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Moral Economics


On the shoulders of: Altruistic Arbitrage, Certificates of Impact, Cognitive Load and Effective Donation, Coordination Problems for Donations, Donation Swapping, International Donation Trade, Direct Funding for EAs and especially Moral Trade.


News: Giles created a new #Moraltrade channel on Slack, which is being used during the Sunday US UK online EA workathons - in person for those in SF. To see the workathon Sunday event go here. And to enter the channel for Moral Trade enter here.

Special thanks to Ryan Carey, Ben Hoskin and Leo Arruda for ideas and corrections.

Crossposted at diegocaleiro.com

In these writings we propose the creation of a subfield of knowledge, Moral Economics, and provide in broad strokes its characteristics. We assemble previous writings that can be considered prospective subfields. We also discuss several concepts that have been developed in recent years that are instrumentally useful for Moral Economic thinking, and propose several new ones that could also bear fruit if the study of this area develops further in the future.


  1. Introducing Moral Economics

  2. Examples of Moral Economics Concepts

  3. Branches Within Moral Economics

  4. Moving Moral Economics Forward

  5. Direct Funding Between EAs

  6. Certificates of Impact, Doing It Right - Giles Edkins

    1. Moral market failure: how COIs might help

    2. Problems with COIs, and their solutions

    3. Implementing COIs

  7. Agential Identity in Moral Economics

The birth of a subfield of knowledge


Economics for altruists doesn't operate under the same rules as regular economics.

Economics for altruists, and for moral agents at large, could be a prolific field of study, if both similarities and differences were appreciated. To see them, we cite Ord (In press):

Different self-regarding tastes allow for gains from trade. For example, if two children would prefer to eat each other’s packed lunches, they can trade them and both benefit. Similarly, if people have different moral views, they can potentially realise gains from moral trade, making them both think that their moral view is better satisfied if they make a trade than if they don’t. For example, consequentialists may think that the trade produces a better outcome, while deontologists may think that it better fulfils their duties or that it is a supererogatory option.  


As Carey pointed out while reviewing this:

People do not behave in an entirely self-interested manner, and economists are often tempted to model people as though they are. Utility in economics is used to mean something different from how it is usually understood, which is at best confusing, and at worst distorts the discourse. [We can][...] call into question the notion that what society common-sensically calls a person is necessarily one agent in the economic sense. Instead, you want to say that a person is made up of lots of desires, which might be subagents themselves (picoeconomics) that they might be the same as temporally distant similar people (UDT/TDT), and that their other-regarding beliefs should not be excluded from analysis, or from efforts to build robust institutions to fulfil these values.


In traditional economics, monolithic self-interested agents that have full personal identity over time perform trade, make contracts and create firms in order to satisfy their preferences, especially with regards the consumption of goods and services. Over time, the opportunities for increased efficiency offered by the division of labour becomes a strong incentive for cooperation even if agents are mostly self-interested, so alliances and groups become more likely. Negative externalities frequently generate tragedy of the commons type dilemmas, a multiplayer version of prisoner’s dilemma (Ingmar & Savulescu 2013).

There are many ways in which the assumptions of traditional economic models can be challenged. For altruists and moral philosophers, some of these are worth pointing out, not as critique of the homo economicus model, which has been done thoroughly and at this point would be attacking a strawman, but merely to increase the saliency of some aspects of economics that will be useful to reason about altruistic economics. Let us look at them in turn.


  • Heuristics and Biases: famously associated with Kahneman and Tversky , this subfield has lead to many predictive models at the individual as well as the social level. They adjust the traditional assumptions of perfect or adaptive rationality, replacing them with specific ways in each human reasoning is predictably imperfect Cognitive Illusions is a good introduction to the field, and Rationality, from AI to Zombies contains a more intuitive introduction. CFAR attempts to help individuals utilize this knowledge for practical rationality.

  • Picoeconomics: George Ainslie has elaborated a model of intra-agent hyperbolic trading, deconstructing the assumption that agents are monolithic and have full personal identity over time. Instead he contends that there is a dispute between different time slices of the same individual, and they too perform trade and bargain at the sub-personal level. His model makes different mathematical predictions of what an individual would deem an acceptable trade or not and has also been empirically corroborated as a better model of what humans actually do than the Homo Economicus strawman, though alternative models have empirically equivalent accuracy.

  • Fitness economics: Evolutionary Psychology, Parental Investment, Epigenetics and Human Behavioral Genomics These subfields and theories are not traditionally considered part of economic theory, so I'm lumping them all together under the umbrella of fitness economics. I consider these relevant as they provide an explanatory framework for the incentives that govern human behavior that is different from the heuristics and biases, the picoeconomics, and the homo economicus perspectives. Fitness economics provides a theory of the behavior of economic agents in terms not to the benefits to individuals themselves, but to the long term survival and propagation of the genes or some epigenetic elements that individuals carry. Frequently these explanations give a better understanding of why a particular bias or heuristic is ubiquitous in human cognition, and they are also utilized to generate hypotheses and empirical tests which are then carried on by behavioral economists, who evaluate heuristics and biases empirically.


We suggest the creation of another subfield of economics:

Moral Economics.

It could also be called Altruistic Economics if that seems more suitable down the road. The important intuition is that moral economics should be valuable for moral agents with many different perspectives, and even more so for altruistic agents and agents with broadly aggregative consequentialist values.

What does Moral Economics encompass?


It can be taken as drawing a line in idea-space around the ideas in Altruistic Arbitrage, Certificates of Impact, Cognitive Load and Effective Donation, Coordination Problems for Donations, Donation Swapping, International Donation Trade, Direct Funding for EAs and especially Moral Trade.

The idea is to create the concept of a field of knowledge which associates these in a cluster, and understand the mechanics and logic that makes them related in concept space, as well as provides a vocabulary and perspective which allows us to discover other ideas which belong to the same cluster.


These ideas all use the methods of analysis that are traditionally associated with economics and game theory, but from a different perspective and under different assumptions about what matters for agents, what is valuable for them. It is also necessary to use different notions of externalities and of utility. Compared to traditional economic agents, we would  expect moral economic agents to behave differently, for there are qualitative shifts - even sign reversals - in the desirability of some forms of trade, formation of firms, incentives, contracts, coalitions and other economic precepts.

Moral economics would also diverge from traditional economics in having a multidimensional notion of value, which causes further detachment between price and market price, because different individuals will assign different subjective values for equal actions. Frequently they will value actions equivalently if taken by themselves or others, in a way that enables more frequent trade, in particular arbitrage, than the type of subjective valuation individuals have in standard microeconomics.

Economics has traditionally  focused on positive predictions about states of affairs and passive evaluations about the desirability/efficiency of those states. Concerns about how to improve matters were generally passed off as being the responsibility of the state, which was assumed to be largely omniscient and benevolent. Though the latter assumption has been challenged by Public Choice Economics, economics in general has had little to say about the perspective of an individual agent whose primary concern was aggregative value. Moral Economics hopes to address this deficiency.

The moral market is currently much less developed than the conventional economic market. The latter benefits from a sophisticated infrastructure to facilitate trade, including contracts, speculation and financial intermediaries, all of which are largely lacking from the Moral Economic sphere. As such, we should expect the moral market to be significantly less efficient than traditional market. This gap in market efficiency is expected to diminish as a larger fraction of resources reaches price equilibrium in both markets at the same time, effectively unifying them as a market, although I don't anticipate the gap to close anytime soon, or ever. Bostrom (2003), Scott Alexander, Hanson (forthcoming), Fabiano & Caleiro (2015), and Christiano (2014) make the case for us having reason to suspect that incentive structures will not lead to morally desirable outcomes in the very long run. Despite these reasons for skepticism about moral outcomes thousands or millions of years into the future, there are still substantial benefits of moral trade that can be accrued now or in the nearer future, The creation of "currency exchange" institutions such as Givewell, Giving What We Can, and others can be seen as a first step in closing the efficiency gap separating the traditional market from the moral market.


Next in the Moral Economics series (posts every other day):


  • Examples of Moral Economics Concepts
  • Branches Within Moral Economics
  • Moving Moral Economics Forward
  • Agential Identity in Moral Economics
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It could be worth running this by a mainstream economist to see if they think there's anything to it.

Robin Hanson is not mainstream in any sense I can envision, he did take a look at it though :) I asked an economist friend to review, and an economy student reviewed it as well. Check below for the link for the complete google docs if you are an economist who happens to be reading this.

This is an interesting and promising field. You might look into some of the work done on distributive justice in recent years, as I think some of that could also be useful to this endeavor. For instance, John Roemer's idea of "Kantian optimization" offers a sort of altruistic economy (though not one that I think most effective altruists would necessarily call for): http://citeseerx.ist.psu.edu/viewdoc/download?doi=

Might be worth speaking to Richard Povey about this. he's modelled the optimal level of altruism in a particular setting mathematically.

Interestingly, I think there'll be a fair amount of crossover between this and theories / models of corruption. Good luck.

If you are eager to see the other posts in the series, and would like to help them by commenting, feel free to comment in this google docs which contains all the posts in the series.

The posts are already finished, yet, I highly encourage other EAs to create more posts in that document, or suggest changes. I'm not an economist, I was struck by this idea while writing my book on Altruism, and already spent many hours learning more economics to develop it. The goal is to have actual economists carrying this on to distances I cannot.

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