I don’t know whether this is too obvious to be worth pointing out, but money is just token for goods of inherent value. If you give money to a charity, you aren’t directly increasing net global wealth, you are just moving resources from one area to another. This might, however, end up increasing global net wealth if the resources are more productive in this new area. So, anyone who gives to charity is implicitly asserting that they are able to identify areas in which resources are more productive than how the economy would otherwise employ them. If you can’t identify such areas, the world would be just as well off if you were to simply burn your money rather than give it to charity. So, suppose you think that you can increase the productivity of resources by directing their allocation rather than letting other people direct their allocation. I’ll label the quantification of this effect the WAP (for Wise Allocation Premium). WAP = (Value of your allocation—value of default allocation) / value of default allocation.
It also needs to be noted that jobs have social value apart from what one does with one’s salary. So, if you work as a heart surgeon, and you save a bunch of lives, then you’re contributed to society, even if you don’t give your money to charity. There are different ways of accounting for this. One is to estimate what the difference between the social value of one’s job and one’s salary is, and then add in the social value of what one does with one’s salary, minus the resources that are consumed through one’s expenditures. So:
Total social value = (social value of job—salary) + (social value of expenditures – opportunity cost of expenditures) *
However, this is a needlessly complicated way of expressing it that obscures the true nature of the calculation. The equation can be simplified quite a bit to just this:
Total social value = social value of career path + salaryWAP
If your WAP is low, you should focus on doing something that benefits society, and not give much weight to how much you’re making. If your WAP is zero, then your salary is completely irrelevant altruistically, except insofar as it reflects social value. As your WAP increases, you should put more and more emphasis on making money, rather than doing work that matters. If your WAP is really high, then the social value of your career path is largely irrelevant. For instance, if you think that your WAP is 20, then (at least from a utilitarian perspective) it would make sense to break into people’s houses, steal their stuff, sell it, and then give the money to charity.
It should also be noted that while one can altruistically allocate resources by making a large salary and then donating that money, one can also allocated resources through one’s conduct in one’s job. For instance, if you own a monopoly, you can set your price according to what maximizes your profit, and then give that money to charity, or you can just sell your good at cost. If the deadweight percentage is greater than your WAP, then the latter course makes more sense. If you own a construction company, you can choose projects that have the greatest social value. Etc.
I don’t know whether this is too obvious to be worth pointing out, but money is just token for goods of inherent value. If you give money to a charity, you aren’t directly increasing net global wealth, you are just moving resources from one area to another.
Inherent value? Most models see value as subjective, which allows for gains from trade. Charity, in particular, can increase wealth if the donor and recipient are both more satisfied afterwards, as swapping an apple and an orange can increase wealth if the traders are both more satisfied afterwards.
It also needs to be noted that jobs have social value apart from what one does with one’s salary. So, if you work as a heart surgeon, and you save a bunch of lives, then you’re contributed to society, even if you don’t give your money to charity.
Part of the argument for earning to give is that high-compensation fields are generally restricted entry; only so many people work on Wall Street, or as doctors, or so on, and so the more altruists seek to enter those fields, the more resources that those fields control will be directed towards altruistic purposes. This seems very dependent on the field- the number of working doctors will not be altered by a marginal student deciding to apply to medical school, but the number of FAI philosophers may be altered by a marginal student deciding whether or not to work as one.
Most models see value as subjective, which allows for gains from trade.
I’m not clear on what meaning you’re giving to “subjective”, that it means that it allows gains from trade. Whatever label we give, there is clearly a difference between money, and, say, gasoline. If I burn $20 worth of gasoline, there is now $20 less wealth in the world. If I burn a $20 bill, the net global change in wealth is negligible.
I’m not clear on what meaning you’re giving to “subjective”, that it means that it allows gains from trade.
Suppose Bob has five gallons of gasoline. The “value” of those gallons is a two place word; I might want those gallons so I can fuel my car so I can visit friends, and Bob might want those gallons for their resale value. If I want the gallons more than Bob does, it makes sense for me to give him money and for him to give me the gasoline. The “price” of those gallons is the same for each of us- but the “value” is higher than the price for me, and lower than the price for him (or else the trade would not occur voluntarily).
Thus, if the transfer of tokens can lead to increased global wealth in the context of voluntary exchange, it is thus also possible for the transfer of tokens to lead to increased global wealth in the context of charitable donations. The same safeguards are not in place, and so one might argue that it is less likely, but to argue that moving resources from one area to another cannot increase global wealth, as I understood you were doing in the great-grandparent, is arguing that trade doesn’t increase wealth, which is a basic result in economics.
I don’t know whether this is too obvious to be worth pointing out, but money is just token for goods of inherent value. If you give money to a charity, you aren’t directly increasing net global wealth, you are just moving resources from one area to another. This might, however, end up increasing global net wealth if the resources are more productive in this new area. So, anyone who gives to charity is implicitly asserting that they are able to identify areas in which resources are more productive than how the economy would otherwise employ them. If you can’t identify such areas, the world would be just as well off if you were to simply burn your money rather than give it to charity. So, suppose you think that you can increase the productivity of resources by directing their allocation rather than letting other people direct their allocation. I’ll label the quantification of this effect the WAP (for Wise Allocation Premium). WAP = (Value of your allocation—value of default allocation) / value of default allocation.
It also needs to be noted that jobs have social value apart from what one does with one’s salary. So, if you work as a heart surgeon, and you save a bunch of lives, then you’re contributed to society, even if you don’t give your money to charity. There are different ways of accounting for this. One is to estimate what the difference between the social value of one’s job and one’s salary is, and then add in the social value of what one does with one’s salary, minus the resources that are consumed through one’s expenditures. So:
Total social value = (social value of job—salary) + (social value of expenditures – opportunity cost of expenditures) *
However, this is a needlessly complicated way of expressing it that obscures the true nature of the calculation. The equation can be simplified quite a bit to just this:
Total social value = social value of career path + salaryWAP
If your WAP is low, you should focus on doing something that benefits society, and not give much weight to how much you’re making. If your WAP is zero, then your salary is completely irrelevant altruistically, except insofar as it reflects social value. As your WAP increases, you should put more and more emphasis on making money, rather than doing work that matters. If your WAP is really high, then the social value of your career path is largely irrelevant. For instance, if you think that your WAP is 20, then (at least from a utilitarian perspective) it would make sense to break into people’s houses, steal their stuff, sell it, and then give the money to charity.
It should also be noted that while one can altruistically allocate resources by making a large salary and then donating that money, one can also allocated resources through one’s conduct in one’s job. For instance, if you own a monopoly, you can set your price according to what maximizes your profit, and then give that money to charity, or you can just sell your good at cost. If the deadweight percentage is greater than your WAP, then the latter course makes more sense. If you own a construction company, you can choose projects that have the greatest social value. Etc.
Inherent value? Most models see value as subjective, which allows for gains from trade. Charity, in particular, can increase wealth if the donor and recipient are both more satisfied afterwards, as swapping an apple and an orange can increase wealth if the traders are both more satisfied afterwards.
Part of the argument for earning to give is that high-compensation fields are generally restricted entry; only so many people work on Wall Street, or as doctors, or so on, and so the more altruists seek to enter those fields, the more resources that those fields control will be directed towards altruistic purposes. This seems very dependent on the field- the number of working doctors will not be altered by a marginal student deciding to apply to medical school, but the number of FAI philosophers may be altered by a marginal student deciding whether or not to work as one.
I’m not clear on what meaning you’re giving to “subjective”, that it means that it allows gains from trade. Whatever label we give, there is clearly a difference between money, and, say, gasoline. If I burn $20 worth of gasoline, there is now $20 less wealth in the world. If I burn a $20 bill, the net global change in wealth is negligible.
Suppose Bob has five gallons of gasoline. The “value” of those gallons is a two place word; I might want those gallons so I can fuel my car so I can visit friends, and Bob might want those gallons for their resale value. If I want the gallons more than Bob does, it makes sense for me to give him money and for him to give me the gasoline. The “price” of those gallons is the same for each of us- but the “value” is higher than the price for me, and lower than the price for him (or else the trade would not occur voluntarily).
Thus, if the transfer of tokens can lead to increased global wealth in the context of voluntary exchange, it is thus also possible for the transfer of tokens to lead to increased global wealth in the context of charitable donations. The same safeguards are not in place, and so one might argue that it is less likely, but to argue that moving resources from one area to another cannot increase global wealth, as I understood you were doing in the great-grandparent, is arguing that trade doesn’t increase wealth, which is a basic result in economics.