investors, not charitable donors.
But even putting that aside, you're still wrong, because the average overhead of charities is around 25%. And there's absolutely no way a priori of determining if this (or an even higher overhead) is even a bad thing at all! It's an empirical quetion!
Hiring elitely skilled managers that command enormous salaries may well lead to better net outcomes than hiring someone cheaper. It might be that the net impact of these high overhead charities is larger because the charity is managed more effectively in terms of determining which projects to fund and in raising more money for the charity.
We have no way of knowing just from looking at a charity's overhead whether they are more effective or not, we have to actually do the maths and look at the results.
What we CAN say a priori is that a charity that spends 30% on overhead but raises $10 million dollars is probably going to have a larger social impact (on average) than a charity with 20% overhead that only raises $5 million dollars because they have, even with higher costs, more money leftover to spend on projects.
And the goal of all of this is to improve the effectiveness of charities and the efficiency (of social impact) of charitable donation. Charitable donors are only required to fund projects that actually work, and people more skilled at determing which charities work take the risk of money being wasted on ineffective projects. They are compensated for this risk by making a profit for funding effective projects which is expected to result in a net social benefit by more effectively using charitable donations (even accounting for the cut that these investors get).
Well, if I were to offer a criticism, it would be that this scheme partakes of the not uncommon delusion that a sufficiently clever mechanism can solve long-standing problems of insufficient data (like the idea that amassing ever more ignorant opinions about the future, but combining them in novel mathematical ways, will allow you to extract brilliantly correct opinions about the future -- which flies in the face of the empirical GIGO and TANSTAAFL laws).
In this case, the problem to be solved is, as you observe, that projects (charitable or no) require funding to start, but whether they will succeed is not easily known until they finish. How to transfer the knowledge of which will succeed from the future to the present, so investors can make better funding allocations?
This is hardly a new problem, it's as old as humanity, and it's hardly a problem about which investors, both individually and as a class, don't care very much, or towards the solution of which they don't already bend all their effort and will, and use every technique they can imagine[1].
So the delusional assumption underlying this scheme appears to me to be that the fundamental problem *isn't* the impossibility of time travel, but rather a lack of motivation to accurately predict the future somewhere (despite money and reputation already at stake), or the lack of an economic mechanism for allowing those who can see the future to connect to those who need the future predicted. Either of these assumptions strike me as naive about human nature.
Of course, there's nothing wrong with people trying out naive ideas with their own money. Naive ideas even actually work, every now and then. But there is an opportunity cost here, in the sense that if effort and capital goes into the scheme, it is not available for something else -- something else that could have a lot more predictable positive impact (e.g. just finding some unfortunate soul in your family or among friends somewhere who is struggling to finish his final year of college and just give him the dough, or if we consider the effort just using that mental energy to get a better grade in school, do a better job at work, reconcile with a friend or family member, or read Marcus Aurelius).
So one could take mild exception to the scheme in the same way that one is disgruntled about late-night advertisements of the buy-my-book get-rich-quick with this One Amazing Trick Nobody Other Than The Millions Of You Now Watching Knows About nature -- through a complex brainy appearance, and by appealing to eternal existential yearnings of men for a predictable and secure future, it may be somewhat exploitive of the young and/or naive.
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[1] Indeed, ironically there appears to be an internal contradiction here: one the one hand we assume that although we have no a priori idea how to predict the future better, if we basically crowd-source the solution to this problem, *someone* out there does, and if we connect his talent to our need, magic happens. But on the other hand, we assume that this possibililty has never occured to anyone before now, and all that's needed to make it happen is our unique brilliant insight of establishing the connecction. It's sort of saying "Look! There's $100 on the ground! Let's pick it up!" and also at the same time saying "We don't know how to pick up the $100, but I'm sure someout out there does." Well, if someone out there does, why didn't he? The problem is *really* just that it never occured to him to try? Hmm.
My understanding of this is that it isn't so much trying to be a magic crystal ball as align incentives. In the current state of things, there aren't hundred dollar bills lying around because being really good at predicting which causes are grant-worthy isn't profitable. There's probably a hedge fund manager somewhere out there that could determine that political activism wouldn't help legalize prediction markets while spamming Reddit with memes would, or whatever, but neither would make them any money. With the impact market, they could fund the meme machine now, and then in six months when everyone realizes how effective it was, they would get paid for it, hopefully more than their investment.
Well, this is where the naivete I mentioned comes in. The idea that "being really good at predicting which causes are grant-worthy isn't profitable." That strikes me as exceedingly naive. I'm pretty sure that if I could reliably predict which causes would succeed and which fail, and I could establish that to Bill and Melinda Gates, then their foundation would offer me a $250k starting salary instantly.
And then I could play the Carnegie Foundation off them to boost it up another $100k. And then the government, which hands out $billions, would get in the act and offer me still more money, plus my own Secret Service detail to boot.
And that's not even touching the fact that it seems very, very unlikely that there is something magical about predicting which *charitable* causes will succeed. If I can do it for charitable causes, I can probably do it for lots of other activities, too. Wait...is that Elon Musk on the line, offering me $3m/year if I can come predict which Starlink variation will succeed? Excuse me, gotta take the call...
Right, predicting which activities will succeed is indeed very profitable, which is why good traders make so much. The reason they don't apply that expertise to charities is that charities don't pay dividends. Impact markets make charities pay dividends (metaphorically).
My impression is that 350k is pretty low for a good hedge fund manager, and that government spending is driven more by politics than efficacy. I'm not aware of the Gates Foundation trying to poach successful quants, and maybe they should. But maybe predicting vitamin interventions in Africa is substantially different from predicting tech company earnings, which is the reason to set up a market for it.
$250k salary isn't much compared to elite institutional investors.
And again, its not clear how this scheme could possibly be harmful.
If it's ineffective, the only losses will be those borne by the investors, not charitable funders. It will be investors funding failed and ineffective projects. No money that would have otherwise been used on charitable projects is wasted (unless the impact market creator poorly specifies success criteria etc.). And if it works, not only do effective projects get carried out, but you've proven that a more efficient model for funding charitable projects can work.
Why is this any different to the current charitable model? Charities fund projects and don't know in advance what the correct projects to fund will be. How do impact markets make this any worse?
Nobody knows the future, ESPECIALLY not currently existing charities and their donors that directly fund projects.
Even if you are correct and this all turns out to be a waste, I still don't understand having that much hatred for this idea. If I only read your comments, I would have assumed that Scott was proposing abolishing all charities that don't use impact certificates. Or at least steering several million dollars of other people's money into it.
But that's not what's happening - this is a tiny (like ridiculously minuscule) pilot project to study how well this idea works on a small scale, and since Scott already ran a grant program using a more traditional structure, I assume he'll compare them and see the relative benefits of each. I think the median result will be that this saves Scott a huge amount of time and effort and it will turn out to not be significantly better or worse than the alternative.
But even a mediocre result like that would be significant, because it would introduce a new means of coordinating and organization new charitable causes, for which there isn't an existing organization, and probably lower the barrier to entry.
As you say predicting the future is hard. Are you really so confident that this idea should not be tried at all?
I think you probably meant to address this to someone else. I don't hate the idea. I was just pointing out where I think someone *could* start to be annoyed by it.
Personally, I do think it's a bit silly, because as I said it gives me the impression of the not uncommon habit of smart verbal people to discount the hard College O' The Real World lessons of GIGO and TANSTAAFL, and to rely on an implicit belief that a sufficiently complex mechanism can spin straw into gold. But as you point out Scott has wisely chosen to quite limit his financial exposure, and more importantly it's someone risking his own money of his own free choice, doing what matters most to himself, and in my world everyone should always be free to do that -- indeed, encouraged to do that.
"On this model, altruistic work receives some or all of its funding after completion rather than beforehand. Once an individual or organization completes work with a positive social impact, they can apply for a certificate of impact. They can then sell this certificate to another organization or individual. Following the sale, the new certificate holder can claim credit for the impact of the project, and the organization that carried out the project must acknowledge that they have sold its impact."
Two things strike me about this:
(1) It would seem to work best for projects that don't need the money. If I'm looking for a grant of $5,000 to set up everything for my project of teaching inner-city women to make lace when can then be sold to fashion houses, then I need that $5,000 to rent premises and buy supplies and all the rest of it. I can't wait until after we've made and sold the lace, because I need the money to make the lace. No money, no lace; no lace, no social impact; no social impact, no certificate; no certificate, no grant.
(2) This is re-inventing buying indulgences 😁 Good-doers A do the good work and get the credit, moneybags B can have that credit applied to wipe away the temporal punishment for sin thanks to the treasury of merits - I mean, they can raise their social credit score by purchasing the social credit of another. Though to be fair, carbon offsets probably are the new version of indulgences, our government seems to be trying to get remission of its sins the new modern way:
"THE GOVERNMENT IS due to buy up almost €3 million worth of carbon credits from Slovakia ahead of an EU deadline for emission target compliance.
Environment Minister, Eamon Ryan, received Cabinet approval today to buy the credits to help comply with 2020 emission targets, with the deadline for compliance being 17 February.
The agreement will see Ireland purchase over 4.1 million credits from Slovakia to help meet the 2020 target, at a cost of €2.9 million."
We commit the sin of carbon emissions, Slovakia's merits cover our misdoings in the eyes of the Judge of Ages, the EU.
For 1, I think you missed the step where the third-party investor gets involved. You find someone who has $5,000 to spare who thinks that making lace is a good way to make a social impact, they invest the money, and then in September Scott will give the investor $5,000, or maybe even more than that if it turns out that your lace-making enterprise revitalized the inner city and Scott thinks you managed to do $10,000 worth of good on a $5,000 investment.
For 2, I think that's equally true for all forms of donating money to charity. But we capitalists have this weird idea that identifying a good work and giving them money is itself a good work that deserves recognition.
>we capitalists have this weird idea that identifying a good work and giving them money is itself a good work that deserves recognition.
I mean, this is kind of the fundamental premise of capitalism, right? That the people with capital are most qualified to determine where is should go to have to best effect? (For a given value of "best", which is often unaligned...)
It would be much better phrased as "the people who are most highly motivated to ensure money is spent wisely are the people who have to bear the loss if it isn't, i.e. those who own the capital." With a side-dish of "social harmony is better preserved if the people who suffer a loss of capital can blame no one other than themselves."
Whether in the event the owner of capital actually turns out to be better at allocating it than anyone else is a separate question. Despite centuries of trying, we have no meter which we can point at an individual's brain that will tell us exactly how good he is at forseeing the future consequences of his present decisions. So we are forced to make the second-best choice, which is to ensure that at least the person entrusted with the decision is the person most closely concerned with the outcome, and who will bear the loss if it goes wrong.
Granted, if we set aside that you're narrowly defining "wisely" to mean "in a way which makes those capitalists more money", which is what I mean by "unaligned" (regarding the prosocial common good)...
...that capitalist *can* and *do* blame everyone else when they make poor long-term investments (e.g. see almost any article about millennials "killing" every industry)...
...and that it's unfortunately far from "ensured" that capitalists "bear the loss if it goes wrong" (see: The Big Short and every other economic downturn where the proles lose their jobs and savings and the rich get richer).
To steal and modify capitalists' favorite quip: "capitalism looks great on paper but falls apart IRL"
How exactly do you think capitalists make more money? I mean, on my planet, that happens when they come up with some brilliant innovation (like smartphones, Airbnb, windshield wipers, HPV vaccines) that ordinary people find so incredibly useful that they gladly fork out the asking price. That is, the accumulation of wealth from voluntary transactions occurs because the value the people get from whatever the capitalist creates greatly exceeds the value of money he gets in return. Why *else* would people make the transaction, pray?
So yeah, if you want to call smartphones or Airbnb et cetera a "narrow" definition of "success" than I guess so, but there are very few people not academic ideologues who would find that persuasive.
Yes, I'm aware people can and do cast blame in absurd ways. This need not distract us from the point that those complaints are never credible. On the other hand, if government takes half my money in taxes to fund some hare-brained scheme to, say, transform Iraq into West Germany, and the whole operation crashes and burns, evaporating $1 trillion that could otherwise have been used to send a whole lot of kids to college, or fund retirements, or just put a new roof on the house that doesn't link -- yeah I'll be pissed, and it will be a very reasonable complaint, because *I* didn't decide to blow my money stupidly.
Dunno what you mean about the Big Short but this sounds like some combination of special pleading and nonsense to me. If you want to elaborate on what you mean I'd be happy to take another crack at understanding and responding in detail.
But in general the idea that the proletariat always bear the brunt of bad capital allocation is stunningly naive, the kind of thing only people with tons of book learning and theorizing can say, but who have zero real-world experience. I mean, start yourself a small business and see for yourself who bears the greater risk to your future, you or the people you hire. Or maybe talk to someone who has done that, and whose business has gone under, and see if you'd really rather be the business owner than the line workers who lost their jobs when things went tits up.
> How exactly do you think capitalists make more money? I mean, on my planet, that happens when they come up with some brilliant innovation
We both know that's not how the majority of capitalists make money. Hell, the *majority* is just from moving other money around. If you want to argue that it has downstream effects on innovation, sure, but that's *not* the argument you made and it's a second-order connection at best in most cases.
And that's precisely my point. Sure, capitalists build things and foster innovation when it's the easiest path to make money, but when they can do something else to make more money, *they do that instead*. Even if it has detrimental consequences to society as a whole. So they're *poorly aligned*, in the AI safety sense, like I keep saying. The only thing that keeps it in check is that Capitalists are still human and not as powerful or alien as a real AI.
>Dunno what you mean about the Big Short but this sounds like some combination of special pleading and nonsense to me.
Some real chutzpah to call me pointing out all the ways in which your definition is special pleading that, but okay.
I didn't mean to imply the proles *always* bear the brunt of bad capital allocation, certainly not in the general case (though it's not altogether uncommon), but it's unfortunately common in for economic downturns.
2008: The crisis was directly caused by bad investments and known fraud, regulation agencies rubber-stamping dogshit securities, and such. Exactly one person went to jail while the rest got off, the agencies largely paid fines enumerated in a fraction of what they made over the period of bad investments. Meanwhile millions of people lost their homes, jobs, or worse. We can quibble on the magnitude of the details, but it doesn't matter since this is *clearly* not an instance of the consequences of bad investment *being limited to the capitalists* who made those investments. (The Big Short is a popular movie that happens to explain a lot of this, I thought it served as a good pop culture short hand)
I'm not talking about small-business petit-bourgeois here, since I agree that they're more prone to following the actual ideals of capitalism. But since you prompted: Yeah, I have a friend who worked for a new restaurant downtown, owned by an absentee manager who owned three other restaurants, and when the downtown one flopped my friend couldn't make rent while he looked for a job, while the owner took his third vacation of the year. Of the "risk to their future", I know which I'd take.
I was a bit tongue-in-cheek writing that. Moving money to the right place is definitely "real work" that someone has to do, it just doesn't intuitively feel like it.
Some of the problems inherent in 1, are solved by factoring. Lacemaker has an order, but needs supplies, working capital, money to pay workers, etc.. Lacemaker sells the right to payment on the order to the factor for a discounted up front cash payment up front to meet cash needs.
The point isn't really buying the credit for the good work like indulgences though (it's necessary that you keep track of who has the credit to avoid double spending but that's not morally the point). By giving final funding, the funder fulfils the obligation of their earlier promise to do so (which was itself made to persuade investors to actually fund the project), and/or creates an expectation that final funding is a thing that (in certain circumstances) will actually be available, again hopefully having an effect on the behaviour of investors in future projects. I think this might just be the factoring thing Feral Finster brought up, just explained as it applies to this case specifically.
The carbon credits thing is the same, sort of. I don't know the actual circumstances of why Slovakia had excess carbon credits, but by creating the market for carbon credits and the rules on obeying the related caps and things, the EU creates conditions in which Slovakia can make money by emitting less than its fair share, thereby incentivising it to do so.
Sure but in practice the leadership of Slovakia is who gets the money, and it's the poorest of Slovakia's citizens -- those who want to move from bicycling 10 miles to work each way to owning a car, so they don't have to get up at 4am every day -- who are going to be actually forgoing the emissions. It'd be nice to believe that the government of Slovakia will be altruistically handing over the money to the people who actually earned it through their sacrifice, but experience suggests skepticism about that.
Plus this could readily incentivize the government the wrong way: why spend time and effort building out modern infrastructure, at the expense of your wealthiest taxpayers (who are not going to be happy about the cost), when you can instead vend the involuntary sacrifice of your poorest to the international community by doing nothing about their situation? It's kind of win-win: you get money, you don't have to tax your wealthy, and you can tell the poor that they're contributing to global virtue, so be happy and keep pedaling.
I feel like that's kind of a separate problem though. A bad government can exploit their citizens whether or not there are environmental goals attached.
Hence my "plus." If I offer you $100,000 to break the law or do some harm to someone, is that a bad thing? Most people say "yes," although it is still possible for you to be a bad person all on your own, whether or not I incentivize you to do so.
If you directly offer someone money specifically for doing something bad, sure that's bad, but it's not so clear to me at least that the Slovakian government's incentives are worse in the presence of the carbon credit system than without it.
Sure, and it's not clear to me that humans burning fossil fuels cause global warming. We are all entitled to our skepticism, and far be it from me to deny the value of yours. I was only offering an argument for why one might be skeptical about the ultimate value of carbon credits. Personally, I think Deiseach is 100% right about they're merely being indulgences reborn, only in this case instead of Chartres built on the backs of peasant labor we get lowered CO2 emissions also built on the backs of peasant labor. I do admire Chartres, but my heart lies with the peasants, so I won't be supporting these ideas.
If you are interested in a partner with over 30 years of software development experience for your forecasting project, please contact me. ben.michelson@gmail.com - I don't do machine learning.
I had actually thought of something like an end to welfare - a very basic minimum income, along with tokens that could be used in prediction markets with real payouts.
If nothing else, we ought to be able to get some empirical evidence regarding market efficiency.
It is. Less random than traditional games of chance, but still gambling.
My immediate concern is that it incentivizes gaming the targets/data collection. You get what you measure. But depending on the application that is a solvable problem.
"Right now we're not measuring anything except whether I (or whoever I delegate final oracular funding responsibility to) approves of it."
That's the problem I see. When you make it Investors, not Donors, then you are selecting for "what will win the funding grant to repay my investment?" and that depends on "what has successful social impact so they are awarded the certificate?" and *that* depends on "what do the grant body delegates consider successful social impact?"
Which will lead to guessing the password, and lead to "what will have successful social impact *according to the grant committee*?" not "according to improving the neighbourhood/city/state".
I might think that "successful social impact" is "getting the kids in school to read the Bible" (seriously, if someone can convince Catholics to read the Scriptures, you will have the pope's gratitude*) and award the impact certificate (which can then be traded for real cash money for the grant) to whoever demonstrates "our project enrolled 500 kids in three schools for after-class Bible reading!"
Somebody else might not think that is an example of successful social impact. If the Investor wants their money back, they want the project to get the impact certificate. The impact certificate will be awarded according to whatever delegates approve of it. And the delegates will approve of it according to whether it fits with their views of what successful social impact is.
So Investors will invest in projects that have a good chance of return, and lean on potential projects to be that kind of project. And "good chance of return" will mean "win the impact certificate", which will mean "fit in with the presuppositions of the grant awarding body".
That may - I don't say will, I say may - end up with 99 underwater yoghurt weaving projects to 1 that fills a need the people of the deprived area really have. But if the grants committee is handing out impact certificates for underwater yoghurt weaving, that is what Investors will purchase, and what project organisers will have to go for.
*I mean, it's Lent, and *I'm* not reading the Scriptures, even though I keep getting nice weekly emails from the Franciscans about 'read along with the Scriptures during Lent, sign up to this handy online course'.
Isn't this exactly what you want though? If the grants committee wants to spend $20k funding underwater yoghurt weaving, they're welcome to do that. The IC model just lets them outsource the risk and foresight to the investors.
Okay, let's say we have donors instead of investors. One group pitching for donations wants to set up underwater yoghurt weaving. One group wants to set up before-school breakfast clubs in DEIS schools.
Right now, donors can donate to whichever one they prefer, or to both. Or to neither, if they don't care about either project.
Now we move to the impact certificate model. Instead of donors, we have investors, who are looking to get a return on the money they invest.
Now we have the layer of "the grant-making committee gives out the impact certificates and awards grants accordingly".
So now the investors, who want a return on their money, try and decide what kind of project the grant-making committee considers to have the most beneficial social impact.
They find out that Jane on the committee really loves woven underwater yoghurt and eats it at every meal. Sergio provides scuba diving gear. Mateusz's cousin is a teacher of underwater yoghurt weaving.
So they'll fund project A on the grounds that the committee is much more likely to think underwater yoghurt weaving is socially impactful in a beneficial way.
Now all the investors fund underwater yoghurt weaving, because it's a sure way to get back the money they gave to the charity, and the kids in the DEIS schools can go hungry for all anyone cares.
Under the donor model, both projects have a more or less equal chance of getting funded. Under the investor model, only the projects deemed profitable will get funded, and profitable is not at all the same thing as 'having a beneficial social impact' in practice, no matter how nicely the prospectus dresses up the wonderful benefits of learning how to weave your own yoghurt be it in pool, river or sea!
Explain why this isn't a problem for the current model of charitable funding.
Charities will do and say things to maximize the amount of funding they recieve including committing explicit fraud in the reporting of their success of their projects, reporting the results of their projects in deceptive or misleading ways, or using metrics that aren't aligned with maxmially achieving social impact.
At least in the impact markets model of charity, the people funding projects are the ones who get to decide the terms of the donation directly, and have much more of an incentive to make sure theyre right. In traditional charities, there's a lot of reputational baggage where you assume a charity is big and has been around a long time and has other high profile investors, it must be legit. Impact markets force you to actually care about what is real or not.
And in traditional donating, much donation is done on the basis of prestiege, donating to the charities which give you the most social esteem or self satisfaction.
Any esteem you get for this impact market donation will be on actual results being delivered, so you're much more invested in working out who is giving you genuine social impact to avoid being ripped off.
Oh it is already a problem. But making the targets more specifics has both upsides, but also downsides of the metrics don’t actually track doing good.
You tell people that they are measured by how many families they are able to place into homes, and what you see is overtime the homes degrade because people maximize what is measured.
When there aren’t metrics people can do more rational balancing of these things. To be clear I am not anti metrics, but metrics need to be very carefully deployed and they typically are not.
Also as regards gambling, this sounds a lot like creating a derivatives market in “social good created”. And historically derivatives markets haven’t always been good for the underlying market.
Sure, in the same sense that charities are "gambling" when they risk the charity's resources on a project that may have sub-optimal or zero social impact.
Gambling is bad when it causes social harm through people jeoparidizing theirs and their families' financial security, accuring black market debt that could result in becoming the victims of violent enforcement, funding organized crime etc.
NONE of those things apply here, so objecting to it on the basis of it being "gambling" is fallacious.
Any losses through this "gambling" will be borne by investors with enough money to risk on these projects, and being successful in this "gambling" results in socially effective charitable projects being carried out (and incentivizing further investment is these kind of projects).
>Suppose that one project is really excellent and we value it at $70,000, another project is also excellent and worth $20,000, and the third is still pretty good, and worth $10,000. The ratio is 7:2:1, so we’ll pay $14,000 for the impact certificate for the first, $4,000 for the second, and $2,000 for the third.
How does Scott decide the values of projects? What if his valuation of a project causes an investor to lose money (for example, the investor in the third project might have invested $3000, but gets only $2000 from Scott)?
Then he is a bad investor. He will quit investing (or at least have less of a "vote", since he has less money). And the pool of investors becomes better.
Then it incentivizes the investor not to fund that project or to look at ways of running it more efficiently to reduce its cost.
If they invest in a project that succeeds but loses them money, they made a bad investment and are punished accordingly, not different to any other kind of investment.
If you fund the creation of a company that becomes profitable but doesn't cover the cost of your investment (including opportunity costs), you made a bad investment and will have less money moving forward to be used to direct resources in the economy, and people make good investments will have more money.
"If they invest in a project that succeeds but loses them money, they made a bad investment and are punished accordingly, not different to any other kind of investment."
And that is exactly my objection there. I don't seem to be making my point correctly; I don't care about impact certificates per se, it's just another way of buying indulgences.
What I care about is that charity is *not* a business. And if you start running it to make a return on investment, rather than efficiency of objectives (I am *not* objecting to "can we make sure this charity is not wasteful or badly run or just throwing money at stupid projects?", that's basic common sense), then my concern is that the goals of the charity become "return on investment" not whatever their original charitable aim was.
Suppose we have a group working on the (sigh) school-to-prison pipeline. They even have some success! Now instead of little Johnny dropping out early and ending up with 5 to 50 in prison, he stays in school, graduates, and ends up with a job working in a convenience store.
I think this is beneficial social impact. I'm sure the grant award committee will think the same. And the investor gets his money back.
But what if the investor wants more than just 'his money back'? This is like interest on a loan, because that's what we're basically talking about: the charity borrows money from the investor and pays it back when it gets the grant funding upon successful completion.
Suppose the investor goes "Yeah that's all very well, but this kid didn't end up with a job in Goldman Sachs, so he's not productively contributing to the economy. I'm interested in kids who get jobs in Goldman Sachs so they pay back a slice of their future earnings for a period as return on my investment. What good is some minimum-wage loser to me? So I'm gonna invest in the school-to-Goldman Sachs pipeline projects instead. Let the losers end up in jail, *I* don't care".
The Goldman Sachs kids may make more money for the investor. This is a good investment. The investor is not punished for this investment, as he would be by investing in the minimum wage kids.
But is that more beneficial for society? If the kids who might have been minimum wage instead end up in prison, because it's more "economically productive and hence better for society" if the focus is on the Goldman Sachs kids?
*That's* my concern about turning charities into businesses.
I think the disconnect might be, the charities don't pay the investors back if their project is successful. They keep all the money the investors give them forever. Once they get paid, that's the end of it as far as they're concerned. The grants committee pays back the investors at a later date based on how successful the charity has been.
In your example, if the school-to-Goldman Sachs charity hasn't helped any kids keep out of prison (and I imagine it wouldn't), then the grants committee won't pay any investor who gave money to it, which means they're basically just donating the money. Now, maybe they think a donation with no immediate payback will be worth it in the long run, but at that point it has nothing to do with the impact market, they can just donate on their own.
I think sadly that far too many (most?) people are too ideologically blinded to understand impact markets and why they should be expected to be a more effective model of charity. Even on this blog, where the commenters are supposed to be especially switched on, we see the same foolish objections each and every time Scott posts about this topic. Hopefully the people who can't grasp it are the ones who don't need to understand and support it for it to have a chance of succeeding.
To all who have responded to me about impact markets, rather than doing this for every one of you individually:
Thank you for the full and frank exchange of views. Were this another site on the web, or were I of a different political disposition, this is the moment I would loudly fling about recriminations about dogpiling and the general faults of all, then flounce off in a huff slamming the door behind me.
Well tough, lady doggesses, you don't get rid of me that easily! 😁
I love this place because it is one of the very few online where we can have a good old ding-dong, people mostly don't get *too* precious about their fee-fees, and the benevolently dictatorial aura of the True Caliph and his Reign of Terror mean we broadly stay within the confines of civility.
Love and kisses to one and all, even if I remain unconvinced about the "more effective model of charity". You need to think in the long term, like two hundred years, about what this will evolve into. See the history of almshouses:
I'm going to sound awfully miserly here but it needs to be said. Robin Hanson, inventor of prediction markets and one of the smartest people in the world, believes that the next step for PMs is a single dramatic demonstration to people in positions of power: specifically his "fire the CEO" market, which requires a million dollars. Which is a lot, and is annoying, but I think he's right that that's what it'll take to get PMs some mainstream recognition. I think a single, big, boring project is needed, not lots of little interesting ones.
What's the idea there? A prediction market gets going with all YES votes on "Should the CEO of Watson's Widgets be fired?", and then the board of directors/major shareholders see that and go "Jings! A bunch of nobodies have spoken that we should fire the CEO! Leave us do that immediately!" and this will prove that prediction markets are the way forward?
I have an idea that a very expensive termination of employment without cause law suit would ensue for "Why did you fire my client on nothing more than a bunch of nobodies said so, when you admitted you were satisfied with his job performance up to then?"
I agree a single big project would be great, but I don't have the resources to launch one, and I think the way you get one is by having lots of little projects that go well until someone powerful pays attention.
Seems sad that this has gotten no traction, while I don't buy the idea entirely I think it's rather interesting and has potential.
For what it's worth it doesn't help that, as far as I could tell, when this was announced, manifunds accredited investors flow didn't seem to work... might be partially related.
Might be worth making it simpler and cutting the investor, instead approving projects people value at a certain $ for their time, and paying the profits to those.
Seems boring enough that I wouldn't participate myself *but* potentially quite useful for a more college -studenty demographic.
Also selecting markets at a certain worth e.g. 15k cap and only allowing shares in those would heavily incentivise investors.
A few questions about the retrofunding thought process (realizing that these details may intentionally be left open-ended):
"1. On September 1, we’ll look at all of the projects that got funded and try to value all of them."
Will the evaluation focus on impact the projects have demonstrated up to September 1, potential for future impact, or both?
"2. We’ll try to buy impact certificates of the projects we value most."
How many of the top-valued projects would you expect to buy impact certificates for? Supposing 15 projects get funded, and you think 10 of them are at least somewhat impactful, would you offer to buy the impact certificates of all 10 in proportion to the valuations you've assigned, or only offer for the top few projects?
1. My plan (open for criticism) is "expected final impact, conditional on impact 9/1". If the project is finished, completed impact = expected final impact. If it's partway done, I will use the done part to predict final impact. If it's not done at all, I will use the fact that the person is a flake and wasted six months to predict final impact (probably low, though there could be extenuating factors).
2. My plan (open for criticism) is to value every project, and distribute final oracular funding at the same ratio, ie if your project produced X% of the total value, you get $40K/X. I don't have a clear plan about whether this means buying certificates for all non-zero projects, I think it would depend on transaction costs and how big the differences between projects were. I would probably find it annoying to have to send money to more than ten projects.
Hi Scott. Seems like it's time to put my money where my mouth was [1]! I've just went through the accredited investor flow and should hopefully be buying up impact certificates shortly. (And yes, it took me two weeks to find the free time to actually make an account, etc.)
Can you clarify the judging process? In particular, what is the judging criteria: is it something about how useful these projects will be for forecasting, or how likely Scott and his friends are to think they're good projects, or what? For example, one project I'm looking at seems very Scott-friendly, very cool, and good "ROI" in terms of potential world impact... but I'm not sure how likely it is going to be to improve the state of the art in forecasting specifically. Would that be a "good" investment, or a "bad" one?
(I might invest in that project anyway as a charitable donation, but, I'd still like a general sense of what projects are most likely to get the potentially-3x returns.)
Thanks a lot to Scott for working with us on this! I've been a longtime fan of the concept of impact certs (I think my friends are fed up hearing about me pitch them on "THE solution to public goods funding"); it's a huge privilege to be able to help kickstart this ecosystem. Let me know if you have any questions about the Manifund platform~
Fun fact: Manifund is the *second* site I've built that was originally a proposal by Paul Christiano -- his post https://sideways-view.com/2019/10/27/prediction-markets-for-internet-points/ predates the existence of Manifold by 2 years~
"THE solution to public goods funding"
Pitch me. I am very interested to know why this is seen as the solution, since to me it seems that we have a lot of evidence already that monetising charities and turning them into businesses means the donations/money tends to flow towards the administrative costs etc. and a lot less gets applied to the actual aims of the charity.
If I get funded for $1 million dollars by investors, my project is so successful it generates $5 million dollars of social good, the grant committee gives me $5 million and I have to turn over that $5 million to my investors for their profit, instead of further ploughing it into more projects, how has this solved the problem of public goods funding? Profit-seeking investors will only go for sure things. Many social problems and needs are not sure things, are money sinks, and will never generate a profit, but they are also genuine needs that do need funding. If impact certificates completely replace all other means of public goods funding (e.g. no more government funding), then what happens to the real needs that aren't profitable?
In your example - I completely agree that it would be good for charity founders who have made successful projects to have money to plough into more projects. An impact cert allows for this by giving founders the choice of how much of the total project shares to keep vs sell as part of fundraising - so perhaps if the founder had sold 50% of the certs for 1m instead, then when the project is bought for 5m they walk away with 2.5m to further invest.
I think it's not quite the case that investors only go for sure things - almost the opposite, investors take on risk in expectation of making net positive returns. Meanwhile, it's philanthropic donors who want to purchase "sure things", eg a guarantee that X lives have been saved or Y tons of carbon have been sequestered.
I'm of course very uncertain that impact certs should replace every other funding source. The mechanism is basically untested! So for now, I think the most important thing is to get real world usage of these things and see how well it plays out - what we are hoping to accomplish with this test.
If you have the time, I'd love to hop on a video call and chat more about certs (also open offer to anyone reading this!): https://calendly.com/austinchen/manifold
Here's hoping this is the first step on the road to impact certificates taking off! Awesome stuff, Scott.
Yes, it will enable wealthy donors to endow chantries where the socially meritorious can perform works of mercy in order to earn impact certificates which can then be sold on to provide alms for the needy project-devisers who have no funding of their own. All will acknowledge in their annual financial report the beneficence of the original donors, whose social credit score will accrue increases according as the impacts accrue, thus lessening the period of their purgation for being filthy moneybags in the first place seeing as how "there is no ethical consumption under capitalism".
I'm glad to see you all returning to the 13th century model 😁
I honestly don’t understand what you’re trying to say here.
Trying to tie charitable giving to projects that have a better chance of working seems obviously good. If you disagree, then why exactly?
I'm not saying funding projects is bad. I don't see how this works, though; if I'm looking for funding, I get the money *after* my project is successful.
While this will certainly help to cut down on wasteful or failed projects eating funding that could better have gone elsewhere, it seems to put a roadblock in the way. If I need the money, I can't do the project. If I don't do the project, I don't get the social impact certificate to exchange for funding.
What this seems to do is select for projects that already have money in the bank or funding in place, which seems to defeat the aim of "getting funding to those that need it". If they have the money, they don't need to apply for this grant.
So the end result seems to be: sell the rights to someone who will provide funding, then collect when your project is successful. I don't know if making a business out of charitable work is a good idea. I've seen too many government-backed attempts at "let's make X function like private business!" that flounder because the work *isnt'* a business, that is why there are no private companies already doing it.
Presumably the idea is that if, as someone else has given as an example, if Good Cause gets $5,000 in funding from Investor who then 'owns' the impact certificate once it's won, and the cause has done so well it gets $10,000 of the grant, the Investor will then virtuously use that extra $5,000 not as profit but to fund *two* projects instead of one in the next round.
But I see no reason why an Investor might not decide to make a business of this, and keep the extra above the $5,000 funding when repaid - be that $100 or $5,000. Naturally, the risk is that Good Cause will sink like a lead balloon, taking the initial $5,000 funding with it, so Investor will want *something* to pay him for the risk, besides the Halo of Social Impact Virtue from being able to claim "Yes, 'twas me what fed the hungry" with the certificate handed over by Good Cause (with "by providing initial funding" in *very* small print on their website, advertising, and PR releases).
>But I see no reason why an Investor might not decide to make a business of this, and keep the extra above the $5,000 funding when repaid - be that $100 or $5,000. Naturally, the risk is that Good Cause will sink like a lead balloon, taking the initial $5,000 funding with it, so Investor will want *something* to pay him for the risk, besides the Halo of Social Impact Virtue from being able to claim "Yes, 'twas me what fed the hungry"
I think this is exactly how it's supposed to work. The investor is getting rewarded for managing risk - he needs to put in the money up front, and face the risk that Scott might not give him anything if the charity fails. But if the charity is really awesome, Scott might pay him more money than he put in. Scott is the one who ends up getting the "I fed the hungry" certificate at the end - he buys it off the investor once he's confirmed that the hungry did get fed and he got his money's worth.
The system basically allows Scott to trade money for certainty - he has to put in more money than he would if he funded the charity directly, since he needs to promise enough money that the investor could turn a profit, but in exchange Scott doesn't take on any risk, since he doesn't pay until the charity finishes its work.
But sometimes the charitable work that most needs to be done is never going to be profitable. It's socially necessary, but you won't make money out of it. So incentivising charity to be money-making means the kinds of problems we've already seen: charities becoming 'professional' which means hiring on outsiders from the world of private business, which means "we need to pay comparable salaries to get a good CEO" which ends up with "80% of donations go to paying salaries and perks, 10% go to running the organisation, and 10% if that goes to the actual work we are supposed to be funding".
The investor's profit doesn't come from the charity itself, it comes from Scott saying "Wow, this was really important charitable work that needed doing, have a bunch of money!" If the charity sends only 10% of the money to the actual work, presumably Scott won't be impressed and won't pay much money.
I suppose it's possible that the charity ends up optimized for impressing Scott rather than for doing their work, but that's equally a problem if Scott funds them directly.
Wow.
Please, go back and read this post before commenting further: https://astralcodexten.substack.com/p/impact-markets-the-annoying-details
Sorry if this sounds rude, but you're leaving snarky comments disagreeing with something when you literally don't understand the most rudimentary aspects of how it works.
If you did understand impact markets at all, you would know that they have *nothing to do with charitable work being directly profitable*
The impact markets MAKE this work profitable by providing *extrenal* financial reward for correct 'investment' in charitable projects that achieve some agreed upon *social goals*.
If you fund a malaria charity project whose agreed upon goal was to reduce malaria infections by 10%, and the project does reduce malaria infections by 10% or more, you make a profit not because less malria infections provides a direct financial dividend. You make a profit because the impact market funders agreed to give you this money if you funded a successful charitable project.
>problems we've already seen: charities becoming 'professional' which means hiring on outsiders from the world of private business, which means "we need to pay comparable salaries to get a good CEO" which ends up with "80% of donations go to paying salaries and perks, 10% go to running the organisation, and 10% if that goes to the actual work we are supposed to be
It's absolutely not like that, it's about outsourcing the risk of funding ineffective projects to investors, not charitable donors.
But even putting that aside, you're still wrong, because the average overhead of charities is around 25%. And there's absolutely no way a priori of determining if this (or an even higher overhead) is even a bad thing at all! It's an empirical quetion!
Hiring elitely skilled managers that command enormous salaries may well lead to better net outcomes than hiring someone cheaper. It might be that the net impact of these high overhead charities is larger because the charity is managed more effectively in terms of determining which projects to fund and in raising more money for the charity.
We have no way of knowing just from looking at a charity's overhead whether they are more effective or not, we have to actually do the maths and look at the results.
What we CAN say a priori is that a charity that spends 30% on overhead but raises $10 million dollars is probably going to have a larger social impact (on average) than a charity with 20% overhead that only raises $5 million dollars because they have, even with higher costs, more money leftover to spend on projects.
And the goal of all of this is to improve the effectiveness of charities and the efficiency (of social impact) of charitable donation. Charitable donors are only required to fund projects that actually work, and people more skilled at determing which charities work take the risk of money being wasted on ineffective projects. They are compensated for this risk by making a profit for funding effective projects which is expected to result in a net social benefit by more effectively using charitable donations (even accounting for the cut that these investors get).
Well, if I were to offer a criticism, it would be that this scheme partakes of the not uncommon delusion that a sufficiently clever mechanism can solve long-standing problems of insufficient data (like the idea that amassing ever more ignorant opinions about the future, but combining them in novel mathematical ways, will allow you to extract brilliantly correct opinions about the future -- which flies in the face of the empirical GIGO and TANSTAAFL laws).
In this case, the problem to be solved is, as you observe, that projects (charitable or no) require funding to start, but whether they will succeed is not easily known until they finish. How to transfer the knowledge of which will succeed from the future to the present, so investors can make better funding allocations?
This is hardly a new problem, it's as old as humanity, and it's hardly a problem about which investors, both individually and as a class, don't care very much, or towards the solution of which they don't already bend all their effort and will, and use every technique they can imagine[1].
So the delusional assumption underlying this scheme appears to me to be that the fundamental problem *isn't* the impossibility of time travel, but rather a lack of motivation to accurately predict the future somewhere (despite money and reputation already at stake), or the lack of an economic mechanism for allowing those who can see the future to connect to those who need the future predicted. Either of these assumptions strike me as naive about human nature.
Of course, there's nothing wrong with people trying out naive ideas with their own money. Naive ideas even actually work, every now and then. But there is an opportunity cost here, in the sense that if effort and capital goes into the scheme, it is not available for something else -- something else that could have a lot more predictable positive impact (e.g. just finding some unfortunate soul in your family or among friends somewhere who is struggling to finish his final year of college and just give him the dough, or if we consider the effort just using that mental energy to get a better grade in school, do a better job at work, reconcile with a friend or family member, or read Marcus Aurelius).
So one could take mild exception to the scheme in the same way that one is disgruntled about late-night advertisements of the buy-my-book get-rich-quick with this One Amazing Trick Nobody Other Than The Millions Of You Now Watching Knows About nature -- through a complex brainy appearance, and by appealing to eternal existential yearnings of men for a predictable and secure future, it may be somewhat exploitive of the young and/or naive.
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[1] Indeed, ironically there appears to be an internal contradiction here: one the one hand we assume that although we have no a priori idea how to predict the future better, if we basically crowd-source the solution to this problem, *someone* out there does, and if we connect his talent to our need, magic happens. But on the other hand, we assume that this possibililty has never occured to anyone before now, and all that's needed to make it happen is our unique brilliant insight of establishing the connecction. It's sort of saying "Look! There's $100 on the ground! Let's pick it up!" and also at the same time saying "We don't know how to pick up the $100, but I'm sure someout out there does." Well, if someone out there does, why didn't he? The problem is *really* just that it never occured to him to try? Hmm.
My understanding of this is that it isn't so much trying to be a magic crystal ball as align incentives. In the current state of things, there aren't hundred dollar bills lying around because being really good at predicting which causes are grant-worthy isn't profitable. There's probably a hedge fund manager somewhere out there that could determine that political activism wouldn't help legalize prediction markets while spamming Reddit with memes would, or whatever, but neither would make them any money. With the impact market, they could fund the meme machine now, and then in six months when everyone realizes how effective it was, they would get paid for it, hopefully more than their investment.
Well, this is where the naivete I mentioned comes in. The idea that "being really good at predicting which causes are grant-worthy isn't profitable." That strikes me as exceedingly naive. I'm pretty sure that if I could reliably predict which causes would succeed and which fail, and I could establish that to Bill and Melinda Gates, then their foundation would offer me a $250k starting salary instantly.
And then I could play the Carnegie Foundation off them to boost it up another $100k. And then the government, which hands out $billions, would get in the act and offer me still more money, plus my own Secret Service detail to boot.
And that's not even touching the fact that it seems very, very unlikely that there is something magical about predicting which *charitable* causes will succeed. If I can do it for charitable causes, I can probably do it for lots of other activities, too. Wait...is that Elon Musk on the line, offering me $3m/year if I can come predict which Starlink variation will succeed? Excuse me, gotta take the call...
Right, predicting which activities will succeed is indeed very profitable, which is why good traders make so much. The reason they don't apply that expertise to charities is that charities don't pay dividends. Impact markets make charities pay dividends (metaphorically).
My impression is that 350k is pretty low for a good hedge fund manager, and that government spending is driven more by politics than efficacy. I'm not aware of the Gates Foundation trying to poach successful quants, and maybe they should. But maybe predicting vitamin interventions in Africa is substantially different from predicting tech company earnings, which is the reason to set up a market for it.
$250k salary isn't much compared to elite institutional investors.
And again, its not clear how this scheme could possibly be harmful.
If it's ineffective, the only losses will be those borne by the investors, not charitable funders. It will be investors funding failed and ineffective projects. No money that would have otherwise been used on charitable projects is wasted (unless the impact market creator poorly specifies success criteria etc.). And if it works, not only do effective projects get carried out, but you've proven that a more efficient model for funding charitable projects can work.
Why is this any different to the current charitable model? Charities fund projects and don't know in advance what the correct projects to fund will be. How do impact markets make this any worse?
Nobody knows the future, ESPECIALLY not currently existing charities and their donors that directly fund projects.
Even if you are correct and this all turns out to be a waste, I still don't understand having that much hatred for this idea. If I only read your comments, I would have assumed that Scott was proposing abolishing all charities that don't use impact certificates. Or at least steering several million dollars of other people's money into it.
But that's not what's happening - this is a tiny (like ridiculously minuscule) pilot project to study how well this idea works on a small scale, and since Scott already ran a grant program using a more traditional structure, I assume he'll compare them and see the relative benefits of each. I think the median result will be that this saves Scott a huge amount of time and effort and it will turn out to not be significantly better or worse than the alternative.
But even a mediocre result like that would be significant, because it would introduce a new means of coordinating and organization new charitable causes, for which there isn't an existing organization, and probably lower the barrier to entry.
As you say predicting the future is hard. Are you really so confident that this idea should not be tried at all?
I think you probably meant to address this to someone else. I don't hate the idea. I was just pointing out where I think someone *could* start to be annoyed by it.
Personally, I do think it's a bit silly, because as I said it gives me the impression of the not uncommon habit of smart verbal people to discount the hard College O' The Real World lessons of GIGO and TANSTAAFL, and to rely on an implicit belief that a sufficiently complex mechanism can spin straw into gold. But as you point out Scott has wisely chosen to quite limit his financial exposure, and more importantly it's someone risking his own money of his own free choice, doing what matters most to himself, and in my world everyone should always be free to do that -- indeed, encouraged to do that.
"We’ll try to buy impact certificates of the projects they value most." Should "they" be "we"?
I think it's "they", not "we", because of the potential conflict of interest point Scott mentioned in the FAQ? Or maybe I'm misunderstanding
But who is "they"? There's no antecedent for it.
Also, he goes on to say "We’ll distribute this in the same ratio as *our* valuation of the projects" (emphasis mine).
Presumably he means the judges mentioned in the FAQ, although I agree the sentence is confusing.
> Q: Who will be the final judges?
> A: We’re trying to figure that out. I would have liked to do it myself, but I think there are legal issues...
Yes, fixed, thank you.
"On this model, altruistic work receives some or all of its funding after completion rather than beforehand. Once an individual or organization completes work with a positive social impact, they can apply for a certificate of impact. They can then sell this certificate to another organization or individual. Following the sale, the new certificate holder can claim credit for the impact of the project, and the organization that carried out the project must acknowledge that they have sold its impact."
Two things strike me about this:
(1) It would seem to work best for projects that don't need the money. If I'm looking for a grant of $5,000 to set up everything for my project of teaching inner-city women to make lace when can then be sold to fashion houses, then I need that $5,000 to rent premises and buy supplies and all the rest of it. I can't wait until after we've made and sold the lace, because I need the money to make the lace. No money, no lace; no lace, no social impact; no social impact, no certificate; no certificate, no grant.
(2) This is re-inventing buying indulgences 😁 Good-doers A do the good work and get the credit, moneybags B can have that credit applied to wipe away the temporal punishment for sin thanks to the treasury of merits - I mean, they can raise their social credit score by purchasing the social credit of another. Though to be fair, carbon offsets probably are the new version of indulgences, our government seems to be trying to get remission of its sins the new modern way:
https://www.thejournal.ie/government-buy-carbon-credits-slovakia-5995598-Feb2023/
"THE GOVERNMENT IS due to buy up almost €3 million worth of carbon credits from Slovakia ahead of an EU deadline for emission target compliance.
Environment Minister, Eamon Ryan, received Cabinet approval today to buy the credits to help comply with 2020 emission targets, with the deadline for compliance being 17 February.
The agreement will see Ireland purchase over 4.1 million credits from Slovakia to help meet the 2020 target, at a cost of €2.9 million."
We commit the sin of carbon emissions, Slovakia's merits cover our misdoings in the eyes of the Judge of Ages, the EU.
For 1, I think you missed the step where the third-party investor gets involved. You find someone who has $5,000 to spare who thinks that making lace is a good way to make a social impact, they invest the money, and then in September Scott will give the investor $5,000, or maybe even more than that if it turns out that your lace-making enterprise revitalized the inner city and Scott thinks you managed to do $10,000 worth of good on a $5,000 investment.
For 2, I think that's equally true for all forms of donating money to charity. But we capitalists have this weird idea that identifying a good work and giving them money is itself a good work that deserves recognition.
>we capitalists have this weird idea that identifying a good work and giving them money is itself a good work that deserves recognition.
I mean, this is kind of the fundamental premise of capitalism, right? That the people with capital are most qualified to determine where is should go to have to best effect? (For a given value of "best", which is often unaligned...)
It would be much better phrased as "the people who are most highly motivated to ensure money is spent wisely are the people who have to bear the loss if it isn't, i.e. those who own the capital." With a side-dish of "social harmony is better preserved if the people who suffer a loss of capital can blame no one other than themselves."
Whether in the event the owner of capital actually turns out to be better at allocating it than anyone else is a separate question. Despite centuries of trying, we have no meter which we can point at an individual's brain that will tell us exactly how good he is at forseeing the future consequences of his present decisions. So we are forced to make the second-best choice, which is to ensure that at least the person entrusted with the decision is the person most closely concerned with the outcome, and who will bear the loss if it goes wrong.
Granted, if we set aside that you're narrowly defining "wisely" to mean "in a way which makes those capitalists more money", which is what I mean by "unaligned" (regarding the prosocial common good)...
...that capitalist *can* and *do* blame everyone else when they make poor long-term investments (e.g. see almost any article about millennials "killing" every industry)...
...and that it's unfortunately far from "ensured" that capitalists "bear the loss if it goes wrong" (see: The Big Short and every other economic downturn where the proles lose their jobs and savings and the rich get richer).
To steal and modify capitalists' favorite quip: "capitalism looks great on paper but falls apart IRL"
How exactly do you think capitalists make more money? I mean, on my planet, that happens when they come up with some brilliant innovation (like smartphones, Airbnb, windshield wipers, HPV vaccines) that ordinary people find so incredibly useful that they gladly fork out the asking price. That is, the accumulation of wealth from voluntary transactions occurs because the value the people get from whatever the capitalist creates greatly exceeds the value of money he gets in return. Why *else* would people make the transaction, pray?
So yeah, if you want to call smartphones or Airbnb et cetera a "narrow" definition of "success" than I guess so, but there are very few people not academic ideologues who would find that persuasive.
Yes, I'm aware people can and do cast blame in absurd ways. This need not distract us from the point that those complaints are never credible. On the other hand, if government takes half my money in taxes to fund some hare-brained scheme to, say, transform Iraq into West Germany, and the whole operation crashes and burns, evaporating $1 trillion that could otherwise have been used to send a whole lot of kids to college, or fund retirements, or just put a new roof on the house that doesn't link -- yeah I'll be pissed, and it will be a very reasonable complaint, because *I* didn't decide to blow my money stupidly.
Dunno what you mean about the Big Short but this sounds like some combination of special pleading and nonsense to me. If you want to elaborate on what you mean I'd be happy to take another crack at understanding and responding in detail.
But in general the idea that the proletariat always bear the brunt of bad capital allocation is stunningly naive, the kind of thing only people with tons of book learning and theorizing can say, but who have zero real-world experience. I mean, start yourself a small business and see for yourself who bears the greater risk to your future, you or the people you hire. Or maybe talk to someone who has done that, and whose business has gone under, and see if you'd really rather be the business owner than the line workers who lost their jobs when things went tits up.
> How exactly do you think capitalists make more money? I mean, on my planet, that happens when they come up with some brilliant innovation
We both know that's not how the majority of capitalists make money. Hell, the *majority* is just from moving other money around. If you want to argue that it has downstream effects on innovation, sure, but that's *not* the argument you made and it's a second-order connection at best in most cases.
And that's precisely my point. Sure, capitalists build things and foster innovation when it's the easiest path to make money, but when they can do something else to make more money, *they do that instead*. Even if it has detrimental consequences to society as a whole. So they're *poorly aligned*, in the AI safety sense, like I keep saying. The only thing that keeps it in check is that Capitalists are still human and not as powerful or alien as a real AI.
>Dunno what you mean about the Big Short but this sounds like some combination of special pleading and nonsense to me.
Some real chutzpah to call me pointing out all the ways in which your definition is special pleading that, but okay.
I didn't mean to imply the proles *always* bear the brunt of bad capital allocation, certainly not in the general case (though it's not altogether uncommon), but it's unfortunately common in for economic downturns.
2008: The crisis was directly caused by bad investments and known fraud, regulation agencies rubber-stamping dogshit securities, and such. Exactly one person went to jail while the rest got off, the agencies largely paid fines enumerated in a fraction of what they made over the period of bad investments. Meanwhile millions of people lost their homes, jobs, or worse. We can quibble on the magnitude of the details, but it doesn't matter since this is *clearly* not an instance of the consequences of bad investment *being limited to the capitalists* who made those investments. (The Big Short is a popular movie that happens to explain a lot of this, I thought it served as a good pop culture short hand)
I'm not talking about small-business petit-bourgeois here, since I agree that they're more prone to following the actual ideals of capitalism. But since you prompted: Yeah, I have a friend who worked for a new restaurant downtown, owned by an absentee manager who owned three other restaurants, and when the downtown one flopped my friend couldn't make rent while he looked for a job, while the owner took his third vacation of the year. Of the "risk to their future", I know which I'd take.
I was a bit tongue-in-cheek writing that. Moving money to the right place is definitely "real work" that someone has to do, it just doesn't intuitively feel like it.
Some of the problems inherent in 1, are solved by factoring. Lacemaker has an order, but needs supplies, working capital, money to pay workers, etc.. Lacemaker sells the right to payment on the order to the factor for a discounted up front cash payment up front to meet cash needs.
https://en.wikipedia.org/wiki/Factoring_(finance)#:~:text=Factoring%20is%20a%20financial%20transaction,present%20and%20immediate%20cash%20needs.
The point isn't really buying the credit for the good work like indulgences though (it's necessary that you keep track of who has the credit to avoid double spending but that's not morally the point). By giving final funding, the funder fulfils the obligation of their earlier promise to do so (which was itself made to persuade investors to actually fund the project), and/or creates an expectation that final funding is a thing that (in certain circumstances) will actually be available, again hopefully having an effect on the behaviour of investors in future projects. I think this might just be the factoring thing Feral Finster brought up, just explained as it applies to this case specifically.
The carbon credits thing is the same, sort of. I don't know the actual circumstances of why Slovakia had excess carbon credits, but by creating the market for carbon credits and the rules on obeying the related caps and things, the EU creates conditions in which Slovakia can make money by emitting less than its fair share, thereby incentivising it to do so.
Sure but in practice the leadership of Slovakia is who gets the money, and it's the poorest of Slovakia's citizens -- those who want to move from bicycling 10 miles to work each way to owning a car, so they don't have to get up at 4am every day -- who are going to be actually forgoing the emissions. It'd be nice to believe that the government of Slovakia will be altruistically handing over the money to the people who actually earned it through their sacrifice, but experience suggests skepticism about that.
Plus this could readily incentivize the government the wrong way: why spend time and effort building out modern infrastructure, at the expense of your wealthiest taxpayers (who are not going to be happy about the cost), when you can instead vend the involuntary sacrifice of your poorest to the international community by doing nothing about their situation? It's kind of win-win: you get money, you don't have to tax your wealthy, and you can tell the poor that they're contributing to global virtue, so be happy and keep pedaling.
I feel like that's kind of a separate problem though. A bad government can exploit their citizens whether or not there are environmental goals attached.
Hence my "plus." If I offer you $100,000 to break the law or do some harm to someone, is that a bad thing? Most people say "yes," although it is still possible for you to be a bad person all on your own, whether or not I incentivize you to do so.
If you directly offer someone money specifically for doing something bad, sure that's bad, but it's not so clear to me at least that the Slovakian government's incentives are worse in the presence of the carbon credit system than without it.
Sure, and it's not clear to me that humans burning fossil fuels cause global warming. We are all entitled to our skepticism, and far be it from me to deny the value of yours. I was only offering an argument for why one might be skeptical about the ultimate value of carbon credits. Personally, I think Deiseach is 100% right about they're merely being indulgences reborn, only in this case instead of Chartres built on the backs of peasant labor we get lowered CO2 emissions also built on the backs of peasant labor. I do admire Chartres, but my heart lies with the peasants, so I won't be supporting these ideas.
If you are interested in a partner with over 30 years of software development experience for your forecasting project, please contact me. ben.michelson@gmail.com - I don't do machine learning.
I had actually thought of something like an end to welfare - a very basic minimum income, along with tokens that could be used in prediction markets with real payouts.
If nothing else, we ought to be able to get some empirical evidence regarding market efficiency.
So this is just gambling on whether charities will meet their targets?
Only in the same sense that investing is gambling on whether companies will meet their targets.
It is. Less random than traditional games of chance, but still gambling.
My immediate concern is that it incentivizes gaming the targets/data collection. You get what you measure. But depending on the application that is a solvable problem.
Right now we're not measuring anything except whether I (or whoever I delegate final oracular funding responsibility to) approves of it.
"Right now we're not measuring anything except whether I (or whoever I delegate final oracular funding responsibility to) approves of it."
That's the problem I see. When you make it Investors, not Donors, then you are selecting for "what will win the funding grant to repay my investment?" and that depends on "what has successful social impact so they are awarded the certificate?" and *that* depends on "what do the grant body delegates consider successful social impact?"
Which will lead to guessing the password, and lead to "what will have successful social impact *according to the grant committee*?" not "according to improving the neighbourhood/city/state".
I might think that "successful social impact" is "getting the kids in school to read the Bible" (seriously, if someone can convince Catholics to read the Scriptures, you will have the pope's gratitude*) and award the impact certificate (which can then be traded for real cash money for the grant) to whoever demonstrates "our project enrolled 500 kids in three schools for after-class Bible reading!"
Somebody else might not think that is an example of successful social impact. If the Investor wants their money back, they want the project to get the impact certificate. The impact certificate will be awarded according to whatever delegates approve of it. And the delegates will approve of it according to whether it fits with their views of what successful social impact is.
So Investors will invest in projects that have a good chance of return, and lean on potential projects to be that kind of project. And "good chance of return" will mean "win the impact certificate", which will mean "fit in with the presuppositions of the grant awarding body".
That may - I don't say will, I say may - end up with 99 underwater yoghurt weaving projects to 1 that fills a need the people of the deprived area really have. But if the grants committee is handing out impact certificates for underwater yoghurt weaving, that is what Investors will purchase, and what project organisers will have to go for.
*I mean, it's Lent, and *I'm* not reading the Scriptures, even though I keep getting nice weekly emails from the Franciscans about 'read along with the Scriptures during Lent, sign up to this handy online course'.
Isn't this exactly what you want though? If the grants committee wants to spend $20k funding underwater yoghurt weaving, they're welcome to do that. The IC model just lets them outsource the risk and foresight to the investors.
Okay, let's say we have donors instead of investors. One group pitching for donations wants to set up underwater yoghurt weaving. One group wants to set up before-school breakfast clubs in DEIS schools.
Right now, donors can donate to whichever one they prefer, or to both. Or to neither, if they don't care about either project.
Now we move to the impact certificate model. Instead of donors, we have investors, who are looking to get a return on the money they invest.
Now we have the layer of "the grant-making committee gives out the impact certificates and awards grants accordingly".
So now the investors, who want a return on their money, try and decide what kind of project the grant-making committee considers to have the most beneficial social impact.
They find out that Jane on the committee really loves woven underwater yoghurt and eats it at every meal. Sergio provides scuba diving gear. Mateusz's cousin is a teacher of underwater yoghurt weaving.
So they'll fund project A on the grounds that the committee is much more likely to think underwater yoghurt weaving is socially impactful in a beneficial way.
Now all the investors fund underwater yoghurt weaving, because it's a sure way to get back the money they gave to the charity, and the kids in the DEIS schools can go hungry for all anyone cares.
Under the donor model, both projects have a more or less equal chance of getting funded. Under the investor model, only the projects deemed profitable will get funded, and profitable is not at all the same thing as 'having a beneficial social impact' in practice, no matter how nicely the prospectus dresses up the wonderful benefits of learning how to weave your own yoghurt be it in pool, river or sea!
https://www.gov.ie/en/policy-information/4018ea-deis-delivering-equality-of-opportunity-in-schools/
Explain why this isn't a problem for the current model of charitable funding.
Charities will do and say things to maximize the amount of funding they recieve including committing explicit fraud in the reporting of their success of their projects, reporting the results of their projects in deceptive or misleading ways, or using metrics that aren't aligned with maxmially achieving social impact.
At least in the impact markets model of charity, the people funding projects are the ones who get to decide the terms of the donation directly, and have much more of an incentive to make sure theyre right. In traditional charities, there's a lot of reputational baggage where you assume a charity is big and has been around a long time and has other high profile investors, it must be legit. Impact markets force you to actually care about what is real or not.
And in traditional donating, much donation is done on the basis of prestiege, donating to the charities which give you the most social esteem or self satisfaction.
Any esteem you get for this impact market donation will be on actual results being delivered, so you're much more invested in working out who is giving you genuine social impact to avoid being ripped off.
Oh it is already a problem. But making the targets more specifics has both upsides, but also downsides of the metrics don’t actually track doing good.
You tell people that they are measured by how many families they are able to place into homes, and what you see is overtime the homes degrade because people maximize what is measured.
When there aren’t metrics people can do more rational balancing of these things. To be clear I am not anti metrics, but metrics need to be very carefully deployed and they typically are not.
Also as regards gambling, this sounds a lot like creating a derivatives market in “social good created”. And historically derivatives markets haven’t always been good for the underlying market.
Sure, in the same sense that charities are "gambling" when they risk the charity's resources on a project that may have sub-optimal or zero social impact.
But it seems like you're using "gambling" in a way that constitutes the non-central fallacy:https://www.lesswrong.com/posts/yCWPkLi8wJvewPbEp/the-noncentral-fallacy-the-worst-argument-in-the-world
Gambling is bad when it causes social harm through people jeoparidizing theirs and their families' financial security, accuring black market debt that could result in becoming the victims of violent enforcement, funding organized crime etc.
NONE of those things apply here, so objecting to it on the basis of it being "gambling" is fallacious.
Any losses through this "gambling" will be borne by investors with enough money to risk on these projects, and being successful in this "gambling" results in socially effective charitable projects being carried out (and incentivizing further investment is these kind of projects).
As mentioned above I don’t think making investment markets for type of activity is always good for the well functioning of the activity.
>Suppose that one project is really excellent and we value it at $70,000, another project is also excellent and worth $20,000, and the third is still pretty good, and worth $10,000. The ratio is 7:2:1, so we’ll pay $14,000 for the impact certificate for the first, $4,000 for the second, and $2,000 for the third.
How does Scott decide the values of projects? What if his valuation of a project causes an investor to lose money (for example, the investor in the third project might have invested $3000, but gets only $2000 from Scott)?
Then he is a bad investor. He will quit investing (or at least have less of a "vote", since he has less money). And the pool of investors becomes better.
Then it incentivizes the investor not to fund that project or to look at ways of running it more efficiently to reduce its cost.
If they invest in a project that succeeds but loses them money, they made a bad investment and are punished accordingly, not different to any other kind of investment.
If you fund the creation of a company that becomes profitable but doesn't cover the cost of your investment (including opportunity costs), you made a bad investment and will have less money moving forward to be used to direct resources in the economy, and people make good investments will have more money.
"If they invest in a project that succeeds but loses them money, they made a bad investment and are punished accordingly, not different to any other kind of investment."
And that is exactly my objection there. I don't seem to be making my point correctly; I don't care about impact certificates per se, it's just another way of buying indulgences.
What I care about is that charity is *not* a business. And if you start running it to make a return on investment, rather than efficiency of objectives (I am *not* objecting to "can we make sure this charity is not wasteful or badly run or just throwing money at stupid projects?", that's basic common sense), then my concern is that the goals of the charity become "return on investment" not whatever their original charitable aim was.
Suppose we have a group working on the (sigh) school-to-prison pipeline. They even have some success! Now instead of little Johnny dropping out early and ending up with 5 to 50 in prison, he stays in school, graduates, and ends up with a job working in a convenience store.
I think this is beneficial social impact. I'm sure the grant award committee will think the same. And the investor gets his money back.
But what if the investor wants more than just 'his money back'? This is like interest on a loan, because that's what we're basically talking about: the charity borrows money from the investor and pays it back when it gets the grant funding upon successful completion.
Suppose the investor goes "Yeah that's all very well, but this kid didn't end up with a job in Goldman Sachs, so he's not productively contributing to the economy. I'm interested in kids who get jobs in Goldman Sachs so they pay back a slice of their future earnings for a period as return on my investment. What good is some minimum-wage loser to me? So I'm gonna invest in the school-to-Goldman Sachs pipeline projects instead. Let the losers end up in jail, *I* don't care".
The Goldman Sachs kids may make more money for the investor. This is a good investment. The investor is not punished for this investment, as he would be by investing in the minimum wage kids.
But is that more beneficial for society? If the kids who might have been minimum wage instead end up in prison, because it's more "economically productive and hence better for society" if the focus is on the Goldman Sachs kids?
*That's* my concern about turning charities into businesses.
I think the disconnect might be, the charities don't pay the investors back if their project is successful. They keep all the money the investors give them forever. Once they get paid, that's the end of it as far as they're concerned. The grants committee pays back the investors at a later date based on how successful the charity has been.
In your example, if the school-to-Goldman Sachs charity hasn't helped any kids keep out of prison (and I imagine it wouldn't), then the grants committee won't pay any investor who gave money to it, which means they're basically just donating the money. Now, maybe they think a donation with no immediate payback will be worth it in the long run, but at that point it has nothing to do with the impact market, they can just donate on their own.
I think it would help if you said more about what kinds of projects fall under the scope of the grant ("forecasting projects" is kind of ambiguous)
I think sadly that far too many (most?) people are too ideologically blinded to understand impact markets and why they should be expected to be a more effective model of charity. Even on this blog, where the commenters are supposed to be especially switched on, we see the same foolish objections each and every time Scott posts about this topic. Hopefully the people who can't grasp it are the ones who don't need to understand and support it for it to have a chance of succeeding.
To all who have responded to me about impact markets, rather than doing this for every one of you individually:
Thank you for the full and frank exchange of views. Were this another site on the web, or were I of a different political disposition, this is the moment I would loudly fling about recriminations about dogpiling and the general faults of all, then flounce off in a huff slamming the door behind me.
Well tough, lady doggesses, you don't get rid of me that easily! 😁
I love this place because it is one of the very few online where we can have a good old ding-dong, people mostly don't get *too* precious about their fee-fees, and the benevolently dictatorial aura of the True Caliph and his Reign of Terror mean we broadly stay within the confines of civility.
Love and kisses to one and all, even if I remain unconvinced about the "more effective model of charity". You need to think in the long term, like two hundred years, about what this will evolve into. See the history of almshouses:
https://www.almshouses.org/
😘😘😘😘😘😘😘😘😘
I'm going to sound awfully miserly here but it needs to be said. Robin Hanson, inventor of prediction markets and one of the smartest people in the world, believes that the next step for PMs is a single dramatic demonstration to people in positions of power: specifically his "fire the CEO" market, which requires a million dollars. Which is a lot, and is annoying, but I think he's right that that's what it'll take to get PMs some mainstream recognition. I think a single, big, boring project is needed, not lots of little interesting ones.
What's the idea there? A prediction market gets going with all YES votes on "Should the CEO of Watson's Widgets be fired?", and then the board of directors/major shareholders see that and go "Jings! A bunch of nobodies have spoken that we should fire the CEO! Leave us do that immediately!" and this will prove that prediction markets are the way forward?
I have an idea that a very expensive termination of employment without cause law suit would ensue for "Why did you fire my client on nothing more than a bunch of nobodies said so, when you admitted you were satisfied with his job performance up to then?"
https://www.overcomingbias.com/p/if-i-had-a-millhtml
Alternatively, video: https://youtu.be/4yZKGbq1YmA
I agree a single big project would be great, but I don't have the resources to launch one, and I think the way you get one is by having lots of little projects that go well until someone powerful pays attention.
Seems sad that this has gotten no traction, while I don't buy the idea entirely I think it's rather interesting and has potential.
For what it's worth it doesn't help that, as far as I could tell, when this was announced, manifunds accredited investors flow didn't seem to work... might be partially related.
Might be worth making it simpler and cutting the investor, instead approving projects people value at a certain $ for their time, and paying the profits to those.
Seems boring enough that I wouldn't participate myself *but* potentially quite useful for a more college -studenty demographic.
Also selecting markets at a certain worth e.g. 15k cap and only allowing shares in those would heavily incentivise investors.
No idea though, just my two cents
Is Manifund's accredited investor flow still broken for you? If so, can you explain how?
Works just fine now!
A few questions about the retrofunding thought process (realizing that these details may intentionally be left open-ended):
"1. On September 1, we’ll look at all of the projects that got funded and try to value all of them."
Will the evaluation focus on impact the projects have demonstrated up to September 1, potential for future impact, or both?
"2. We’ll try to buy impact certificates of the projects we value most."
How many of the top-valued projects would you expect to buy impact certificates for? Supposing 15 projects get funded, and you think 10 of them are at least somewhat impactful, would you offer to buy the impact certificates of all 10 in proportion to the valuations you've assigned, or only offer for the top few projects?
1. My plan (open for criticism) is "expected final impact, conditional on impact 9/1". If the project is finished, completed impact = expected final impact. If it's partway done, I will use the done part to predict final impact. If it's not done at all, I will use the fact that the person is a flake and wasted six months to predict final impact (probably low, though there could be extenuating factors).
2. My plan (open for criticism) is to value every project, and distribute final oracular funding at the same ratio, ie if your project produced X% of the total value, you get $40K/X. I don't have a clear plan about whether this means buying certificates for all non-zero projects, I think it would depend on transaction costs and how big the differences between projects were. I would probably find it annoying to have to send money to more than ten projects.
Hi Scott. Seems like it's time to put my money where my mouth was [1]! I've just went through the accredited investor flow and should hopefully be buying up impact certificates shortly. (And yes, it took me two weeks to find the free time to actually make an account, etc.)
Can you clarify the judging process? In particular, what is the judging criteria: is it something about how useful these projects will be for forecasting, or how likely Scott and his friends are to think they're good projects, or what? For example, one project I'm looking at seems very Scott-friendly, very cool, and good "ROI" in terms of potential world impact... but I'm not sure how likely it is going to be to improve the state of the art in forecasting specifically. Would that be a "good" investment, or a "bad" one?
(I might invest in that project anyway as a charitable donation, but, I'd still like a general sense of what projects are most likely to get the potentially-3x returns.)
[1]: https://astralcodexten.substack.com/p/impact-markets-the-annoying-details/comment/7755694