tag:blogger.com,1999:blog-18935445.post7677752527382063604..comments2024-04-09T05:07:37.465-04:00Comments on *Reflective Disequilibrium*: Turning log-consumption into a [crude] measure of short-run human welfareCarlhttp://www.blogger.com/profile/16384464120149476437noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-18935445.post-36283151377613209882014-01-02T18:44:45.659-05:002014-01-02T18:44:45.659-05:00The model as you've stated it treats income as...The model as you've stated it treats income as a multiple of the subsistence income- one way to get around this (and deal with what utility value you assign to death, and so on) is to consider s+log(income+x). The behavior around incomes of 0 is more reasonable, and for small x it barely impacts the behavior at high incomes.Vaniverhttps://www.blogger.com/profile/11612557970192838199noreply@blogger.comtag:blogger.com,1999:blog-18935445.post-89966696054571521442014-01-02T12:07:43.149-05:002014-01-02T12:07:43.149-05:00Thanks for many good points Toby, definitely worth...Thanks for many good points Toby, definitely worth using in a followup. I took the chart from your post.<br /><br />I wonder if doing such a global human welfare estimation might be a good research project for an undergraduate looking for an EA-relevant topic.<br /><br />Thanks Nick, done.Carlhttps://www.blogger.com/profile/16384464120149476437noreply@blogger.comtag:blogger.com,1999:blog-18935445.post-50478330550976873162014-01-02T11:29:19.449-05:002014-01-02T11:29:19.449-05:00Thanks, Carl. Cool post.
Typos:
> However, si...Thanks, Carl. Cool post.<br /><br />Typos:<br /><br />> However, since humans cannot survive on sub-subsistence income, so we can generally ignore the region between zero income and subsistence, assigning (death or nonexistence) a value of zero<br /><br />so we can --> we can<br />missing periodNick Becksteadhttps://www.blogger.com/profile/16561745593227211371noreply@blogger.comtag:blogger.com,1999:blog-18935445.post-34843526429789610182014-01-02T10:22:05.087-05:002014-01-02T10:22:05.087-05:00Also, note that an increase of 0.1 in this measure...Also, note that an increase of 0.1 in this measure is about a 25% increase in income, and an increase of 0.01 is about a 2.5% increase. The world read GDP growth rate is about 3% on average, so we can think of that as a global increase of about 0.01 each year due to growth (if the relative inequality stays fixed). Or about 1.00 per century at historic rates.Toby Ordhttps://www.blogger.com/profile/18019744097526255393noreply@blogger.comtag:blogger.com,1999:blog-18935445.post-41887278475978886292014-01-02T07:45:22.886-05:002014-01-02T07:45:22.886-05:00Thanks for the nice clear presentation of this and...Thanks for the nice clear presentation of this and the crunching of the numbers. Here are some scattered comments:<br /><br />1) It is great to have a stab at this and get it on (virtual) paper. There are many hidden assumptions in your model, but putting them down in the light of day is the way to find them, and to challenge people to do better. In general, I really admire how you do this so often.<br /><br />2) The self-reported happiness numbers in that chart are pretty bizarre, methodologically speaking. It is not at all clear that people's wellbeing is linear in them. That said, they are a reasonable starting point.<br /><br />3) Regardless of the self-reported numbers, there is a literature on people's risk aversion about income. Assuming they are risk neutral about wellbeing, this lets us work out the diminishing utility of income function. People use the one-dimensional family of isoelastic utility functions, (which are those with constant relative risk aversion). Log is a special case in this family, but the usual measures are more steeply diminishing than log. You could use the parameter of this family as something else for your sensitivity analysis.<br /><br />4) Consumption measures are better than income if we have them (and I think the GWWC calculator data might use consumption).<br /><br />5) The GWWC data is in international dollars, which are good for the mapping into utility/wellbeing, but are confusing for distribution. I presume that when equalising world income money is moved from places with worse purchasing power to ones with more purchasing power, so *more* international dollars are created and your calculation will be an under-estimate of the good created. I'm not sure by how much. I can't imagine the amount of international dollars going up by more than a factor of 4 (roughly the PPP ration between mainstreet USA and India), so the log value can't go up by more than about 0.5.<br /><br />6) When changing the population, you will change the total income/consumption, as well as changing the function that maps this to wellbeing. I'm not sure how big a deal this is or how to deal with it, but you might want to think about it.Toby Ordhttps://www.blogger.com/profile/18019744097526255393noreply@blogger.com