Damn, the nicest comment I've ever gotten and it's a bot lol
Just one point of nuance. Even if the current government issues the asset with the intention of breaking the promise, they lose basically nothing in net present terms (because those cashflows 50 years into the future are discounted by 1+d to the 50th power). I've updated the post to make the point clearer.
Interesting points. 100 years is unnecessarily long, it just simplified some of my arguments (every politician being dead, for instance).
If it were, say, 50 years, the arguments still roughly hold. Then it becomes something that people do for their children, and not something for “the unborn children of my unborn children” which doesn't seem real to people (even though it is). I think this probably solves the silliness issue, and the constituency issue.
But I also think it might seem silly because no one has done it before. In December, putting a tree in your house and covering it with lights doesn't seem silly because it's something that everyone does. The first successful instance of this will be much harder than every other attempt.
Politicians who only advocated for these policies would seem silly, because current issues also matter. So I'm not suggesting that, just that it plays a part in their overall policy portfolio. And normally when policies are passed, several go through at once. If no one else cares about what happens in 50 years time, they have a chance of slipping by.
So my question is, why not try it on something uncontroversial that has a short-term sticking point? What do you gain from not seeing if this works?
I would assume that for a private prison that has become good at its business the benefits of more inmates would outweigh the liabilities and that at some point it would (in principle, ignoring the free rider problem for a moment) become easier to increase the profits by increasing the revenue by making more things illegal than trying to reduce the reoffending rate.
Ignoring the free-rider problem ("problem" being from the perspective of the prison), as the prison gets more and more current/former inmates, it becomes harder for that cost-benefit calculation to make sense. With no change in the law or the performance of the prison, the prison's liabilities will grow until the point at which the current/former inmates who die are are as numerous incoming inmates. So for lobbying to make financial sense, it would probably have to occur soon after the prison is started or soon after the system is implemented. But that time is also when the prison has the least information about their own competence (in terms of rehabilitation and auction pricing).
Also do administrators profit from more crimes in a public system? It of course increases the demand for administrators, but I don't see how it would increase the salary of a significant number of them.
Not really, but that's besides the point. The point is that they don't benefit from rehabilitating their inmates. They don't benefit from firing abusive guards. They don't benefit from reading the latest literate on inmate rehabilitation and creating policies that reduce the chance of their inmates re-offending.
Does insurance contracts typically contain clauses for future “products”? I would have assumed that the insurance of the prison would only cover the damage of the point in time the contract was firmed.
I don’t know much about insurance, but I think you can write pretty much whatever contract you like, as long as no laws are broken.
The “Planck principle” seems more applicable to scientists who are strongly invested in a given hypothesis
Yep, that’s why I referred to your 2nd and 3rd traits: A better competing theory is only an inconvenient conclusion if you’re invested in the wrong theory (especially if you yourself created that theory).
I know IQ and these traits are probably correlated (again, since some level intelligence is a prerequisite for most of the traits). But I’m assuming the reason you wrote the post is that a correlation across a population isn’t relevant when you’re dealing with a smart individual who lacks one of these traits.
I think you have to be smart to have all the OP’s listed traits, so sure, there’s going to be correlation. But what’s the phrase? “Science advances one funeral at a time.” If that’s true, then there are plenty of geniuses who can’t bring themselves to admit when someone else has a better theory. That would show that traits 2 and 3 are commonly lacking in smart people, which yes, makes those people dumber than they otherwise would be, but they’re still smart.
Wow, that essay explains strong anecdotes a lot better than I did. I knew about the low-variance aspect, but his third point and onwards made things even clearer for me. Thanks for the link!
Maybe I should have gone into why everyone puts anecdotes at the bottom of the evidence hierarchy. I don't disagree that they belong there, especially if all else between the study types is equal. And even if the studies are quite different, the hierarchy is a decent rule of thumb. But it becomes a problem when people use it to disregard strong anecdotes and take weak RCTs as truth.
One big change that a lot of employers can make is changing their interviews and written tests.
I’ve been required to create a new policy from scratch in interview settings. “Okay now you should come up with an idea on the spot, and you will need to say why this policy should now be a legal requirement of every person in the country.” It’s exactly that type of surface-level thinking that policymakers should avoid.
You should be allowed to bring in work that you’ve already made into the interview and for the written application. It’s far more reflective of the work you will do, because it is the work that you’ve done. Plans for future policy writings mean nothing because there very well could be some technical reason why your nascent policy idea is fundamentally flawed.
If we were to see inflation going back to levels expected by the Fed (2-3% I suppose?) how would that change your forecast?
Great question. So my view is that there could be a few potential triggers for a sell-off cascade (via some combination of margin calls and panic selling), leading to a large drop. There’s also a few triggers for increasing interest rates, not just inflation: The Fed doesn’t have a monopoly on rates. When they buy fewer bonds, they shift the demand curve left, decreasing the price, leading to higher effective interest rates. I’m kind of baffled that they speak about “tapering” as if it’s possible to do so without increasing interest rates.
The particular problem with persistent inflation is that the Fed is less able to increase the cash supply in the event of a large crash. So while I think that inflation isn’t necessary for a 30 percent drop (I’d say it’s over half of my credence), I expect it to magnify the downside if it is higher than normal right before a crash.
When you wrote “The main thing I’m worried about is increased savings” did you mean what you described in the previous paragraph (e.g. zero-NPV assets investing and alike), or was it something else?
When I say zero-NPV assets, I mean anything that doesn’t pay out future cash flows to investors, like gold, silver, bitcoin, and NTFs. Certain stocks are being traded as if they were these assets too (AMC, GameStop). I think investment in these things is indicative of mania.
I’m worried that the Fed has flooded the market with so much cash that the new normal for the CAPE ratio and PS ratio are close to what they are now. If it is, then margin-debt-to-GDP isn’t the relevant ratio anymore, margin-debt-to-total-market-cap is, which is not at as high of a level as margin-to-GDP. Basically, supposing we have a smooth exponential curve for the S&P 500, I’m worried about a one-off discontinuity in the graph. I’m also worried about people investing more of their income and net worth, which would have the same effect.
I’m thinking that you might be able to bet against experienced bettors who think that you’re the victim of confirmation bias (which you might be)
I’d say I’m neutral (though so would anyone who has confirmation bias). I’ve given reasons why these indicators may have lost their predictive value. My main concern is increased savings (and investment of those savings). But hey, we don’t get better at prediction until we actually make predictions.
I’m just looking for market odds. I’d prefer to read the other side that you mention before I size my bets, but I listened to Chairman Powell’s reasoning every time he gives it. Watching Bloomberg’s videos. Listened to Buffett explain why he’s still holding stocks (low interest rates). Let me know if I should be listening to something else. I’m very happy to read the other side if someone is giving their credences.
I’m not quite sure about my bet structure. I’ve got my probability distribution, and I want to bet it against the market’s implied probability distribution in such a way that I’m maximizing long-run growth. Not sure how to do that other than run simulations. If there’s a formula, please let me know.
Damn, the nicest comment I've ever gotten and it's a bot lol
Just one point of nuance. Even if the current government issues the asset with the intention of breaking the promise, they lose basically nothing in net present terms (because those cashflows 50 years into the future are discounted by 1+d to the 50th power). I've updated the post to make the point clearer.
Interesting points. 100 years is unnecessarily long, it just simplified some of my arguments (every politician being dead, for instance).
If it were, say, 50 years, the arguments still roughly hold. Then it becomes something that people do for their children, and not something for “the unborn children of my unborn children” which doesn't seem real to people (even though it is). I think this probably solves the silliness issue, and the constituency issue.
But I also think it might seem silly because no one has done it before. In December, putting a tree in your house and covering it with lights doesn't seem silly because it's something that everyone does. The first successful instance of this will be much harder than every other attempt.
Politicians who only advocated for these policies would seem silly, because current issues also matter. So I'm not suggesting that, just that it plays a part in their overall policy portfolio. And normally when policies are passed, several go through at once. If no one else cares about what happens in 50 years time, they have a chance of slipping by.
So my question is, why not try it on something uncontroversial that has a short-term sticking point? What do you gain from not seeing if this works?
Ignoring the free-rider problem ("problem" being from the perspective of the prison), as the prison gets more and more current/former inmates, it becomes harder for that cost-benefit calculation to make sense. With no change in the law or the performance of the prison, the prison's liabilities will grow until the point at which the current/former inmates who die are are as numerous incoming inmates. So for lobbying to make financial sense, it would probably have to occur soon after the prison is started or soon after the system is implemented. But that time is also when the prison has the least information about their own competence (in terms of rehabilitation and auction pricing).
Not really, but that's besides the point. The point is that they don't benefit from rehabilitating their inmates. They don't benefit from firing abusive guards. They don't benefit from reading the latest literate on inmate rehabilitation and creating policies that reduce the chance of their inmates re-offending.
I don’t know much about insurance, but I think you can write pretty much whatever contract you like, as long as no laws are broken.
Yep, that’s why I referred to your 2nd and 3rd traits: A better competing theory is only an inconvenient conclusion if you’re invested in the wrong theory (especially if you yourself created that theory).
I know IQ and these traits are probably correlated (again, since some level intelligence is a prerequisite for most of the traits). But I’m assuming the reason you wrote the post is that a correlation across a population isn’t relevant when you’re dealing with a smart individual who lacks one of these traits.
I think you have to be smart to have all the OP’s listed traits, so sure, there’s going to be correlation. But what’s the phrase? “Science advances one funeral at a time.” If that’s true, then there are plenty of geniuses who can’t bring themselves to admit when someone else has a better theory. That would show that traits 2 and 3 are commonly lacking in smart people, which yes, makes those people dumber than they otherwise would be, but they’re still smart.
Wow, that essay explains strong anecdotes a lot better than I did. I knew about the low-variance aspect, but his third point and onwards made things even clearer for me. Thanks for the link!
Yep, I agree.
Maybe I should have gone into why everyone puts anecdotes at the bottom of the evidence hierarchy. I don't disagree that they belong there, especially if all else between the study types is equal. And even if the studies are quite different, the hierarchy is a decent rule of thumb. But it becomes a problem when people use it to disregard strong anecdotes and take weak RCTs as truth.
One big change that a lot of employers can make is changing their interviews and written tests.
I’ve been required to create a new policy from scratch in interview settings. “Okay now you should come up with an idea on the spot, and you will need to say why this policy should now be a legal requirement of every person in the country.” It’s exactly that type of surface-level thinking that policymakers should avoid.
You should be allowed to bring in work that you’ve already made into the interview and for the written application. It’s far more reflective of the work you will do, because it is the work that you’ve done. Plans for future policy writings mean nothing because there very well could be some technical reason why your nascent policy idea is fundamentally flawed.
(One of my comments from LessWrong)
Great question. So my view is that there could be a few potential triggers for a sell-off cascade (via some combination of margin calls and panic selling), leading to a large drop. There’s also a few triggers for increasing interest rates, not just inflation: The Fed doesn’t have a monopoly on rates. When they buy fewer bonds, they shift the demand curve left, decreasing the price, leading to higher effective interest rates. I’m kind of baffled that they speak about “tapering” as if it’s possible to do so without increasing interest rates.
The particular problem with persistent inflation is that the Fed is less able to increase the cash supply in the event of a large crash. So while I think that inflation isn’t necessary for a 30 percent drop (I’d say it’s over half of my credence), I expect it to magnify the downside if it is higher than normal right before a crash.
Interestingly, the Fed itself was (and probably still is) concerned about the current high valuations.
When I say zero-NPV assets, I mean anything that doesn’t pay out future cash flows to investors, like gold, silver, bitcoin, and NTFs. Certain stocks are being traded as if they were these assets too (AMC, GameStop). I think investment in these things is indicative of mania.
I’m worried that the Fed has flooded the market with so much cash that the new normal for the CAPE ratio and PS ratio are close to what they are now. If it is, then margin-debt-to-GDP isn’t the relevant ratio anymore, margin-debt-to-total-market-cap is, which is not at as high of a level as margin-to-GDP. Basically, supposing we have a smooth exponential curve for the S&P 500, I’m worried about a one-off discontinuity in the graph. I’m also worried about people investing more of their income and net worth, which would have the same effect.
I’d say I’m neutral (though so would anyone who has confirmation bias). I’ve given reasons why these indicators may have lost their predictive value. My main concern is increased savings (and investment of those savings). But hey, we don’t get better at prediction until we actually make predictions.
I’m just looking for market odds. I’d prefer to read the other side that you mention before I size my bets, but I listened to Chairman Powell’s reasoning every time he gives it. Watching Bloomberg’s videos. Listened to Buffett explain why he’s still holding stocks (low interest rates). Let me know if I should be listening to something else. I’m very happy to read the other side if someone is giving their credences.
I’m not quite sure about my bet structure. I’ve got my probability distribution, and I want to bet it against the market’s implied probability distribution in such a way that I’m maximizing long-run growth. Not sure how to do that other than run simulations. If there’s a formula, please let me know.