I occasionally hear the argument “civilization is clearly insane, we can’t even do the obvious thing of <insert economic argument here, e.g. carbon taxes>”.
But it sounds to me like most rationalist / EA group houses didn’t do the “obvious thing” of taxing COVID-risky activities (which basically follows the standard economic argument of pricing in externalities). What’s going on? Some hypotheses:
Actually, taxing COVID-risky activities is not a good solution EDIT: and group houses recognized this. (Why? It seemed to work pretty well for my group house.)
Actually, rationalist / EA group houses did tax COVID-risky activities. (Plausible, I don’t know that much about other group houses, but what I’ve heard doesn’t seem consistent with this story.)
That would have been a good solution, but it requires some effort to set up, and the benefits aren’t worth it. (Seems strange, especially after microCOVID existed it should take <10 person-hours to implement an actual system, and it sounds like group houses had a lot of COVID-related trouble that they would gladly have paid 10 person-hours to avoid. Maybe it takes much longer to agree on what system to implement, and that was the blocker? But didn’t people take lots of time deciding what system to implement anyway?)
That would have been a good solution, but EAs / rationalists systematically failed to think of it or implement it. (Why? This is basically just a Pigouvian tax, which I hear EAs / rationalists talk about all the time—in fact that’s how I learned the term.)
Our house implemented cap and trade (i.e. “You must impose at most X risk” instead of “You must pay $X per unit of risk.”).
Both yield efficient outcomes for the correct choice of X, so the question is just how well you can figure out the optimal levels of exposure vs. the marginal cost of exposure. If costs are linear in P(COVID) then the marginal cost is in some sense strictly easier (since the way you figure out levels is by combining marginal costs with the marginal cost of prevention) which is why you’d expect a Pigouvian tax to be better.
But a cap can still be easier to figure out (e.g. there is no way to honestly elicit costs from individuals when they have very different exposures to COVID, and the game theory of finding a good compromise is super complicated and who knows what’s easier). Caps also allow you to say things like “Look the total level of exposure is not that high as long as we are under this cap, so we can stop thinking about it rather than worrying that we’ve underestimated costs and may incur a high level of risk.” You could get the same benefit by setting an approximate cost and then revising if the total level goes above a threshold (and conversely in this approach you need to revisit the cap if the marginal cost of prevention goes too high, but who knows which of those is easier to handle).
Overall I don’t think our COVID response was particularly efficient/rational, due to a combination of having huge differences in beliefs/values and not wanting to spend much time dealing with it. We didn’t trade that much outside of couples. Most of our hassle went into resolving giant disagreements about the riskiness of activities (or dealing with estimating risks). I don’t think that doing slightly more negotiation to switch to a tax would have been the most cost-effective way to spend time to reduce our total COVID hassle.
Overall I still think that Pigouvian taxes will usually be more effective for a civilization facing this kind of question, but the costs and benefits of different policies are quite different when you are 7 people vs 70,000 people (since deliberation is much cheaper in the latter case). I expect cap and trade was basically fine but like you I’m interested in divergences between what looks like a good idea on paper and then what actually seemed reasonable in this tiny experiment. That said, I think the object-level arguments for implementing a Pigouvian tax here are much weaker than in typical cases where I complain about related civilization inadequacy because the random frictions are bigger.
I am curious about how different our cap ended up being from total levels of exposure under a Pigouvian tax. I think our cap was that each of us was exposed to <30 microcovids/day from the house (i.e. ~1%/year). I’d guess that the efficient level of exposure would have been somewhat higher.
If costs are linear in P(COVID) then the marginal cost is in some sense strictly easier (since the way you figure out levels is by combining marginal costs with the marginal cost of prevention) which is why you’d expect a Pigouvian tax to be better.
Yeah, that.
here is no way to honestly elicit costs from individuals when they have very different exposures to COVID, and the game theory of finding a good compromise is super complicated and who knows what’s easier
I’m definitely relying on some level of goodwill / cooperation / trying to find the best joint group decision, or something like that. (Though I think all systems rely on that at least somewhat.)
I think the object-level arguments for implementing a Pigouvian tax here are much weaker than in typical cases where I complain about related civilization inadequacy because the random frictions are bigger.
I guess you mean the random frictions in figuring out what system to use? One of the big reasons I prefer the Pigouvian tax over cap-and-trade is that you don’t have to trade to get the efficient outcome, which means after an initial one-time cost to set the price (and occasional checks to reset the price) everyone can just do their own thing without having to coordinate with others.
(Also, did most people who set a cap / budget then also trade? Seems pretty far from efficient if you neglect the “trade” part)
I am curious about how different our cap ended up being from total levels of exposure under a Pigouvian tax.
I just checked, and it looks like we had ~0.3% of (estimated) exposure over the course of roughly a year. I think it’s plausible though that we overestimated the risk initially and then failed to check later (in particular I think we used a too-high IFR, based on this comment).
At Event Horizon we had a policy for around 6-9 months where if you got a microcovid, you paid $1 to the house, and it was split between everyone else. Do whatever you like, we don’t mind, as long as you bring a microcovid estimate and pay the house.
At Event Horizon we had a policy for around 6-9 months where if you got a microcovid, you paid $1 to the house
That gives an implied cost of $1 million dollars for someone getting COVID-19, which seems way overpriced to me. I thought I’d do a quick Fermi estimate to verify my intuitions.
I don’t know how many people are in Event Horizon, but I’ll assume 15. Let’s say that on average about 10 people will get COVID-19 if one person gets it, due to some people being able to isolate successfully. I’m going to assume that the average age there is about 30, and the IFR is roughly 0.02% based on this paper. That means roughly 0.002 expected deaths will result. I’ll put the price of life at $10 million. I’ll also assume that each person loses two weeks of productivity equivalent to a loss of $20 per hour for 80 hours = $1600, and I’ll assume a loss of well-being equivalent to $10 per hour for 336 hours = $3360. Finally, I’ll assume the costs of isolation are $1,000 per person. Together, this combines to $10M x 0.002 + ($1600 + $3360) x 10 + $1000 x 15 = $84,600.
However, I didn’t include the cost of long-covid, which could plausibly raise this estimate radically depending on your beliefs. But personally I’m already a bit skeptical that 15 people would be willing to collectively pay $86,400 to prevent an infection in their house with certainty, so I still feel my initial intuition was mostly justified.
(I lived in this house) The estimate was largely driven by fear of long covid + a much higher value per hour of time, which also factored in altruistic benefits from housemate’s work that aren’t captured by the market price of their salary.
There were also about 8 of us, and we didn’t assume everyone would get it conditional on infection (household attack rates are much lower than that, and you might have time to react and quarantine). We assumed maybe like 2-3 others.
I totally expect we would have paid $84,600 to prevent a random one of us getting covid—and it would’ve even looked like a pretty cheap deal compared to getting it!
The estimate was largely driven by fear of long covid + a much higher value per hour of time
Makes sense, though FWIW I wasn’t estimating their wage at $20 an hour. Most cases are mild, and so productivity won’t likely suffer by much in most cases. I think even if the average wage there is $100 after taxes, per hour (which is pretty rich, even by Bay Area standards), my estimate is near the high end of what I’d expect the actual loss of productivity to be. Though of course I know little about who is there.
ETA: One way of estimating “altruistic benefits from housemate’s work that aren’t captured by the market price of their salary” is to ask at what after-tax wage you’d be willing to work for a completely pointless project, like painting a wall, for 2 weeks. If it’s higher than $100 an hour I commend those at Event Horizon for their devotion to altruism!
If it’s 8 hour workdays and 5 days a week, at $100/hour that’s 8 * 10 * 100 = $8k. No, you could not pay me $8k to stop working on the LW team for 2 weeks.
I’m kind of confused right now. At a mere $15k, you could probably get a pretty good software engineer to work for a month on any altruistic project you wish. I’m genuinely curious about why you think your work is so irreplaceable (and I’m not saying it isn’t!).
You could certainly hire a good software engineer at that salary, but I don’t think you could give them a vision and network and trust them to be autonomous. Money isn’t the bottleneck there. Just because you have the funding to hire someone for a role doesn’t mean you can. Hiring is incredibly difficult. Go see YC on hiring, or PG.
Most founding startup people are worth way more than their salary.
When my 15-person house did the calculation, we had a higher IFR estimate (I think 0.1%) and a 5x multiplier for long COVID, which gets you most of the way there. Not sure why we had a higher IFR estimate—it might be because we made this estimate in ~June 2020 when we had worse data, or plausibly IFR was actually higher then, or we raised it to account for the fact that some people were immunocompromised.
But personally I’m already a bit skeptical that 15 people would be willing to collectively pay $86,400 to prevent an infection in their house with certainty
(Fwiw, at < $6000 per person that seems like a bargain to me. At the full million, it would be ~$63,000 per person, which is now sounding iffy, but still plausible. Maybe it shouldn’t be plausible given how low the IFR is -- 0.02% does feel quite a bit lower than I had been imagining.)
Still, I think you shouldn’t ask about paying large sums of money—the utility-money curve is pretty sharply nonlinear as you get closer to 0 money, so the amount you’d pay to avoid a really bad thing is not 100x the amount you’d pay to avoid a 1% chance of that bad thing. (See also reply to TurnTrout below.)
You could instead ask about how much people would have to be paid for someone with COVID to start living at the house; this still has issues with nonlinear utility-money curves, but significantly less so than in the case where they’re paying. That is, would people accept a little under $6000 to have a COVID-infected person live with them?
Fwiw, at < $6000 per person that seems like a bargain to me
Possibly my intuition here comes from seeing COVID-19 risks as not too dissimilar from other risks for young people, like drinking alcohol or doing recreational drugs, accidental injury in the bathroom, catching the common cold (which could have pretty bad long-term effects), kissing someone (and thereby risk getting HSV-1 or the Epstein–Barr virus), eating unhealthily, driving, living in an area with a high violent crime rate, insufficiently monitoring one’s body for cancer, etc. I don’t usually see people pay similarly large costs to avoid these risks, which naturally makes me think that people don’t actually value their time or their life as much as they say.
One possibility is that everyone would start paying more to avoid these risks if they were made more aware of them, but I’m pretty skeptical. The other possibility seems more likely to me: value of life estimates are susceptible to idealism about how much people actually value their own life and time, and so when we focus on specific risk evaluations, we tend to exaggerate.
ETA: Another possibility I didn’t mention is that rationalists are just rich. But if this is the case, then why are they even in a group house? I understand the community aspect, but living in a group house is not something rich people usually do, even highly social rich people.
Still, I think you shouldn’t ask about paying large sums of money—the utility-money curve is pretty sharply nonlinear as you get closer to 0 money, so the amount you’d pay to avoid a really bad thing is not 100x the amount you’d pay to avoid a 1% chance of that bad thing.
So the $6000 cost is averting roughly 100 micromorts (~50% of catching it from the new person * 0.02% IFR), ignoring long COVID. Most of the things you list sound like < 1 micromort-equivalent per instance? That sounds pretty consistent.
E.g. Suppose unhealthy eating knocks off ~5 years of lifespan (let’s call that 10% as bad as death, i.e. 10^5 micromorts). You have 10^3 meals a year, times about 50 years, for 5 * 10^4 meals, so each meal is roughly 2 micromorts = $120 of cost. On this model, you should see people caring about their health, but not to an extraordinary degree, e.g. after getting the first 90% of benefit, then you stop (presumably you value a tasty meal at ~$12 more than a not-tasty meal, again thinking at the margin). And empirically that seems roughly right—most of the people I know think about health, try to get good macronutrient profiles, take supplements where relevant, but they don’t go around conducting literature reviews to figure out the optimal diet to consume.
Also, I think partly you might be underestimating how risk-avoiding people at Event Horizon and my house are—I’d say both houses are well above the typical rationalist. (And also that a good number of these people are in fact rich, if we count a typical software engineer as rich.)
Another possibility I didn’t mention is that rationalists are just rich. But if this is the case, then why are they even in a group house? I understand the community aspect, but living in a group house is not something rich people usually do, even highly social rich people.
There’s a pretty big culture difference between rationalists and stereotypical rich people. One of those is living in a group house. I currently prefer a group house over a traditional you-and-your-partner house regardless of how much money I have.
I ended up saying that long-covid costs were roughly the same as death, so it was a factor of 2x.
Price of a life at $10 million is a bit low, I put mine at $50 million, so a factor of 5x difference.
I didn’t follow all of your calculations about being out for 2 weeks and isolated, I basically just did those two (death and long covid) and it came to ~$200k for me. Roughly say that’s the average among 5 people and then you get to $1 per microcovid to the house.
My best guess is that rationalists aren’t that sane, especially when they’ve been locked up for a while and are scared and socially rewarding others being scared.
Part of the issue is that there’s rarely a natural way of pricing Pigouvian taxes. You can make price estimates based on how people hypothetically judge the harm to themselves, but there’s always going to be huge disagreements.
This flaw is a reasonable cause for concern. Suppose you were in a group house where half of the people worked remotely and the other half did not. The people who worked remotely might be biased (at least rhetorically) towards the proposition that the Pigouvian tax should be high, and the people who work in-person might be biased in the other direction. Why? Because if someone doesn’t expect to have to pay the tax, but does expect to receive the revenue, they may be inclined to overestimate the harm of COVID-19, as a way of benefiting from the tax, and vice versa.
In regards to carbon taxes, it’s often true that policies sound like the “obvious” thing to do, but actually have major implementation flaws upon closer examination. This can help explain why societies don’t do it, even if it seems rational. Noah Smith outlines the case against a carbon tax here,
This isn’t just politics; economists have forgotten basic Econ 101. Voters instinctively know what economists, for some mystifying reason, have seemed to ignore — the people who pay the costs of a carbon tax don’t reap the benefits. Carbon taxes are enacted locally, but climate change is a global phenomenon. That means that if Washington state taxes carbon, its own residents pay, but most of the benefit is reaped by people in other countries and other states. Thus, jurisdictions that choose not to enact carbon taxes can simply hope that someone else shoulders the cost of combating climate change. So no one ends up paying the cost.
Of course, this argument shouldn’t stop a perfectly altruistic community from implementing a carbon tax. But if the community was perfectly altruistic, the carbon tax would be unnecessary.
In regards to carbon taxes, it’s often true that policies sound like the “obvious” thing to do, but actually have major implementation flaws upon closer examination.
Tbc, I’m pretty sympathetic to this response to the general class of arguments that “society is incompetent because they don’t do X” (and it is the response I would usually make).
You can make price estimates based on how people hypothetically judge the harm to themselves, but there’s always going to be huge disagreements.
Yeah, I agree that in theory this could be a reason not to do it (though similar arguments also apply to other methods, e.g. in a budgeting system, people with remote jobs can push for a lower budget).
My real question though is: did people actually do this? Did they consider the possibility of a tax, discuss it, realize they couldn’t come to an agreement on price, and then implement something else? If so, that would answer my question, but I don’t think this is what happened.
My real question though is: did people actually do this? Did they consider the possibility of a tax, discuss it, realize they couldn’t come to an agreement on price, and then implement something else?
Probably not, although they lived in a society in which the response “just use Pigouvian taxes” was not as salient as it otherwise could have been in their minds. This reduced saliency was, I believe, at least partly due to fact that Pigouvian taxes have standard implementation issues. I meant to contribute one of these issues as a partial explanation, rather than respond to your question more directly.
Makes sense, thanks. I still feel confused about why they weren’t salient to EAs / rationalists, but I agree that the fact they aren’t salient more broadly is something-like-a-partial-explanation.
TBH I think what made the uCOVID tax work was that once you did some math, it was super hard to justify levels that would imply anything like the existing risk-avoidance behaviour. So the “active ingredient” was probably just getting people to put numbers on the cost-benefit analysis.
I feel like Noah’s argument implies that states won’t incur any costs to reduce CO2 emissions, which is wrong. IMO, the argument for a Pigouvian tax in this context is that for a given amount of CO2 reduction that you want, the tax is a cheaper way of getting it than e.g. regulating which technologies people can or can’t use.
IMO, the argument for a Pigouvian tax in this context is that for a given amount of CO2 reduction that you want, the tax is a cheaper way of getting it
Since the argument about internalizing externalities fails in this case (as the tax is local), arguably the best way of modeling the problem is viewing each community as having some degree of altruism. Then, just as EAs might say “donate 10% of your income in a cause neutral way” the argument is that communities should just spend their “climate change money” reducing carbon in the way that’s most effective, even if it’s not rationalized in some sort of cost internalization framework. And Noah pointed out in his article (though not in the part I quoted) that R&D spending is probably more effective than imposing carbon taxes.
Note that a) some group houses just did this, b) a major answer for why people didn’t do particularly novel things with microcovid was “by the time it came out, people were pretty exhausted out from covid negotiation, and doing whatever default thing was suggested was easier.”
a) Do you have a sense for the proportion of group houses that did it? And the proportion of group houses that seriously considered it? (My guess would be that 10-20% did it, and an additional 10% considered it.)
Re: b) That does seem like a good chunk of the explanation, thanks. I do expect the Pigouvian tax would have been a better policy even prior to microcovid.org existing, given how much knowledge about COVID people had, so I’m still wondering why it wasn’t considered even before microcovid.org existed.
(I remember doing explicit risk calculations back in April / May 2020, and I think there’s a good chance we would have implemented a similar Pigouvian tax system even without microcovid existing, with worse risk estimates.)
I actually guess even fewer houses than you’re thinking did it (I think I only know if like 1-3).
In my own house, where I think we could have come up with the Pigouvian tax, I think when we did all our initial negotiations in April, I think the thinking was “hunker down for a month while we wait to see how bad Covid actually is, to avoid tail risks of badness, and then re-evaluate” but then it turned out by the time we got to the “re-evaluate” step, people were burned out on negotiation.
I like this question. If I had to offer a response from econ 101:
Suppose people love eating a certain endangered species of whale, and that people would be sad if the whale went extinct, but otherwise didn’t care about how many of these whales there were. Any individual consumer might reason that their consumption is unlikely to cause the whale to go extinct.
We have a tragedy of the commons, and we need to internalize the negative externalities of whale hunting. However, the harm is discontinuous in the number of whales remaining: there’s an irreversible extinction point. Therefore, Pigouvian taxes aren’t actually a good idea because regulators may not be sure what the post-tax equilibrium quantity will be. If the quantity is too high, the whales go extinct.
Therefore, a “cap and trade” program would work better: there are a set number of whales that can be killed each year, and firms trade “whale certificates” with each other. (And, IIRC, if # of certificates = post-tax equilibrium quantity, this scheme has the same effect as a Pigouvian tax of the appropriate amount.)
Similarly: if I, a house member, am unsure about others’ willingness to pay for risky activities, then maybe I want to cap the weekly allowable microcovids and allow people to trade them amongst themselves. This is basically a fancier version of “here’s the house’s weekly microcovid allowance” which I heard several houses used. I’m protecting myself against my uncertainty like “maybe someone will just go sing at a bar one week, and they’ll pay me $1,000, but actually I really don’t want to get sick for $1,000.” (EDIT: In this case, maybe you need to charge more per microcovid? This makes me less confident in the rest of this argument.)
There are a couple of problems with this argument. First, you said taxes worked fine for your group house, which somewhat (but not totally) discredits all of this theorizing. Second, (4) seems most likely. Otherwise, I feel like we might have heard about covid taxes being considered and then discarded (in e.g. different retrospectives)?
EDIT: In this case, maybe you need to charge more per microcovid? This makes me less confident in the rest of this argument.
Yeah, this. The beautiful thing about microCOVIDs is that because they are probabilities, the goodness of an outcome really is linear in terms of microCOVIDs incurred, and so the “cost” of incurring a microCOVID is the same no matter “when” you incur it, so it’s very easy to price. (Unlike the whale example, where the goodness of the outcome is not linear in the number of whales, and so killing a single whale has different costs depending on when exactly it happens.)
You might still end up with nonlinear costs if your value of money is nonlinear on the relevant scale, e.g. maybe the first $1,000 is really great but the next $10,000 isn’t 10x as great, and so you need to be paid more after the first $1,000 for the same number of microcovids, but I don’t think this is really how people in our community feel?
I guess another way you get nonlinear costs is if you really do need to incur some microcovids, and then the amount you pay matters a lot—maybe the first $10 is fine, but then $1,000 isn’t, because you don’t have a huge financial buffer to draw from, so while the downside of a microcovid stays constant, the downside of paying money for it changes. I didn’t get the sense that this would be a real problem for most group houses, since people were in general being very cautious and so wouldn’t have paid much, but maybe it would have affected things. Partly for this reason and partly out of a sense of fairness, at my group house we didn’t charge for “essential” microcovids, such as picking up drug prescriptions (assuming you couldn’t get them delivered) or (in my case) an in-person appointment to get a visa.
Re 1, we ran into some of the issues Matthew brought up, but all other COVID policies are implicitly valuing risk at some dollar amount (possibly inconsistently), so the Pigouvian tax seemed like the best option available.
Carbon taxes are useful for market transactions. A lot of interactions within a group house aren’t market transactions. Decisions about who brings out the trash aren’t made through market mechanisms. Switching to making all the transactions in a group house market based will create a lot of conflict and isn’t just about how to deal with COVID-19.
Using a market-based mechanism in an enviroment where the important decisions are market-based is easier then introducing a market based mechanism in an enviroment where most decisions are not.
If you introduce a market-based mechanism around COVID-19 you get a result where rich members in the house can take more risk then the poorer ones which goes against assumptions of equality between house members (and most group houses work on assumptions of equality).
Personally, I don’t really feel the force of this argument—I feel like on either side I get a good deal (on the rich side, I get to do more things, on the poor side, I get paid more money than I would pay to avoid the risk). I agree other people feel the force of this though, and I don’t really know why.
(But like, also, shouldn’t this apply to carbon taxes or all the other economic arguments that civilization is “insane” for not doing?)
(Also also, don’t we already see e.g. rich members getting larger, nicer rooms than poorer members? What’s the difference?)
(Chores are different in that they aren’t a very big deal. If they are a big deal to you, then you hire a cleaner. If they’re not a big enough deal that you’d hire a cleaner, then they’re not a big enough deal to bother with a market, which does have transaction costs.)
As a single data point, the COVID tax didn’t create conflict in my group house (despite having non-trivial income inequality, and one of the richer housemates indeed taking on more risk than others), though admittedly my house is slightly more market-transaction-y than most.
I occasionally hear the argument “civilization is clearly insane, we can’t even do the obvious thing of <insert economic argument here, e.g. carbon taxes>”.
But it sounds to me like most rationalist / EA group houses didn’t do the “obvious thing” of taxing COVID-risky activities (which basically follows the standard economic argument of pricing in externalities). What’s going on? Some hypotheses:
Actually, taxing COVID-risky activities is not a good solution EDIT: and group houses recognized this. (Why? It seemed to work pretty well for my group house.)
Actually, rationalist / EA group houses did tax COVID-risky activities. (Plausible, I don’t know that much about other group houses, but what I’ve heard doesn’t seem consistent with this story.)
That would have been a good solution, but it requires some effort to set up, and the benefits aren’t worth it. (Seems strange, especially after microCOVID existed it should take <10 person-hours to implement an actual system, and it sounds like group houses had a lot of COVID-related trouble that they would gladly have paid 10 person-hours to avoid. Maybe it takes much longer to agree on what system to implement, and that was the blocker? But didn’t people take lots of time deciding what system to implement anyway?)
That would have been a good solution, but EAs / rationalists systematically failed to think of it or implement it. (Why? This is basically just a Pigouvian tax, which I hear EAs / rationalists talk about all the time—in fact that’s how I learned the term.)
Our house implemented cap and trade (i.e. “You must impose at most X risk” instead of “You must pay $X per unit of risk.”).
Both yield efficient outcomes for the correct choice of X, so the question is just how well you can figure out the optimal levels of exposure vs. the marginal cost of exposure. If costs are linear in P(COVID) then the marginal cost is in some sense strictly easier (since the way you figure out levels is by combining marginal costs with the marginal cost of prevention) which is why you’d expect a Pigouvian tax to be better.
But a cap can still be easier to figure out (e.g. there is no way to honestly elicit costs from individuals when they have very different exposures to COVID, and the game theory of finding a good compromise is super complicated and who knows what’s easier). Caps also allow you to say things like “Look the total level of exposure is not that high as long as we are under this cap, so we can stop thinking about it rather than worrying that we’ve underestimated costs and may incur a high level of risk.” You could get the same benefit by setting an approximate cost and then revising if the total level goes above a threshold (and conversely in this approach you need to revisit the cap if the marginal cost of prevention goes too high, but who knows which of those is easier to handle).
Overall I don’t think our COVID response was particularly efficient/rational, due to a combination of having huge differences in beliefs/values and not wanting to spend much time dealing with it. We didn’t trade that much outside of couples. Most of our hassle went into resolving giant disagreements about the riskiness of activities (or dealing with estimating risks). I don’t think that doing slightly more negotiation to switch to a tax would have been the most cost-effective way to spend time to reduce our total COVID hassle.
Overall I still think that Pigouvian taxes will usually be more effective for a civilization facing this kind of question, but the costs and benefits of different policies are quite different when you are 7 people vs 70,000 people (since deliberation is much cheaper in the latter case). I expect cap and trade was basically fine but like you I’m interested in divergences between what looks like a good idea on paper and then what actually seemed reasonable in this tiny experiment. That said, I think the object-level arguments for implementing a Pigouvian tax here are much weaker than in typical cases where I complain about related civilization inadequacy because the random frictions are bigger.
I am curious about how different our cap ended up being from total levels of exposure under a Pigouvian tax. I think our cap was that each of us was exposed to <30 microcovids/day from the house (i.e. ~1%/year). I’d guess that the efficient level of exposure would have been somewhat higher.
Yeah, that.
I’m definitely relying on some level of goodwill / cooperation / trying to find the best joint group decision, or something like that. (Though I think all systems rely on that at least somewhat.)
I guess you mean the random frictions in figuring out what system to use? One of the big reasons I prefer the Pigouvian tax over cap-and-trade is that you don’t have to trade to get the efficient outcome, which means after an initial one-time cost to set the price (and occasional checks to reset the price) everyone can just do their own thing without having to coordinate with others.
(Also, did most people who set a cap / budget then also trade? Seems pretty far from efficient if you neglect the “trade” part)
I just checked, and it looks like we had ~0.3% of (estimated) exposure over the course of roughly a year. I think it’s plausible though that we overestimated the risk initially and then failed to check later (in particular I think we used a too-high IFR, based on this comment).
At Event Horizon we had a policy for around 6-9 months where if you got a microcovid, you paid $1 to the house, and it was split between everyone else. Do whatever you like, we don’t mind, as long as you bring a microcovid estimate and pay the house.
Nice, that’s identical to ours.
Instrumental convergence!
Or just logical convergence. Two calculators get the same answer to 2 + 2 = 4, and it’s not because they’re both power-seeking.
Good point.
But in this case, you guys are both seeking utility, right? And that’s what pushed you to some common behaviors?
That gives an implied cost of $1 million dollars for someone getting COVID-19, which seems way overpriced to me. I thought I’d do a quick Fermi estimate to verify my intuitions.
I don’t know how many people are in Event Horizon, but I’ll assume 15. Let’s say that on average about 10 people will get COVID-19 if one person gets it, due to some people being able to isolate successfully. I’m going to assume that the average age there is about 30, and the IFR is roughly 0.02% based on this paper. That means roughly 0.002 expected deaths will result. I’ll put the price of life at $10 million. I’ll also assume that each person loses two weeks of productivity equivalent to a loss of $20 per hour for 80 hours = $1600, and I’ll assume a loss of well-being equivalent to $10 per hour for 336 hours = $3360. Finally, I’ll assume the costs of isolation are $1,000 per person. Together, this combines to $10M x 0.002 + ($1600 + $3360) x 10 + $1000 x 15 = $84,600.
However, I didn’t include the cost of long-covid, which could plausibly raise this estimate radically depending on your beliefs. But personally I’m already a bit skeptical that 15 people would be willing to collectively pay $86,400 to prevent an infection in their house with certainty, so I still feel my initial intuition was mostly justified.
(I lived in this house) The estimate was largely driven by fear of long covid + a much higher value per hour of time, which also factored in altruistic benefits from housemate’s work that aren’t captured by the market price of their salary.
There were also about 8 of us, and we didn’t assume everyone would get it conditional on infection (household attack rates are much lower than that, and you might have time to react and quarantine). We assumed maybe like 2-3 others.
I totally expect we would have paid $84,600 to prevent a random one of us getting covid—and it would’ve even looked like a pretty cheap deal compared to getting it!
Makes sense, though FWIW I wasn’t estimating their wage at $20 an hour. Most cases are mild, and so productivity won’t likely suffer by much in most cases. I think even if the average wage there is $100 after taxes, per hour (which is pretty rich, even by Bay Area standards), my estimate is near the high end of what I’d expect the actual loss of productivity to be. Though of course I know little about who is there.
ETA: One way of estimating “altruistic benefits from housemate’s work that aren’t captured by the market price of their salary” is to ask at what after-tax wage you’d be willing to work for a completely pointless project, like painting a wall, for 2 weeks. If it’s higher than $100 an hour I commend those at Event Horizon for their devotion to altruism!
If it’s 8 hour workdays and 5 days a week, at $100/hour that’s 8 * 10 * 100 = $8k. No, you could not pay me $8k to stop working on the LW team for 2 weeks.
I think $30k-$40k might make sense.
I’m kind of confused right now. At a mere $15k, you could probably get a pretty good software engineer to work for a month on any altruistic project you wish. I’m genuinely curious about why you think your work is so irreplaceable (and I’m not saying it isn’t!).
You could certainly hire a good software engineer at that salary, but I don’t think you could give them a vision and network and trust them to be autonomous. Money isn’t the bottleneck there. Just because you have the funding to hire someone for a role doesn’t mean you can. Hiring is incredibly difficult. Go see YC on hiring, or PG.
Most founding startup people are worth way more than their salary.
When my 15-person house did the calculation, we had a higher IFR estimate (I think 0.1%) and a 5x multiplier for long COVID, which gets you most of the way there. Not sure why we had a higher IFR estimate—it might be because we made this estimate in ~June 2020 when we had worse data, or plausibly IFR was actually higher then, or we raised it to account for the fact that some people were immunocompromised.
(Fwiw, at < $6000 per person that seems like a bargain to me. At the full million, it would be ~$63,000 per person, which is now sounding iffy, but still plausible. Maybe it shouldn’t be plausible given how low the IFR is -- 0.02% does feel quite a bit lower than I had been imagining.)
Still, I think you shouldn’t ask about paying large sums of money—the utility-money curve is pretty sharply nonlinear as you get closer to 0 money, so the amount you’d pay to avoid a really bad thing is not 100x the amount you’d pay to avoid a 1% chance of that bad thing. (See also reply to TurnTrout below.)
You could instead ask about how much people would have to be paid for someone with COVID to start living at the house; this still has issues with nonlinear utility-money curves, but significantly less so than in the case where they’re paying. That is, would people accept a little under $6000 to have a COVID-infected person live with them?
Possibly my intuition here comes from seeing COVID-19 risks as not too dissimilar from other risks for young people, like drinking alcohol or doing recreational drugs, accidental injury in the bathroom, catching the common cold (which could have pretty bad long-term effects), kissing someone (and thereby risk getting HSV-1 or the Epstein–Barr virus), eating unhealthily, driving, living in an area with a high violent crime rate, insufficiently monitoring one’s body for cancer, etc. I don’t usually see people pay similarly large costs to avoid these risks, which naturally makes me think that people don’t actually value their time or their life as much as they say.
One possibility is that everyone would start paying more to avoid these risks if they were made more aware of them, but I’m pretty skeptical. The other possibility seems more likely to me: value of life estimates are susceptible to idealism about how much people actually value their own life and time, and so when we focus on specific risk evaluations, we tend to exaggerate.
ETA: Another possibility I didn’t mention is that rationalists are just rich. But if this is the case, then why are they even in a group house? I understand the community aspect, but living in a group house is not something rich people usually do, even highly social rich people.
Makes sense.
So the $6000 cost is averting roughly 100 micromorts (~50% of catching it from the new person * 0.02% IFR), ignoring long COVID. Most of the things you list sound like < 1 micromort-equivalent per instance? That sounds pretty consistent.
E.g. Suppose unhealthy eating knocks off ~5 years of lifespan (let’s call that 10% as bad as death, i.e. 10^5 micromorts). You have 10^3 meals a year, times about 50 years, for 5 * 10^4 meals, so each meal is roughly 2 micromorts = $120 of cost. On this model, you should see people caring about their health, but not to an extraordinary degree, e.g. after getting the first 90% of benefit, then you stop (presumably you value a tasty meal at ~$12 more than a not-tasty meal, again thinking at the margin). And empirically that seems roughly right—most of the people I know think about health, try to get good macronutrient profiles, take supplements where relevant, but they don’t go around conducting literature reviews to figure out the optimal diet to consume.
Also, I think partly you might be underestimating how risk-avoiding people at Event Horizon and my house are—I’d say both houses are well above the typical rationalist. (And also that a good number of these people are in fact rich, if we count a typical software engineer as rich.)
There’s a pretty big culture difference between rationalists and stereotypical rich people. One of those is living in a group house. I currently prefer a group house over a traditional you-and-your-partner house regardless of how much money I have.
List of changes that stand out to me:
I ended up saying that long-covid costs were roughly the same as death, so it was a factor of 2x.
Price of a life at $10 million is a bit low, I put mine at $50 million, so a factor of 5x difference.
I didn’t follow all of your calculations about being out for 2 weeks and isolated, I basically just did those two (death and long covid) and it came to ~$200k for me. Roughly say that’s the average among 5 people and then you get to $1 per microcovid to the house.
My best guess is that rationalists aren’t that sane, especially when they’ve been locked up for a while and are scared and socially rewarding others being scared.
:’(
Part of the issue is that there’s rarely a natural way of pricing Pigouvian taxes. You can make price estimates based on how people hypothetically judge the harm to themselves, but there’s always going to be huge disagreements.
This flaw is a reasonable cause for concern. Suppose you were in a group house where half of the people worked remotely and the other half did not. The people who worked remotely might be biased (at least rhetorically) towards the proposition that the Pigouvian tax should be high, and the people who work in-person might be biased in the other direction. Why? Because if someone doesn’t expect to have to pay the tax, but does expect to receive the revenue, they may be inclined to overestimate the harm of COVID-19, as a way of benefiting from the tax, and vice versa.
In regards to carbon taxes, it’s often true that policies sound like the “obvious” thing to do, but actually have major implementation flaws upon closer examination. This can help explain why societies don’t do it, even if it seems rational. Noah Smith outlines the case against a carbon tax here,
Of course, this argument shouldn’t stop a perfectly altruistic community from implementing a carbon tax. But if the community was perfectly altruistic, the carbon tax would be unnecessary.
Tbc, I’m pretty sympathetic to this response to the general class of arguments that “society is incompetent because they don’t do X” (and it is the response I would usually make).
Yeah, I agree that in theory this could be a reason not to do it (though similar arguments also apply to other methods, e.g. in a budgeting system, people with remote jobs can push for a lower budget).
My real question though is: did people actually do this? Did they consider the possibility of a tax, discuss it, realize they couldn’t come to an agreement on price, and then implement something else? If so, that would answer my question, but I don’t think this is what happened.
Probably not, although they lived in a society in which the response “just use Pigouvian taxes” was not as salient as it otherwise could have been in their minds. This reduced saliency was, I believe, at least partly due to fact that Pigouvian taxes have standard implementation issues. I meant to contribute one of these issues as a partial explanation, rather than respond to your question more directly.
Makes sense, thanks. I still feel confused about why they weren’t salient to EAs / rationalists, but I agree that the fact they aren’t salient more broadly is something-like-a-partial-explanation.
TBH I think what made the uCOVID tax work was that once you did some math, it was super hard to justify levels that would imply anything like the existing risk-avoidance behaviour. So the “active ingredient” was probably just getting people to put numbers on the cost-benefit analysis.
[context note: I proposed the EH uCOVID tax]
I feel like Noah’s argument implies that states won’t incur any costs to reduce CO2 emissions, which is wrong. IMO, the argument for a Pigouvian tax in this context is that for a given amount of CO2 reduction that you want, the tax is a cheaper way of getting it than e.g. regulating which technologies people can or can’t use.
Since the argument about internalizing externalities fails in this case (as the tax is local), arguably the best way of modeling the problem is viewing each community as having some degree of altruism. Then, just as EAs might say “donate 10% of your income in a cause neutral way” the argument is that communities should just spend their “climate change money” reducing carbon in the way that’s most effective, even if it’s not rationalized in some sort of cost internalization framework. And Noah pointed out in his article (though not in the part I quoted) that R&D spending is probably more effective than imposing carbon taxes.
Note that a) some group houses just did this, b) a major answer for why people didn’t do particularly novel things with microcovid was “by the time it came out, people were pretty exhausted out from covid negotiation, and doing whatever default thing was suggested was easier.”
a) Do you have a sense for the proportion of group houses that did it? And the proportion of group houses that seriously considered it? (My guess would be that 10-20% did it, and an additional 10% considered it.)
Re: b) That does seem like a good chunk of the explanation, thanks. I do expect the Pigouvian tax would have been a better policy even prior to microcovid.org existing, given how much knowledge about COVID people had, so I’m still wondering why it wasn’t considered even before microcovid.org existed.
(I remember doing explicit risk calculations back in April / May 2020, and I think there’s a good chance we would have implemented a similar Pigouvian tax system even without microcovid existing, with worse risk estimates.)
I actually guess even fewer houses than you’re thinking did it (I think I only know if like 1-3).
In my own house, where I think we could have come up with the Pigouvian tax, I think when we did all our initial negotiations in April, I think the thinking was “hunker down for a month while we wait to see how bad Covid actually is, to avoid tail risks of badness, and then re-evaluate” but then it turned out by the time we got to the “re-evaluate” step, people were burned out on negotiation.
(So far we have 3 -- my house, Event Horizon, and Mark Xu’s house, assuming that’s not also Event Horizon.)
Mark Xu’s house is not EH.
I like this question. If I had to offer a response from econ 101:
Suppose people love eating a certain endangered species of whale, and that people would be sad if the whale went extinct, but otherwise didn’t care about how many of these whales there were. Any individual consumer might reason that their consumption is unlikely to cause the whale to go extinct.
We have a tragedy of the commons, and we need to internalize the negative externalities of whale hunting. However, the harm is discontinuous in the number of whales remaining: there’s an irreversible extinction point. Therefore, Pigouvian taxes aren’t actually a good idea because regulators may not be sure what the post-tax equilibrium quantity will be. If the quantity is too high, the whales go extinct.
Therefore, a “cap and trade” program would work better: there are a set number of whales that can be killed each year, and firms trade “whale certificates” with each other. (And, IIRC, if # of certificates = post-tax equilibrium quantity, this scheme has the same effect as a Pigouvian tax of the appropriate amount.)
Similarly: if I, a house member, am unsure about others’ willingness to pay for risky activities, then maybe I want to cap the weekly allowable microcovids and allow people to trade them amongst themselves. This is basically a fancier version of “here’s the house’s weekly microcovid allowance” which I heard several houses used. I’m protecting myself against my uncertainty like “maybe someone will just go sing at a bar one week, and they’ll pay me $1,000, but actually I really don’t want to get sick for $1,000.” (EDIT: In this case, maybe you need to charge more per microcovid? This makes me less confident in the rest of this argument.)
There are a couple of problems with this argument. First, you said taxes worked fine for your group house, which somewhat (but not totally) discredits all of this theorizing. Second, (4) seems most likely. Otherwise, I feel like we might have heard about covid taxes being considered and then discarded (in e.g. different retrospectives)?
Yeah, this. The beautiful thing about microCOVIDs is that because they are probabilities, the goodness of an outcome really is linear in terms of microCOVIDs incurred, and so the “cost” of incurring a microCOVID is the same no matter “when” you incur it, so it’s very easy to price. (Unlike the whale example, where the goodness of the outcome is not linear in the number of whales, and so killing a single whale has different costs depending on when exactly it happens.)
You might still end up with nonlinear costs if your value of money is nonlinear on the relevant scale, e.g. maybe the first $1,000 is really great but the next $10,000 isn’t 10x as great, and so you need to be paid more after the first $1,000 for the same number of microcovids, but I don’t think this is really how people in our community feel?
I guess another way you get nonlinear costs is if you really do need to incur some microcovids, and then the amount you pay matters a lot—maybe the first $10 is fine, but then $1,000 isn’t, because you don’t have a huge financial buffer to draw from, so while the downside of a microcovid stays constant, the downside of paying money for it changes. I didn’t get the sense that this would be a real problem for most group houses, since people were in general being very cautious and so wouldn’t have paid much, but maybe it would have affected things. Partly for this reason and partly out of a sense of fairness, at my group house we didn’t charge for “essential” microcovids, such as picking up drug prescriptions (assuming you couldn’t get them delivered) or (in my case) an in-person appointment to get a visa.
Another way costs are nonlinear in uCOVIDs is if you think you’ll probably get COVID.
Yeah, fair point, the linearity only works as long as you expect probabilities to remain small.
(Which, to be clear, is something you should expect, in the context of most EA / rationalist group houses.)
My house implemented such a tax.
Re 1, we ran into some of the issues Matthew brought up, but all other COVID policies are implicitly valuing risk at some dollar amount (possibly inconsistently), so the Pigouvian tax seemed like the best option available.
Nice! And yeah, that matches my experience as well.
Carbon taxes are useful for market transactions. A lot of interactions within a group house aren’t market transactions. Decisions about who brings out the trash aren’t made through market mechanisms. Switching to making all the transactions in a group house market based will create a lot of conflict and isn’t just about how to deal with COVID-19.
Perhaps I don’t follow. why would you have to market-base “all the transactions in a group house”, instead of just the COVID-19 ones?
Using a market-based mechanism in an enviroment where the important decisions are market-based is easier then introducing a market based mechanism in an enviroment where most decisions are not.
If you introduce a market-based mechanism around COVID-19 you get a result where rich members in the house can take more risk then the poorer ones which goes against assumptions of equality between house members (and most group houses work on assumptions of equality).
Personally, I don’t really feel the force of this argument—I feel like on either side I get a good deal (on the rich side, I get to do more things, on the poor side, I get paid more money than I would pay to avoid the risk). I agree other people feel the force of this though, and I don’t really know why.
(But like, also, shouldn’t this apply to carbon taxes or all the other economic arguments that civilization is “insane” for not doing?)
(Also also, don’t we already see e.g. rich members getting larger, nicer rooms than poorer members? What’s the difference?)
(Chores are different in that they aren’t a very big deal. If they are a big deal to you, then you hire a cleaner. If they’re not a big enough deal that you’d hire a cleaner, then they’re not a big enough deal to bother with a market, which does have transaction costs.)
As a single data point, the COVID tax didn’t create conflict in my group house (despite having non-trivial income inequality, and one of the richer housemates indeed taking on more risk than others), though admittedly my house is slightly more market-transaction-y than most.