It’s true the net effect is low to first order, but you’re neglecting second-order effects. If premia are important enough, people will feel compelled to Goodhart proxies used for them until those proxies have less meaning.
Given the linked siderea post, maybe this is not very true for insurance in particular. I agree that wasn’t a great example.
Slack-wise, uh, choices are bad. really bad. Keep the sabbath. These are some intuitions I suspect are at play here. I’m not interested in a detailed argument hashing out whether we should believe that these outweigh other factors in practice across whatever range of scenarios, because it seems like it would take a lot of time/effort for me to actually build good models here, and opportunity costs are a thing. I just want to point out that these ideas seem relevant for correctly interpreting Zvi’s position.
It’s true the net effect is low to first order, but you’re neglecting second-order effects. If premia are important enough, people will feel compelled to Goodhart proxies used for them until those proxies have less meaning.
Given the linked siderea post, maybe this is not very true for insurance in particular. I agree that wasn’t a great example.
Slack-wise, uh, choices are bad. really bad. Keep the sabbath. These are some intuitions I suspect are at play here. I’m not interested in a detailed argument hashing out whether we should believe that these outweigh other factors in practice across whatever range of scenarios, because it seems like it would take a lot of time/effort for me to actually build good models here, and opportunity costs are a thing. I just want to point out that these ideas seem relevant for correctly interpreting Zvi’s position.