I think the big difference between investors and altruists isn’t about diverse vs concentrated values, but that making money in one time period helps you make money in the next, whereas saving orphans in one time period doesn’t allow you to invest those orphans to help save more next year. We might expect good investors to dominate the stock market until Efficient Market pressures come into play; there is no such positive feedback loop for altruism.
Also, your useage of ‘arbitrage’ is a bit strange. I think of arbitrages as being portfolios with a wealth process W such that
W0 = 0
P[W1 < 0] = 0
P[W1 > 0] > 0
whereas you seem to be thinking of them as “unexploited opportunities”. True, a good opportunity could be turned into an arbitrage as part of the appropriate portfolio, but you’ll probably need to hedge. And yet this is exactly what we do not need to do with utility.
Actually, I’m not sure why you make the reference to Arbitrage. Isn’t your point basically just that consumer surplus can be unusually high for individuals with unusual demand functions because the supply (of chances to do good) is fixed so lower demand ⇒ lower price?
there is no such positive feedback loop for altruism.
Which suggests that creating a corporation that makes money is one of the best forms of altruism around. You’ve created value for others, and put yourself in a position to create even more value in the future.
I have no evidence for this, but it seems plausible: What if people who are the recipients of altruism are more likely to be providers of altruism in the future? This would mean that altruism really is a form of investment. I would be curious to know if anyone has studied the effects of receiving altruism on future behavior.
I think the big difference between investors and altruists isn’t about diverse vs concentrated values, but that making money in one time period helps you make money in the next, whereas saving orphans in one time period doesn’t allow you to invest those orphans to help save more next year. We might expect good investors to dominate the stock market until Efficient Market pressures come into play; there is no such positive feedback loop for altruism.
Also, your useage of ‘arbitrage’ is a bit strange. I think of arbitrages as being portfolios with a wealth process W such that
W0 = 0
P[W1 < 0] = 0
P[W1 > 0] > 0
whereas you seem to be thinking of them as “unexploited opportunities”. True, a good opportunity could be turned into an arbitrage as part of the appropriate portfolio, but you’ll probably need to hedge. And yet this is exactly what we do not need to do with utility.
Actually, I’m not sure why you make the reference to Arbitrage. Isn’t your point basically just that consumer surplus can be unusually high for individuals with unusual demand functions because the supply (of chances to do good) is fixed so lower demand ⇒ lower price?
Which suggests that creating a corporation that makes money is one of the best forms of altruism around. You’ve created value for others, and put yourself in a position to create even more value in the future.
I have no evidence for this, but it seems plausible: What if people who are the recipients of altruism are more likely to be providers of altruism in the future? This would mean that altruism really is a form of investment. I would be curious to know if anyone has studied the effects of receiving altruism on future behavior.
Unfortunately, the Ugandan Orphans you saved are unlikely to be joining you at your hedge fund.