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### A No-Nonsense Guide to Early Retirement

24 февраля, 2021 - 19:37
Published on February 24, 2021 4:37 PM GMT

I wanted to be able to link people to a guide on early retirement that succinctly covered everything I thought was important, but I couldn't find one that I was satisfied with.  So I made this.

There are tons of communities and resources out there for anyone who wants to read more about retirement, investing, financial independence, etc -- many of which I'm cribbing from.  You might start here: https://www.reddit.com/r/financialindependence/wiki/faq.

This is an opinionated guide, which means a lot of it is kind of made up -- but I think it's ~95% in line with what you'll find in financial independence communities across the internet.  Even if some numbers are wrong, I have decent confidence nothing here should lead you too far astray.

Also, disclaimer: I'm a random guy on the internet, please be careful with your money!

Overview

To retire successfully, you need to have enough money to live on until you die.  This requires saving money, and preferably investing it in assets that gain value over time.

Though there's a lot of fiddly details and no one can predict the future, given some reasonable seeming assumptions the process for figuring out how long this will take you is pretty simple.  Just calculate:

• How much you're saving per year
• How much you're spending per year
• How much money you currently have invested

and then plug those numbers into an early retirement calculator like https://networthify.com/calculator/earlyretirement or https://engaging-data.com/fire-calculator/.  As a rule of thumb, you need to have ~25x your yearly spending invested well to be able to live off of the returns.  So to support a $30k/year lifestyle, you need ~$750k invested well.  The actual number may be 15x or 35x based on the length of your retirement, the future performance of markets, whether you ever generate any income during retirement, how flexible your expenses are, etc. -- but we can use 25x as a ballpark.

So you need to save money and invest it in assets that gain value over time.  The more you do this, the quicker you'll retire.  Here's my ultra-sophisticated three part strategy to doing so faster, and consequently the three sections in this guide:

• Spend less
• Earn more
• Invest well
Spending less

Spending less helps in two ways: it lets you save more, and it also reduces the amount you need to save.  Remember the rule of thumb that you need ~25x your yearly spending in investments to retire.  If you consistently reduce spending by $100/month aka$1,200/year, your necessary investment for retirement is lowered by $30,000. A$500/month increase in rent becomes a $150,000 increase in necessary investment. Minor looking financial commitments can cost you years of your life! It turns out that the calculation of years-to-retirement doesn't really depend on your absolute level of spending or savings, just your relative level. If you save 80% of your net income, it will take you ~5 years to retire no matter what your income is. If you save 75% of your net income, it'll take you over 6 years. This illustrates again how minor differences in the amount you consistently save can have a big impact on when you can retire. It's hard to give specific advice about how to spend money, since it's so personal and situational. This area can also be surprisingly emotional; I recommend approaching it with gentleness and honest reflection instead of moralism. If you find that you can't consistently spend less, it's ok; you can rest satisfied with your current trajectory (which you should calculate), or you can also try to make more money. First, look at how much you're spending every month in categories like rent, groceries, eating out, shopping, etc. This might be scary, but knowing your spending in detail will help you control it and make trade-offs that you feel positive about. There are tools online to do this like Mint, but you can also just make a spreadsheet using LibreOffice or Google Docs, copy the information from your bank statement, and then use a pivot table to summarize spending by category. If you know you have specific areas you tend to spend a lot in and would like to reduce, make a monthly summary for them that you monitor. Reflect on your most expensive areas first: saving$500 by selling your expensive car is worth more than saving $200 from not eating out which is worth more than saving$10 from cancelling a subscription.

Be careful of unintended effects.  Reducing rent by moving further away from work and increasing your commute can have a big negative impact on your happiness, for instance.

There are massive reservoirs of information online about how to save money, but there's no magic wand.  If rent and groceries take up 60% of your income, then you're never going to save more than 40% of your income unless you reduce spending on rent or groceries.  If your spending is already pretty well tightened, you might do better by focusing on earning more.

Earning more

The way most people earn money is with a job, so all of my advice in this section relates to jobs.  You also might be able to earn more by doing things like joining the gig economy, starting a side business, or renting out space in your house -- definitely consider such options if they seem like a good fit for you.

Getting a better job

One of my biggest career mistakes (among many) was taking the wrong job after I finished school.  I doubled my salary when I switched to a different job 9 months later -- a job that I'd been qualified for the whole time, and which made no use of my 9 months at the first job.

My big takeaway: try applying for better jobs.  Better might mean more pay now, more pay later on (for instance, by getting into a new profession with higher pay potential), or some other improvement (such as a job that fits your values better or offers you better working hours).  The time commitment to apply is at most a few hours to work on your resume and cover-letter -- the potential payoff is years off of your eventual retirement timeline.  Imposter syndrome and self-esteem issues are big obstructions for a lot of people; if you self-identify as having either of those, you're probably under-applying and should apply to more jobs.  Apply even though you don't think you meet the qualifications.  Even if you're completely happy with your current job, I'd propose you should send something like a dozen applications out per year just to test for even better opportunities.  The only reason I can see not to is if it'd be hard for you to find a dozen better opportunities anywhere in the world.

When applying for jobs, getting a recommendation from an existing employee is much better than just sending your resume and cover letter blind.  People have written mountains about networking, but I'm bad at networking so I'll summarize with "meeting and befriending people in settings related to your profession can have high payoff."  Promising locales include real-life meetups, conferences, and social networking sites.  Don't use your lack of a network as an excuse not to apply for things though -- you can apply now AND try again later if you end up finding someone to recommend you.

If you've worked at the same company for a while, try applying for other jobs even if they seem like lateral moves; you might be able to get a pay boost or promotion by switching companies.  Raises and promotions at a single company don't necessarily keep pace with your market value as your experience increases.  Even if you don't want to switch jobs, you may be able to negotiate compensation increases at your current company if you have another competitive offer.

For certain jobs, building or improving a public portfolio might increase your application success rate.

Depending on your situation, it might make sense to try earning credentials in order to land better jobs.  This is extremely situational and you should do your own research before committing to anything.  Here's a scattered list of thoughts:

• Look for data on salaries by school, degree type, and field before committing to any degree program.  E.g., a Bachelor's degree in Computer Science from Stanford is extremely valuable; a Master's degree in Fine Arts from For-profit College X is probably worthless.  Compare median graduate salaries with the cost of attendance and opportunity cost from lost time.
• PhDs are almost never worth the opportunity cost, with few exceptions.
• Programming is still quite lucrative if you can break into it.  The field is saturated with entry-level applicants, but still has very high demand for experienced talent.
• I've heard that law school has become a bad deal for most people, unless you get into one of the very top schools.
• I've heard that med school has become a worse deal over time, but may still be a good deal on average if you can hack it + residency.
• I've heard nursing can be lucrative.
Negotiating

If you're in the application, interview, or job-offer phase with any company, there's a number of things you can do to potentially increase your pay.  There's a ton out there about negotiation, so I'm just going to share the most important points as I see them.  As an anecdote, my last three negotiations have yielded 12%, 6%, and 7% salary increases respectively over the counterfactual of not negotiating.

In my overly simplified model of negotiation, your success has three primary inputs:

1. Your perceived value to the employer, which affects how much they'll be willing to offer you.
2. Your best alternative to accepting the offer on the table, which affects how hard you should be willing to push.
3. Your ability to execute a basic negotiation strategy without making mistakes.

There are a lot of ways to increase your perceived value, some of which are very situational.  Another scattered list of ideas:

• Acquire prestige.  This could be through schools, other jobs you've held, professional accomplishments, building a public persona, etc.
• Be good at the job in a visible way.  If applicable, build public portfolios which demonstrate your skill.
• Practice generic good social skills.  Try to get honest feedback from others about your social skills.  This is obviously a big area to figure out.
• If the interview process will involve any technical skill, practice that skill so that you perform well (e.g. LeetCode for programmers).
• Practice answering interview questions out loud on your own or with a friend.  Record yourself and examine the results.
• During interviews, talk (honestly) about your positive qualities, achievements, and capabilities.  Don't focus on your negative qualities or failures -- if they do come up, talk about what you've learned from them.
• Don't show desperation.  Even if you are desperate, do what you need to do in order to hide it for the duration of the interview -- the employer will not care and will find your desperation off-putting.

The impact of your best alternative is pretty straight-forward: if you're about to be homeless, you'll probably accept whatever someone offers you.  If you've already got a comfy job that you're happy with, you've got no reason to leave unless the offered pay is substantially better, so you can hold out or make multiple counter-offers.  This is a good reason not to quit your current job before applying to other jobs.

As to basic strategy:  try not to tell potential employers your current salary or salary expectations, as they'll mostly use this information to low-ball you when applicable.  You've got nothing to gain by giving up this information, and the person on the other end of the conversation is aware of this -- it's simply their job to try asking anyway. There's a million strategies posted online about how to avoid giving up this information, but here's a simple one that's worked for me: if they ask for your previous salary or salary expectation, tell them you'd rather not share that information, but that you're happy to confirm your expectations are within a given salary range if they have one -- this puts the obligation on them to list a range.  If they continue insisting without giving a range, just politely repeat that you'd rather not share.  If they ask why, you can truthfully explain that you'd rather hear their range first to anchor the negotiation.  If your current salary or salary expectations are required in a form, try entering the smallest number it will accept (like $0 or$1 or $1000). If a human tells you these numbers are needed on a form, explain the above and then ask them to enter a small number. If a human later asks you about the number on the form, repeat the above. I find it easier not to make mistakes if I just commit to never giving this information, no matter how weird things get -- it's extremely unlikely an employer will be petty enough to refuse to proceed based on this, and if they do you've got a great story you can share on reddit. After you receive a job offer for a high-skill / professional class job, you should directly ask for more money. If you receive an offer for a low-wage / high-labor-supply job such as retail or restaurant service, my impression is that attempting to negotiate at all might get an offer rescinded, so be careful. For high-skill jobs, it's usually perfectly safe (and in fact expected) that you counter-offer once with a +10-15% request -- at worst they won't budge. If they don't counter-counter-offer, but they also hint that higher compensation isn't off the table, ask about a slightly lower number (+5-10%). If at any point they say they can't go higher, then making further counter-offers might cause them to withdraw the offer. If you wouldn't want to accept their current offer regardless, there's no harm in continuing to hold out for the minimum you would accept. A simple phrasing template for counter-offers: "Excellent! I'm excited about x,y,z. Unfortunately, the compensation is somewhat lower than I was aiming for. Would you be able to come up to <counter-offer>?". Add your own voice as desired, there's nothing magical about this template. If you're unsure about your writing but have socially savvy friends, run things by them if you can. You have more at stake proportionally than a company does during negotiation, so to reduce mistakes I think you should negotiate carefully by email whenever possible. If pushed for answers or acceptance in person or over the phone, tell them you're excited but you'd prefer to think about things and get back to them shortly via email. If they say or insinuate they need an answer immediately, refuse to give one and re-iterate that you'd like to think about it and get back to them shortly. If they withdraw an offer due to you not giving an instant answer, then I guess they're either dumb or abusive -- you probably don't want to work for them anyways. If you do decide to negotiate over the phone or in person, make sure you have your decision tree clearly written out or rehearsed, and try to bail back to email at the first sign of trouble. Investing well Despite all of the intense social signaling around personal finance, investing well is surprisingly easy and boring. You can get 80% of the value of everything in this section by doing exactly the following without any additional context: • Build an emergency fund to cover a few months expenses • Invest in your employer's 401(k) up to the matching amount. Buy whatever stock index fund they offer. • Pay off all of your debt. • Go to vanguard.com and open a taxable brokerage account. • Deposit$X each month.
• Use that money to buy VFIFX.
• Never look at stock market indicators and ignore all stock news.
• Retire once the calculators say your account balance is high enough.
• Sell as needed for money during retirement, keeping your expenses the same modulo inflation.

The rest is commentary.  Extremely fiddly commentary.

Comment #1: Emergency funds

Your first investment priority should be taking care of your basic needs.  Have you eaten today?  Did you stay up all night writing an early retirement guide?

Your second investment priority should be building an emergency fund that you keep set aside for urgent and unexpected situations.  Having an emergency fund improves your well-being by giving you leverage and letting you get through life events with minimal disruption.  For example:

• If your car dies, you can take Uber or rent a car.
• If your roommate is late on rent, you can cover for them instead of being evicted.
• Etc.

You should keep your emergency fund somewhere safe like a savings account, not in the stock market.

There's debate over how big your emergency fund should be given your situation. Here's a concrete recommendation that you can adjust to your comfort level:

• First, save enough to cover 1-2 months worth of expenses.
• Then, pay off any crazy interest rate debt (payday loans, credit cards).
• Then, save enough to cover 6-12 months of expenses.  This gives you time to find a new job if you lose your current one.
• Finally, put your excess into paying off other debt or buying investments.

Make sure you save for your actual expenses, not your budgeted ones.  Look at bank statements as discussed in the "Spending less" section to know how much you're actually spending.

Although investments will provide you with additional cushion (you can sell them in an emergency), you should plan to not sell investments until you really need them for reasons we'll discuss later.

Comment #2: Debt

Debt is an anti-investment with a guaranteed negative return (its interest rate).  For this reason, it's basically always a bad idea to go into debt just to buy consumption goods.  Treat any purchase that comes with a monthly payment as extremely suspect.  Buy consumption goods (including cars) up front whenever possible, so you can't hide their true cost from yourself.  You may sometimes need to go into debt temporarily to survive; if so, work on escaping that situation as quickly as possible.  The other techniques in this guide might help.

Debt can be a good idea when it's used to finance creation of future value; for instance, taking out student loans which allow you to get a valuable degree that doubles your expected lifetime earnings.  Just be careful; if you misjudge the value of what you're buying, you might end up worse off.

Mortgages and houses are a complicated topic that I've not researched much.  My current opinion is that having a mortgage is probably marginally better than renting in expected value, but riskier (your property might decline in value) and with much higher transaction costs for moving.  Those transaction costs also lock you into a geographic location, which reduces some opportunities for making more money or reducing spending.

Unless the interest rate is very small (say <3%), paying off a debt is usually better than investing money in index funds since the return on debt is guaranteed.  If the interest rate IS very small, you might want to risk buying index funds instead of paying debt off early.  This is basically equivalent to choosing to take out a loan at that interest rate to buy index funds; the obvious risk is that the market declines and you're left with less than you borrowed.

Make sure you have enough money to cover expenses before paying off debt.  Having debt paid off is no good if you can't pay rent.

Comment #3: Retirement accounts

This is the most complicated part, because tax law is dumb.  This part is also entirely U.S. focused -- I'm sure other countries have their own dumbnesses, but I don't have knowledge of them.

Retirement accounts are accounts with money in them that you can use to buy investments like index funds.  You either open them yourself or have them opened by an employer.  You put money into them manually or through automatic paycheck deposits.  A non-retirement account for buying investments is usually called a "brokerage" or "taxable" account.  Retirement accounts have various tax benefits over non-retirement accounts, so are often called "tax-advantaged" accounts.  You generally make more money long-term by investing in retirement accounts, but they also come with various restrictions and limitations.

I'm going to talk about 3 specialized retirement account types which are all that 90% of people should need to touch: traditional and Roth 401(k)s,  traditional and Roth IRAs, and HSAs. There's a few others floating around (like Solo 401(k)s and 403(b)s), but they work on a lot of the same principles anyways.

IRAs are accounts opened personally by you at some provider.  I recommend vanguard.com.  They're pretty straight-forward to use: you put money in and then select investments to buy.  The only catch to IRAs is you can't contribute to them if your income is too high.

401(k)s are opened by an employer, but you own the money in them.  Employers will often offer a "matching percentage", where they'll give you free money in exchange for investing in your 401(k) -- this is usually an awesome deal that you should definitely take.  Unfortunately, sometimes employers use bad providers with bad asset options and bad websites, so you have to find the best option you can among what's on offer.  I'll talk more about this in the section on index funds below.  You can eventually "rollover" a 401(k) into an IRA at the provider of your choice, usually after you've left the employer.

HSAs are only kind of retirement accounts, with their nominal purpose being to give you tax benefits on medical spending.  They can be opened by either you or your employer, although you pay less taxes if your employer deposits money directly into the HSA from your paycheck, so you should have them do that. You can only deposit into an HSA if you have a High-Deductible Health Plan (HDHP).  You can withdraw from an HSA at any time to pay for "qualified medical expenses", or you can hold the HSA until age 65, at which point it works mostly like a traditional IRA (see below).  Some HSAs are basically savings accounts with no investment opportunities; some others will let you buy things like index funds.  HSA's are not to be confused with FSA's, which as far as I can tell are really dumb and will eat your money.

All retirement accounts have limits on how much you can put into them per year.  Having multiple accounts at different institutions does not increase the limit; it's a total limit across all accounts. For instance, for 2021 you can contribute a maximum of $6000 to IRAs, or$7000 if you're age 50+.

If you withdraw money from an account before a certain age, you'll have to pay a penalty on your taxes.  The age rules differ for every account type, but the cutoff is always in the 55 to 65 range.  I'll just say "retirement age" to refer to these cutoffs.  The penalty has either one or two parts:

• You'll always be taxed a flat percentage of what you withdraw; 20% for HSAs and 10% for most other accounts.
• You might additionally owe regular taxes on some of the money withdrawn, even though you wouldn't owe taxes for an "authorized" withdrawal.

There are some important exceptions to the penalty rules, which we'll discuss shortly.  Those exceptions play a major role for early retirees who want to withdraw money before retirement age.

You'll notice the words "traditional" and "Roth" used above; these refer to two types of tax advantages.  The short summary:

• Contributions to traditional accounts are tax free in the present (you get a deduction for what you contribute); you pay taxes when you withdraw money after retirement age.
• Contributions to Roth accounts are taxed in the present (no deduction, you contribute with post-tax income), but then you can withdraw tax-free after retirement age.
• With both versions, activity within the account isn't taxed; you can buy and sell different assets or receive dividends with no tax consequences.

Compare to a taxable brokerage account: you're taxed in the present (no deduction, you invest with post-tax income), and you also pay taxes on sales and dividends within the account.  Taxes on dividends will drag down your returns somewhat, and even if you only buy and sell once you'll have to pay 0% to 20% in long-term capital gains that you wouldn't pay in a Roth IRA.  If you buy and sell more often then you'll drag down returns even more, since any gains you realize will be taxed and that tax money can no longer be invested by you and compounded.

You get to choose whether to invest in traditional or Roth accounts; you can mix and match however you want.  Which of the two options is better is kind of complicated -- here's an article with more details: https://www.reddit.com/r/personalfinance/wiki/rothortraditional.  The short answer:

• If your tax bracket / income is low right now, you should probably do Roth.
• If your tax bracket / income is high right now, you should probably do traditional.
• If it's in between, there's pros and cons but probably either is fine.  I lean toward Roth.

Back to those penalty exceptions -- there's two big ones:

• The principal amount you invest in a Roth IRA can be withdrawn at any time, penalty and tax free.  This is the main reason I would lean Roth for middle tax brackets -- extra liquidity is very good for the nerves.  You can also access the principal of a Roth 401(k), but first you need to roll it over into a Roth IRA -- which you might not be allowed to do unless you quit your job.
• You can convert funds from a traditional IRA to a Roth IRA at any time, pay taxes on the conversion amount, and then withdraw that money penalty and tax free after waiting at least 5 (tax) years.  You can also do this with a 401(k), but you have to roll it over -- which again, you might need to quit your job to do.

Combined, these two exceptions let you access a good chunk of retirement account assets early without penalties: Roth principal whenever you want, and traditional principal+earnings if you can plan it 5 years in advance.  Roth earnings, unfortunately, are stuck until retirement age, as are HSA principal and earnings for every purpose besides qualified medical expenses.

Since you can convert from traditional to Roth whenever you want, you can control what year you pay conversion taxes in.  This means you can pick a year when you have low income (say, during an early retirement), and fill up your deductible and lower tax brackets with conversion money.  Think of your deductible and lower tax brackets as a resource which expires every year; traditional to Roth conversions let you make use of that resource whenever it makes sense.  This leads to a tactic called a "Roth Conversion Ladder", where each year you convert just enough to cover predicted expenses 5 years hence.

If you have money in taxable accounts, you should usually withdraw that first before hitting your tax-advantaged accounts, since money in tax-advantaged accounts grows faster.

Comment #4: Index funds

An index fund is a pool of money that someone invests in a bunch of different assets, with the goal of having returns match an "index" of some kind.  Usually that index measures the total value of some big market.  Index funds are generally really good at tracking their indices -- they just buy up a proportional share of everything in the indexed market.  Because this is a really easy strategy to execute, they're cheap to run.  Plenty of providers will let you buy into their index funds, and thus you as a tiny investor can easily get an investment return that tracks the total value of a huge market.  Providers will usually charge a fee, and the smaller this fee is, the better.  I recommend vanguard.com; their ownership structure is designed to incentivize small fees.

I am not going to do justice to the theory behind index funds, so here's the short and probably misleading version of why they're such a good idea:

• The performance of an individual stock is really hard to predict, even in the long-term.
• The total value of the entire stock market is much easier to predict in the long-term -- or at least it looks that way based on historical data.  Inflation-adjusted, it seems to go up about 4-10% annualized over long enough time periods.
• This fact is related to a math thing, where diversification (having lots of somewhat different assets) improves risk without hurting average returns very much.

Basically, picking individual stocks is a suckers game and no one is any good at it -- though lots of people pretend to be.  On average stocks are good, but any individual stock is an unpredictable rollercoaster that might eventually go bankrupt.  But if you pick ALL the stocks, things smooth out into a blissful upward rise -- at least, historically they do over investment time frames of 20+ years

The observation about diversification being good applies to basically any type of asset, not just stocks.  The most popular assets besides stocks are "bonds", and of course there's index funds for them too.  Bonds are (on average) a lower-risk, lower-return asset than stocks.  The main way people manage risk-reward tradeoff in a portfolio is to mess with the proportion of stocks vs bonds.  More stocks give higher risk (the market might crash tomorrow), but also higher average return over the long-term.

So that's all good, but which index funds should you buy?  If you're on Vanguard:

• "Target Retirement Funds" such as VFIFX are one-stop shops that are hard to screw up.  These funds hold a couple of other big stock and bond index funds, and automatically shift to fewer stocks/more bonds over time as you approach their target retirement date.
• You could buy VTWAX (total world stock market) for a one fund stock-only portfolio.  This is my strategy.  Lots of people would advise against having no bonds, however.
• If you want to mix 4 gigantic markets yourself instead of buying 1 ultra-gigantic market, you could buy some mixture of VTSAX (US stock), VTIAX (International stock), VBTLX (US bonds), and VTABX (International bonds).  You could start with the mix from a Target Retirement Fund and go from there -- details are available on the fund pages.  If you do this, you might need to occasionally "rebalance" to maintain your target percentages as some investments grow more quickly than others.
• You could read countless arguments online about exactly what you should do, and then do whatever.  As long as your strategy is "buy X% of some stock indices and (100 - X)% of some bond indices" it's probably sane, although IMO X should be at least 50.

If you're not on Vanguard, I recommend first figuring out what you'd do if you were on Vanguard, then finding the nearest equivalent on your provider.  Vanguard is so popular that many online conversations are phrased in terms of its funds.  Your 401(k) is probably not on Vanguard, but many 401(k)s now offer at least some Vanguard options anyways.  If not, look for terms like "S&P 500", "total US stock market", and "US large cap" -- these will all track relatively large stock market indices.  You can Google to learn more about the distinctions if you want to optimize, and you can use your IRA or taxable accounts to help balance out the poor selection in your 401(k).

Comment #5: Don't screw up

Don't sell assets when the market crashes.  Stock markets have always recovered after crashes, and then some.  If you sell after a crash, the main thing you're likely to accomplish is missing out on the eventual recovery -- even if more crashing happens in the meantime!  There will never be a clear signal of when you should buy back in, so when you do buy back in, it will only be after you've seen that the market has already substantially recovered. You'll have missed out on that recovery.  Just buy investments and then don't touch them.  Market crashes mean things are selling at a discount, which is great for you in the long-term!  Keep steadily buying!  Ignore market performance!  The road to inner peace is to just admit that in the short-term you have absolutely no idea what the market will do and when it will do it.  Just steadily invest and ignore short-term results.  This is the most important point in all of investing.  You are actually better off not investing at all ever if you end up selling during crashes.

The paragraph above exists because humans instinctually want to sell their assets during crashes.  Note this about yourself and take precautions.  You might try buying a few shares in some volatile stock for a fixed period of time -- not enough to mess up your plans, but enough that a loss will hurt a bit.  Just see how it feels when the value goes down substantially.  Practice monitoring it daily, but only selling after the designated time period has passed.

A less obvious way to mess up is to buy too much of the wrong assets.  If you really want to buy an asset that's not a stock or bond index fund, then just be careful not to buy too much of it.  I'll talk about four that seem to be popular: gold, other investment products, houses, and cryptocurrency.

Looking at historical returns, gold is just not a very good investment for its risk level -- the same applies to its cousin silver.  I think there's some trend around buying gold related to fear of hyper-inflation/market collapse.  I've not read anything that convinces me it's a good idea; if you're convinced, just keep the amount you buy relatively small.

"Other investment products" is a big category, but some common ones: specific stocks, ETFs that don't track an index, actively managed mutual funds, various commodities, annuities, futures, option contracts, and whole life insurance.  I'm pretty sure that 99% of everyone would be better off never buying any of these.  But if you do, just don't buy very much of them.

I mentioned houses when I talked about debt.  But debt is not the primary reason I think houses are dangerous.  Houses are dangerous because people tend to buy too much house.  Even with a paid off mortgage, money you have invested in a house is money that's not invested in the stock market.  You could own a $500k house and pay 5k/year on repairs and$5k/year on property taxes -- or, you could own $500k in index funds and safely withdraw$20k/year.  That -$10k to +$20k spread is money you could use to pay up to $2.5k/month of rent. That seems pretty reasonable -- until you step back and wonder whether you should be paying effectively$2.5k/month rent in the first place.  Downgrading to a smaller apartment that costs $1k/month in rent would lower your necessary retirement investment by$450k, saving you potentially many years of your life.  But moving from a $500k house to a$1k/month apartment can become too big of a psychological leap for people to even consider.  So if you're going to buy a house, I think you should try hard to buy a small/cheap one until you've achieved all of your other financial goals.

I have no idea what the hell is going on with cryptocurrency and it has consistently surprised me, so I think it's completely sane to buy some cryptocurrency.  As of this writing, cryptocurrency has a market cap of ~$1.6 trillion, with ~$1 trillion of that being Bitcoin.  The total market cap of all stocks is ~100 trillion, so overall investors are putting ~1% as much into Bitcoin as into stocks. So far, cryptocurrency has been extremely high risk and high return as an asset class. If you have a higher risk vs reward preference profile than the average investor, I can at least imagine justifications for going up to 5% or even 10% crypto investment. But if you're putting 50% of your investments in crypto, I basically think you're gambling. Please convince me otherwise, I'd love to join you on the moon. In all of these cases, I think it's ok to make a mistake and buy the wrong thing, or to take a risky gamble that doesn't pay off -- as long as that thing is only a small portion of your investment portfolio! You'll be totally fine whichever way the gamble lands if you use 10% of your disposable paycheck for a few months to buy Dogecoin. But if you sell everything to buy into a fad, and then the fad crashes, it will suck. Be ok with getting rich slowly. Putting it all together Given all of the above, here's my detailed recommendations on how to invest: • Save an emergency fund of 1-2 months of expenses in a savings account. • Contribute to your employer's 401(k), but only up to the matching amount. E.g. if they match half up to 6% of your salary, then contribute 6% of your salary. Use contributions to buy your choice of index funds. Default to just buying VFIFX if available. • Pay off high payday loans/credit cards/other crazy debt. • Increase your emergency fund to 6-12 months of expenses. • Pay off other debt (unless its interest rate is ~3% or less). • Put aside any money for large expected purchases (school, car, etc) in a savings account. • Max out your HSA if you have one. Buy your choice of index funds if it has that option. Default to just buying VFIFX if available. • If your income is low enough to be allowed to contribute, max out your traditional or Roth IRA. Pick traditional if you're high tax-bracket, Roth if you're low tax-bracket. Open one on Vanguard.com if you don't have one. Use it to buy your choice of index funds. Default to just buying VFIFX. • Finish maxing out your 401(k). • Open a taxable brokerage account on Vanguard. Dump the rest of your investment money in here. Buy your choice of index funds. Default to just buying VFIFX. • Never look at stock market indicators and ignore all stock news. In principle, look at your total portfolio value every 6 months or so to check whether you have enough to retire. Never click the sell button. • Retire once the calculators tell you that you have enough. Start converting some traditional funds to Roth if you'll need the money 5 years from now or have space in lower tax brackets due to low income. Sell and withdraw as needed, starting with your taxable accounts. Keep your expenses the same modulo inflation. Here's another great flowchart that I mostly agree with with more detail in certain areas: https://u.cubeupload.com/demonlesondledon/FIREFlowChart.png. Conclusion In its ideal form, this guide should become an extremely boring set of procedures and habits that you execute in the background of your life, taking up roughly 0.1% of your attention. Then as a consequence, at some magical future date far in advance of what it should be, you are freed forever from basic financial concerns. A boring set of procedures and habits that can grant you additional decades of freedom and autonomy strikes me as a surprisingly beautiful artifact. I'm not sure if this guide will live up to that ideal for anyone reading, but I hope it helps and makes your future just a little brighter. Discuss ### Are multiple shorter exposures less likely to reduce in infections of COVID-19 then one larger exposure? 24 февраля, 2021 - 16:14 Published on February 24, 2021 1:14 PM GMT At 15 separate days Alice spends 1 minute in close proximity of Carol, who is infected with COVID-19. Bob on the other hand spends 15 minutes on one day with Carol, who is infected with COVID-19. Assuming the infectiousness of Carol is the same on every day and everything else about the risk factors is constant, is Bob more likely to get infected then Alice? If so, by how much? Discuss ### Reading recommendations on social technology: looking for the third way between technocracy and populism 24 февраля, 2021 - 14:48 Published on February 24, 2021 11:48 AM GMT I broadly see the situation as follows populism is the failure mode that I can characterize as the two wolves and a sheep problem (voting on what's for dinner), adversarial dynamics between majorities and minorities are exacerbated. technocracy is the failure mode where you get a bunch of wonks together to look for positive-sum solutions, maximize on behalf of the aggregate, etc., but you're fighting a losing battle to compress information for them (i.e. in the hayekian criticism of economic planning sense). I guess they fall on opposite sides of a spectrum and I view actually-existing democracies as a constant push-pull, negotiating a sweet spot on the spectrum. I'm wondering if we can dissolve the problem with some truly galaxy-brained social technology. What can I read to beef up my thinking about this? Discuss ### Coincidences are Improbable 24 февраля, 2021 - 12:14 Published on February 24, 2021 9:14 AM GMT Ada Palmer: events which are improbable and proximal are likely to have a causal link I usually feel fine after eating food. One day, I decided to try a new dish at a restaurant. Afterward, my stomach is upset. I suspect that the new dish caused my stomachache. How justified is this suspicion? 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src: local('MathJax_Vector Bold'), local('MathJax_Vector-Bold')} @font-face {font-family: MJXc-TeX-vec-Bx; src: local('MathJax_Vector'); font-weight: bold} @font-face {font-family: MJXc-TeX-vec-Bw; src /*1*/: url('https://cdnjs.cloudflare.com/ajax/libs/mathjax/2.7.2/fonts/HTML-CSS/TeX/eot/MathJax_Vector-Bold.eot'); src /*2*/: url('https://cdnjs.cloudflare.com/ajax/libs/mathjax/2.7.2/fonts/HTML-CSS/TeX/woff/MathJax_Vector-Bold.woff') format('woff'), url('https://cdnjs.cloudflare.com/ajax/libs/mathjax/2.7.2/fonts/HTML-CSS/TeX/otf/MathJax_Vector-Bold.otf') format('opentype')} and B both have a probability 0.01 of occurring, and you observe both. This event favors various hypotheses over each other to the extent that they sharply predicted A∧B. A hypothesis that has P(B∣A)=c∗0.01 assigns c times more probability mass to A∧B than hypotheses that suppose A and B are independent. More concretely, a hypothesis that postulates a strong causal link between A and B might have P(B∣A)=0.9. This hypothesis is favored 90:1 over a hypothesis that has P(B∣A)=P(B)=0.01. More generally, if you observe two improbable things, this is evidence that the presence of one observation makes the other more likely, with the evidence getting stronger as the connection between the two events strengthens. Coincidences happen, but they are improbable. If you get a dog and your couch starts getting damaged, your dog is probably doing it. If your skin gets irritated and you recently switched lotion brands, you're probably allergic to the new brand. If my friend and I both saw someone six feet tall with red hair, we probably saw the same person. If your friend introduces you to someone that is both vegan and plays Magic the Gathering, you probably forget that your friend is also vegan and plays Magic the Gathering. There are four ways events can be causally linked, only two of which are direct: • A causes B; your dog caused the couch damage. • B causes A; your skin irritation is caused by the new lotion brand. • Some event C causes both; the same 6-foot person causes both you and your friend to see them. • Some event D caused by both has been conditioned upon; new introductions have improbable attribute combinations because your friend seeks those combinations out. When enough coincidences happen, start looking for a causal link. Discuss ### The Grandest Vision for Humanity (Light) 24 февраля, 2021 - 10:15 Published on February 24, 2021 7:15 AM GMT This is the third speech in the wedding ceremony of Ruby & Miranda. See the Sequence introduction for more info. The speech was given by Riva-Melissa Tez. Tara descends from podium. Brienne: We hope to banish the darkness. But our ambition is far greater than that. We intend to create a future glorious beyond imagining. I call upon Riva to speak of the Light we might attain. Riva ascends podium. IMAGE 3 PROJECTED ON PLANETARIUM Messier 16 (M16), also known as the Eagle Nebula. Riva commences speech. The universe is complex and beautiful. To think of the themes we have listened to today, of love, humanity, life and death, should leave us humbled by the histories of all those who have lived before, of all those who will live after us, the vast unimportance of ourselves in the sequence of the eternal everything. Forever impressed by the genuine role of human anonymity, the world doesn't and won't ever really know who we are, merely just one of many dots in the vast space-time spectrum that we should protect. But how many of us daydream about the goal of humanity in the universe? What does it look like? Sometimes I think about humanity in the same way I regard a painting by Georges Seurat. The use of pointillism- which is the artistic technique of painting a collection of thousands of microdots on the canvas that contrast and compliment each other in a multitude of colours. From up close these dots seem nonsensical, even plain wrong- a blue dot next to a yellow dot that from further away appears white. From a distant viewpoint these individual dots combine to make a beautifully intricate scene. An analogy of all the beings in the universe. Each life, idea, love simply a tiny colourful dot,complimenting and contrasting, but from further way these blend to contribute to a bigger picture, a bigger goal. How big is this overall picture? Well, it’s huge. The distance of the known universe is 900 billion light years in diameter, where each light year is 5.87 Trillion miles. The full scale is unfathomable to us. And it’s old too. 13.75 billion years old. Our human-like ancestors have only inhabited this universe, this exact planet on which we stand, for around 6 million years, a ridiculously short time-slice when compared to the true scale of the context. The fact that we are here, right now, with all the possibilities and options that could have made things turn out very different. How lucky we are to have such an opportunity, to have the agency to shape the planet to a manifestation that represents the human race. We’ve come a long way, and we can go a very long way too. We could quite literally inherit the universe, to make it ours, not for the sake of possession, but for the sake of protection. For the sake of universal flourishing. Every human so far has died a martyr for evolution. What is the end goal for all this creation and loss? We must fight that humanity’s purpose was not just about sustenance and survival. Imagine a future world. Imagine a future world where we are free from our current limitations. Free from biological time. Free from aging and death. Free from disease. Free from such biological fragility. Free from spatial limits. From being constrained to one, albeit beautiful, planet. We spread through the universe, inhabiting and stabilizing planets in the way that our ancestors inhabited Earth’s towns, cities and countries. But instead of applying borders like we did previously, we will have transcended our insecurities. Imagine a time where each individual intelligence is respected. Imagine a time where universal flourishing combines with a universal interconnectedness. Imagine a deep consideration and compassion for all life, all matter, ingrained in every individual, every action. Imagine respecting every representation of intelligence as a representation of the entire universe. Much like those pointilist dots. For every love, every idea, every instance, every marriage and every child, perhaps we can fathom that we are already contributing to universal flourishing. Imagine the full scale of all of history, all 13.75 billion years of the universe. Imagine these truths accessible at any moment. Imagine a time when we could understand everything- all the cells, all the DNA, all the stars, all their frameworks. Imagine being able to manipulate them. All the systems that define us, all the contexts in which we reside– our bodies, our minds, our planet, our universe. Imagine everything networked, everything connected. All 10 to the 82 estimated atoms of the universe switched on, transcended into programmable matter. Not for the sake of domination, but to ensure that they are the best possible form of themselves, for whatever their purpose may be within this bigger picture. Maybe that’s what love is. Imagine a time when time is no longer imaginable. When the dances never need to end, when the lovers never need to die, when entropy no longer dominates. Imagine a world where we could explore with full scope, for as long as we wanted, every idea, every concept, every location. To dance with the stars, to dance with each other, to dance simply for the sake of dancing with no time limits. Imagine a world of radical life expansion, accompanying radical life extension. Imagine all the things possible. All the potential art, all the potential beauty, all the potential creation and ideation. What will life look free from the shackles of time? I doubt we could even imagine it with the right justice. We live in a world that rests on an assumption that we can fathom what is possible and what is not. Yet history has shown us that the impossible often becomes possible, and the dreams that seem out of our reach become very real. Everything on this earth, every one of humanity’s achievements is simply a manifestation of how high we aim. What’s the grandest vision that humanity can aspire to? Well, it starts with how big you are willing to dream. Discuss ### Avoid Contentious Terms 24 февраля, 2021 - 06:10 Published on February 24, 2021 3:10 AM GMT A succinct term for a concept is great, but only if everyone involved views it similarly. If you're trying to write something persuasive, controversial terms are traps that can derail discussion and make finding common ground harder. Consider limiting yourself to well understood terms to avoid distracting from your core argument. One of my favorite comments I've received was "you're really good at talking about the patriarchy without talking about the patriarchy," on a post about dividing tasks in marriage. I didn't use terms like "emotional labor", "sexism", or, as noted, "patriarchy". This typically involves slightly longer phrasing, but it's not too bad; that post has "not everyone wants to be or will be in a male-female couple" instead of bringing in "heteronormative". Similarly, a version of the post I wrote about tickling kids that used "consent" or "rape culture" would have been worse. There are two main ways people bounce off terms: • Affiliation. A piece mentioning "emotional labor" will lead readers to one set of inferences about the author; one mentioning "traditional marriage" will bring different inferences to mind. This can be useful if you are trying to strengthen the views of people who already agree with you, but not if you're trying to bring in new people. • Confusion. Your audience may not know what your terms mean, or, worse, may think they mean something different than you do. In discussions with your friends a broad understanding of "racist" may be implicit, but if you use the term to describe credit scoring many readers will take it as a claim that the system was maliciously and intentionally designed to disadvantage people on the basis of their race, and perhaps that credit scores explicitly consider an applicant's race. There are some downsides to this approach: it can make it harder to find your piece through searching and it can feel somewhat detached from the broader conversation on the issue. It's probably not for everyone, but it's a pragmatic approach I've found works well. Comment via: facebook Discuss ### Yes, words can cause harm 24 февраля, 2021 - 03:18 Published on February 24, 2021 12:18 AM GMT ⚠️ Content Warning: The territory pointed to in this post can be extremely challenging to navigate skillfully. Quoted below in full is the About This Document section of a short essay I wrote some time ago about the ways words can cause harm to people. On more than one occasion, I've been asked to explain why I suggested that my interlocutor should be more careful with their words. «Words are just wiggly air or patterns of light and dark; I can't produce any string of words that can hurt you without your consent,» goes the argument. I've given a short answers that stuck very closely to the context of the conversations. On one recent occasion, I began compiling a "So, you still don't buy it" list. This would consist of examples of words and phrases that might cause harm, since examples are often the fastest and easiest way to show things to people. Two minutes later, I noticed the obvious information hazard and deleted the list in horror. After about an hour's frantic thought, I tried again. This time, I planned to produce a lightly structured document with categories and explanations. There would be only a single example for each category, carefully selected to exemplify a certain kind of harm, but applicable only to a very narrow range of circumstances. I deleted that list before it even finished taking shape. Likewise the list that followed with examples selected from popular fiction. Nevertheless, I still felt that if the question of how words could cause harm was being asked, it was important to be able to discuss the answer. And the short statement, "words and symbols are causal mental objects capable of producing or promoting harm to any number of entity classes in a wide variety of contexts," seemed unlikely to convey the full scope and gravity of the problem, or even to be particularly convincing on its own. So I wrestled with how to present the whole thing ethically. I wrote a draft of this document and held off on posting it for a week to see if I still felt OK publishing it after that time. I didn't. And even after many hours spent trying over several weeks, I wasn't able to write that essay in a way that made me comfortable publishing. Instead, I'll propose a mechanism for how harm -- or benefit -- can causally flow from the words we choose to express. I've deliberately offered no examples whatsoever, only a brief examination of how change (including harmful change) might follow from a chain of causes containing at least one linguistic link. Words are one medium humans use to share symbols representing thoughts between one mind and another. They have low fidelity, to be sure, but under the right conditions they are able to cause part of one mind to become different in response to part of another mind. Thoughts, including those induced by words, can be causal in at least two modes. They can trigger an urge to act a certain way, and they can help set the stage for those urges to be more or less likely to arise or to be acted on. Urges that are acted on can result in harm in all the obvious ways, and also in many other ways that are far more subtle. Stage-setting thoughts can collectively adjust a mind to be more likely to produce or choose to act on harmful urges, or less likely to produce or choose to act on beneficial urges; establish or contribute to the conditions for trauma; and trigger or exacerbate existing traumatic conditions. Thoughts induced by words can be seen by other parts of the mind as evidence for or against certain beliefs, regardless of the veracity of the beliefs themselves. This might even result in a positive feedback loop where strong beliefs (that can result in strong urges) spin up out of basically nothing repeated back and forth endlessly between different parts of the mind. Such beliefs might become extremely difficult to dislodge due to repetition. Fortunately, it is also true that we can also accomplish the opposite by careful application of the same means. Through our words, actions, and other symbols, we can transmit thoughts that promote more beneficial urges, and that help set the stage for a mind that is less likely to produce harmful actions or ideas. We can encourage minds that take the time to carefully respond instead of violently reacting to stressful or dangerous situations. We can help create conditions that make minds more resilient against trauma. It's also important to make a quick note about causality. From what I've seen, most minds have protections in place to make them robust against perturbation. This also seems to be evident in the literature. Just look at any list of biases to see that human minds, at least, seem to be structured to resist change. That said, sometimes unexpectedly small causes can produce large cascades of massive change. As far as I can tell, this can really only occur if the system happens to be unstable in just the right way for that particular cause. Unfortunately, our minds sometimes get themselves into just such a state. When they do, what seems like a tiny thing can result in a downward spiral of self destruction with truly unfortunate consequences for everybody with the misfortune of being involved. That's why I deleted every version of this post before I committed to using zero explicit examples: you can never tell what tiny thing might set somebody down that path. ⚠️ Fair warning, if any examples of words that might cause harm show up in the comments, they run an extremely high risk of moderation on the basis that such an example is made of words that were chosen because they might cause harm. If you are unsure, at least hide the questionable phrases behind spoiler protection. That said, it is important that we are able to discuss this topic. If I didn't believe that, I wouldn't have bothered figuring out how to write this post as ethically as possible for publication. If you choose to comment, please be especially careful with your words. Discuss ### Survey on cortical uniformity - an expert amplification exercise 24 февраля, 2021 - 01:13 Published on February 23, 2021 10:13 PM GMT In short: We designed a survey to gauge the opinion of expert neuroscientists about the degree of uniformity in the human cortex. The survey was sent to 135 experts, of which only 6 responded. Since we do not consider this a representative sample, we are instead asking the LessWrong community to predict what would have been the survey outcome if more people had responded. The project in brief We want to distinguish two hypotheses. The brain could be a machine with many components, learned through evolution and hardcoded via the genome. Or it could be a relatively simple process, that relies on an overarching principle to learn to perform many tasks. This is not a clean dichotomy; there are many possible degrees in between. Regardless, it is clearly a very interesting question for the study of human cognition. The answer to this question also has consequences on what degree of generality is achievable with artificial intelligence, especially concerning biologically inspired AI. See My computational framework for the brain by Steve Byrne for previous discussion of the topic. There exists research addressing this question in neuroscience, see for example Canonical Microcircuits for Predictive Coding by Andre M. Bastos et al which argues in favor of uniformity and The atoms of neural computation by Gary Marcus et al which argues against. However, it is not clear from the outside of the field whether there is a majority position and what that would be. In order to learn this, we designed a simple three question survey intended to probe the field (the questions are reproduced in the next section). We sent the survey to 135 experts in neuroscience. The public we selected were invited speakers to two conferences by the Society for Neuroscience. The conferences were Neuroscience 2019 and Global Connectome 2021. The response to the survey was underwhelming: only 6 experts responded. We tried reaching out to one of them who seemed especially keen on discussing the topic for an in-depth interview but we received no second response. Given this we have decided to rethink our approach, and use this as a chance to experiment with forecasting and expert amplification. In the next section you will find the survey questions, and we will ask you to predict what you believe would have been the majority result for each question had we received more answers. Also, if you are a neuroscientist involved in organizing a conference or are otherwise in a situation where you could send a copy of the survey to a representative group of experts, please do get in touch with us! This will be useful so we can resolve the community predictions. Survey questions and amplification Here is a reproduction of the survey, with Elicit style voting mechanisms so that you dear reader can leave your best guess. The question resolution depends on what the majority position among neuroscientists would be if this survey was ever run. We ran the survey design by an expert neuroscientist and an independent researcher working on the topic. However we are not sure that the questions are good or informative. For example, one of the experts who answered the survey pointed out that the first two questions are not compatible with a “developmental plasticity” viewpoint. If you have any comments on how you would have phrased things differently please do let us know! We also include the results of the six expert answers to the survey we received. Q1: What sentence better represents your beliefs? A: “The entire cortical network could be modeled as the repetition of a few relatively simple neural structures, arranged in a similar pattern even across different cortical areas” B: “Each section of the neocortex consists of a diverse set of computationally distinct building blocks, different for each cortical area” Elicit Prediction (elicit.org/binary/questions/B8-kppo9F) This question is intended to capture the notion of uniformity manifesting as structural similarity between cortical areas. Our small sample of respondents seems split, erring in favor of many structural differences between cortical areas. Q2: What sentence better represents your beliefs? A: “The genome directly encodes how each of the cortical areas will process information in a different way” B: “The genome only directly specifies the location, extent and general connectivity pattern of the different cortical areas - as opposed to directly specifying the differences on how each cortical area processes information” Elicit Prediction (elicit.org/binary/questions/CMZHvVKt5) This question was intended to capture the notion of uniformity in learning - whether all cortical areas start undifferentiated except because of the inputs they receive, and then differentiate during their operation. Our small sample of respondents seems to favor a “blank slate” model, where differences in cortical areas are not innate but learned. Q3: What sentence better represents your beliefs? A: “Even a rough understanding of the neocortex will require an in-depth study of each cortical area” B: “Once we understand how one area of the neocortex works we will have an almost complete picture of how the full neocortex works” Elicit Prediction (elicit.org/binary/questions/pHnXWWZXR) This question is gauging how much will the experts expect that insights about a cortical area will transfer to other cortical areas. Our small sample of respondents seems to unanimously believe that there will not be enough transfer between areas that learning about one cortical area will teach us much about other areas. Acknowledgements Project and write-up by Jaime Sevilla and Pablo Villalobos. We thank Steve Byrnes, Nikolas Bernaola, Celia Yáñez and an anonymous neuroscience researcher for giving useful feedback on the survey design. We also thank all the participants of the survey for their time. We also thank Miguel Arjona Hermoso, who helped us a great deal with the logistics of distributing the survey. Discuss ### [Fiction] Lena (MMAcevedo) 23 февраля, 2021 - 22:46 Published on February 23, 2021 7:46 PM GMT Wiki article about the first brain image of a human upload (2031). Subpar in some respects, but initially a compliant worker and free to copy thanks to court cases ruling that the biological original did not have a legal right to restrict its use. Discuss ### When you already know the answer - Using your Inner Simulator 23 февраля, 2021 - 20:58 Published on February 23, 2021 5:58 PM GMT I first encountered the idea of Inner Simulators at a CFAR workshop. Credit to them, and read the relevant chapter of their Handbook to see their take. If you’re already familiar with the idea, or find this post slow, I expect you’ll still enjoy the list of examples at the end Introduction I am fascinated by framing effects - when phrasing a question in a different way, this can significantly change my immediate answer. Some of my favourite examples: • Other-ising: I find it easy to get anxious, stuck in my head, and obsessing over things, eg past failures. But when I imagine this happening to a friend and giving them advice, it’s obvious that it’s all ridiculous • Making things concrete: Often, when trying to explain or understand an idea, it feels vague and complex. But, when I am first prompted to think of an example, things click into place • Thinking in bets: When trying to make a prediction about the future, eg forecasting whether I’ll finish a project by a deadline, it’s easy to be optimistic or have fuzzy and vague intuitions. But when phrased as ‘would I be comfortable betting on this?’ my intuitions become much crisper and better calibrated. Personally, I find these effects are all easy to replicate and surprisingly strong. And this is super weird! Changing the way I frame a question can instantly make it much easier to answer well. And this can be applied instantly, in the moment, with little additional effort. Ways to improve my thinking on the five second level are rare and incredibly powerful! I want to collect all the useful framing effects that I can, and make them reflexive parts of my thinking. This post is about one of my favourite framing effects, which boils down to ‘assume you already know the answer to a question, and let your intuition fill in the blanks’. This effect is insanely useful, and I use it multiple times a day. I find it hard to articulate the key mental move here, but people tend to find it fairly intuitive once they get it. So this post will consist of me attempting to describe the idea and gesturing at it in multiple ways, and then giving a long list of examples! (I consider the list of examples to be the most interesting part of this post) Pre-Hindsight I often send emails and, immediately after clicking send, realise I got something wrong, eg forgetting to include a point or to attach a file. This experience seems near-universal, but it’s also super weird! I have gained absolutely no new information, yet I suddenly have an insight that I lacked moments before. This is the sign of a framing effect! And it can be exploited. I imagine sending the email and then instantly realising I forgot something. And then I ask myself “what happened?”. And, often, this framing is enough to get my mind to fill in the blanks for what I forgot. This particularly example is sufficiently useful that Gmail now has an ‘undo’ feature for several seconds after sending an email. This is an example of the CFAR technique of pre-hindsight (part of their broader technique of Murphyjitsu), and the core insight is that there is a significant difference between how we think about the past and the future. We think about the past with hindsight - things feel definite, and concrete, and it’s easy to generate explanations. But the future is vague and fuzzy - it’s easy to flinch away from it, and have no idea what’s going on. By imagining sending the email, I flip it from a future event to a concrete past event, and can now use the power of hindsight to guess at what went wrong. I first encountered this technique at a CFAR workshop, as part of their class on Murphyjitsu, an approach to good planning (see notes for a workshop I gave on this or the CFAR handbook if you want to learn more). The idea is that any time you have a future intention, it’s hard to think about it, and to fully use your intuitions about what might go wrong. But if you concretely simulate the plan happening, and imagine it going wrong without fleshing out the details of what went wrong, you can now use hindsight to predict what went wrong. And that doing this is an effective way to use your intuitions about likely failure modes. For example, I have an important job interview coming up, so I’m currently stressing out, preparing, and trying to ensure I know everything I might be expected to know. I imagine doing the interview and leaving feeling like I screwed up. When I ask myself ‘what went wrong?’, it feels obvious that I got stressed and anxious and made dumb mistakes. Now that I know this, I know that the bottleneck is not being unprepared, it’s getting too anxious about it. And I can instead focus my effort on relaxing and ensuring I go in in a good headspace. I find pre-hindsight to be a super useful mindset for making good plans, but for the purposes of this post I want to focus on the key mental move of ‘assume your plan has failed, and get your intuition to fill in the blanks of what went wrong’. The key here is that it converts something unknown and abstract into something concrete, it assumes I know the answer, and it allows my intuitions to fill in the blanks. I find that this technique generalises far beyond just planning, and that it can be elicited with the right framing. For example, I am often procrastinating because I have several things to be doing but no obvious highest priority. This means things feel vague and non-urgent, so I end up meandering. In order to start doing something I must first do the cognitive work of trading off and choosing the highest priority, which is effort, so I put it off. I can short circuit this by asking myself “suppose I picked one thing as my highest priority, and decided to focus on that. Which was it?” and then just running with the first thing to come to mind. Another example: I notice a problem in my life that’s bugging me, and I have vague thoughts on possible solutions but never really do anything about it and feel helpless. Eg, recently this was ‘being distracted at work’. I can resolve this by imagining myself two weeks from now and saying ‘I changed things up, and this problem no longer feels like an issue. What did I do?’, and letting my intuition fill in the blanks. Inner Simulator Zooming out a bit, what’s going on here? An experiment: Pick up a ball (or something similar), and toss it into the air. Watch the trajectory as it comes down, and try to catch it. When I do this, I find it easy to guess at the future trajectory and to put my hands in the right place to catch it. To do this explicitly and verbally, I’d need to solve a bunch of differential equations. But here, some part of my mind is doing all of this instantly and intuitively, without being under my conscious, verbal control. I call this part of my mind my Inner Simulator, and this is the part of my mind doing all the work in pre-hindsight. It’s a part of my mind that’s really good at simulating the world, and a powerful source of intuition when elicited in the right way. Using my Inner Sim creates feelings of certainty and concreteness, it’s easily able to fill in the blanks. And learning how to use my Inner Sim right is extremely valuable! It is instant and certain, so can cut out a lot of wasted motion and wishy-washy hand-waving. It feels confident and certain, so can add motivation, decisiveness and resolve when facing uncertainty. It lets me use all of the knowledge at my disposal, helping me to identify blind spots and better understand the world. But the reason I need to draw your attention to it is that the Inner Sim is not under your explicit, conscious control. It provides intuitive information, but to use it well, the question needs to be asked in a specific way. It’s very much part of System 1, not System 2. Some tips for how to elicit it well: (Note that these are just speculative guidelines that I find helpful, your mileage may vary. I often find that these aren’t necessary) • Be as concrete and specific as possible • Add as much visceral, sensory detail as possible - what can you see? What can you hear? How warm is it? • Give yourself some space and time without distractions Examples That was all a load of theory and speculation. But the main reason I am excited about this effect is that I use it multiple times a day, and it feels applicable to a wide range of scenarios in my life. So here’s a long list of various ways I find it helpful - hopefully at least one of them resonates! • Seeking upside risk • [When meeting someone new and exciting] If this conversation goes awesomely, what happened? • Often I can now try to push the conversation in that direction • If this project went as awesomely as possible, what happened? • Often, if I don’t have a good answer for this, the project isn’t worth bothering with • Noticing blind spots • I’m currently making a mistake, what is it? • What am I currently not paying attention to? • What problems in my life am I neglecting? • [This works especially well for identifying recurring problems. These work well for me:] • I ask someone for help, and this feels really valuable. Who did I ask? • What is my current biggest bottleneck? • What am I beating myself up unnecessarily about? • Something is weighing on my mind and bothering me, but I’m not doing anything about it. What is it? • Epistemics (Used when disagreeing with someone, or thinking about something complicated) • A few weeks from now, I end up agreeing with the other person. What happened? • I’m currently making a mistake in my reasoning. What is it? • If I changed my mind about this belief, what shifted? • I’m currently wrong about something, but feeling too defensive to admit it. What belief is it? • Focus and good workflow • Debugging code • A few hours from now, I’ve fixed this bug. What did I do? • [If I’m pursuing a particular way to fix a bug, and I’m not sure it’s the right way] Would I be surprised if this worked? • [If I don’t know what the issue is] If, 20 minutes from now, I understand what’s going on, what did I do? • Focused research • If I had to pick one goal right now, what would it be? • If I made progress on that goal right now, what does that look like? • [Execute this plan, then repeat the process] • (I find that this process works similarly well for mathematical research, solving problems, planning code, etc. It works best when there are a lot of options and I’m trying to explore a complex space, but when it works it makes me much more effective) • Solving maths problems • If I solved this problem, what happened? • What would a solution to this problem look like? • Decisiveness • [When I have many things on my to-do list and am procrastinating] If I chose my most important priority right now, what would I choose? • [If flip-flopping on an important decision] Suppose, after a few hours more of thinking, I go with Choice A. What ultimately decided it? [Repeat for Choice B] • Similarly, suppose I go with A but a few weeks from now regret it. What happened? • [When feeling indecisive in general] If I had to pick a choice right now, what would I go for? • Often the best call is just to take it. • Simulating other people • If I asked person X for advice, what would they say? • It helps to try to actually simulate interacting with the person and asking them - you’re using your social machinery for this • If I asked person X for feedback on this piece, what would they say? • Overcoming procrastination: If I never do [thing I am currently putting off] would I be surprised? • If I’m not surprised, this often gives a prompt to actually do it? • Being intentional/avoiding meandering • If I did this right now, what would that look like? • Often this can be fleshed out into a concrete plan, which I then follow • Introspection • [When feeling vague unease and uncertainty] An hour from now I feel fine. What did I do? • [When considering solutions to emotional problems] I do X and a week from now I still feel Y. Am I surprised? • Anxiety: • What would person X say if I asked them for an outside view? • If I realised I was being silly and that this was no big deal, what happened? • [Introspecting on messy problem that I don’t understand] I think for a while, and have a flash of insight and realise what’s going on. What did I realise? • [When feeling guilt/unrealistically high standards] I spend the next several months feeling this guilty, and as a result of this guilt I actually end up doing well, and meeting my standards. Am I surprised by this outcome? • Creativity • If I found a really creative solution to this question, what would that look like? • I try something super dumb, which turns out to work surprisingly well. What did I do? • Learning • [Identifying confusions] I spend the next hour researching this topic, and feel much less confused. What might I now understand? • I realise that I had one major misunderstanding, and after that everything clicks into place. What was it? • I spend the next hour thinking, and at the end feel that I understand confusion X. What did I realise? • [If I don’t know where to start on a topic] If I managed to make progress in understanding this, what would that look like? • Life planning • I follow [my current favourite career plan] and a year from now I feel miserable and regret it. What happened? • I discover a life path that I’m not currently thinking about, and turn out to find it way more fulfilling than expected. What is it, and what did I realise? • Motivation: If I’m not excited about what I’m currently working on • I find a way to reframe this project such that I feel super pumped about working on it. What new angle did I take? • I find a new project that I feel super excited about. What does it look like? • Planning/Pre-hindsight • If this date goes badly, what happened? • I meet (high-status person X) and leave feel like I screwed up. What went wrong? • [When implementing a solution to a problem in my life, eg a new routine] If this system doesn’t stick, what happened? • Alternately, ‘If this system does stick, how did I make it happen?’ • More generally, if I screw this up, what happened? • Project planning: • At the start, say ‘it’s a month from now, and this project feels like a failure. What happened?’ From this, generate a bunch of key failure modes • Then repeatedly make time during the project to check in on these failure modes and how they’re going • Gratitude/Happiness • The most awesome thing to happen to me this week was ____ • [If feeling in a bad mood] I spend the next hour doing something, and at the end of that feel awesome. What did I do? • In the next ten minutes, I pick someone who’s recently improved my life and thank them. Who did I pick and why? • Debugging personal problems • It’s a month from now and I’ve solved [difficult problem X]. What happened? • This is surprisingly effective even for big and intractable feeling bugs, eg sleep issues, motivation issues, having goals and direction. • [If I come across a great technique but am not sure how to use it] I think for a bit, and find the perfect place to apply this idea. Where do I use it? • [If I’m not sure what the problem really is, just that things are going wrong] I change something about my life, and things start to feel way better. What shifted? • [Overcoming helplessness and blind spots] There is one major bottleneck holding me back. What is it? • Debugging other people’s problems: One of the most awesome parts of this framing effect is that it’s really easy to get other people to apply it, by asking questions in the same way that I would to myself! • [If they seem stuck on a problem] Suppose by the end of this conversation we come up with a great solution to this problem. What does that look like? • [If we’ve come up with a plan to solve this problem] Suppose you implement this plan, but a few weeks from now things have gone wrong. Which part failed? • [If I think they’re focusing on the wrong problem, eg they’re focusing on using time efficiently when I think they just have too many commitments] Suppose this plan goes really well, and you perfectly solve (thing they’re focusing on). Does the problem feel solved? • I really like this one, because it fails gracefully - sometimes they say yes, and I realise I was wrong, and they had identified the right problem • Interviewing others/asking for advice [ask them these questions] • Is there anything important I forgot to ask you? • What is one thing I could improve at? • What is a mistake you think I might be currently making? • [If talking to a researcher/domain expert] You see a paper come out in the next 5 years that feels like really surprising progress in this field. What is it about? Conclusion Hopefully at least one of those examples resonated! I tried to strongly err on the side of completion - the key message I want you to take is that this framing is extremely widely useful, and can help in a bunch of different contexts. A final point: The reason I am excited about this idea is that it can be reflexive. Something that sticks, and is used in the right situations to help you reach the right answer. But for it to reach this point, it needs to practiced. I highly recommend actually trying out the examples that resonated best, and paying attention to exactly what the mental move feels like. Further, I find it useful to have it be the default to use this framing. Eg, including questions in my weekly review like ‘what am I currently missing?’. Or having a checklist every time I start a project, that get me to do pre-hindsight. Exercise: Pick three of your favourite examples from the above. How can you ensure that using these becomes a reflex? How can you build these into your life by default? Discuss ### Judging Our April 2020 Covid-19 Predictions 23 февраля, 2021 - 20:20 Published on February 23, 2021 5:20 PM GMT This seems like an excellent opportunity to reflect on those predictions. I’ll also attempt to render my verdict on the predictions, based on the principles I discuss in Evaluating Predictions in Hindsight under Hard Mode, as Scott’s already done the Easy Mode work. Afterwards, I’ll give my take on the Assorted Links from that post as well. Note on Methodology This post is where I gave my predictions. Note that I don’t give my fair probabilities here. Instead, I give what prices I’d be willing to wager at. This is an important distinction. The coward’s method of proposing a wager is to say ‘Bob, you think this is 90% likely, I think that’s too high, so surely you will give me 9:1 odds.’ That’s nonsense, of course, because Bob previously thought those odds were fair, and now someone wants to bet against him. Why should Bob let someone pick which predictions of his someone bets against at fair odds? The epistemic hero’s method would be to give your own fair probability, and offer to meet in the middle via the Green Knight test (you’d do the math and combine into one wager). Thus, ‘Bob, you think this is 90% likely, I think it is 10% likely, so let’s bet at even odds.’ The gambler’s method is to consider the prediction as if it were an initial value for a prediction market, and reveal how far you’d be willing to move the odds while still being comfortable wagering. That doesn’t mean you would then think the odds were fair, or that you’d be comfortable if someone wanted to bet against you on your own side at those new odds. Thus, you say something like “Bob, you say 90%, I’m willing to bet against that at 80% odds” which means you think it’s at most 80%, so you’re willing to place bets first at 90%, then 85%, then 80%, so long as cumulative size isn’t too large, but then you’ll stop and won’t place the one at 75%. If Alice comes along and says “You stopped at 80% odds, I want to bet against this at 75% odds” you might or might not accept her wager. Often you wouldn’t. It’s not a first-best solution to (at least sort of) keep two sets of books in your head, where the odds on the game say 50%, you’re willing to bet up to 55%, but your gut tells you your side will win 70% of the time. It is still often a very good practical solution to keep both sets of books, and mostly avoid placing wagers inside the 55%-70% window. One way to think of that is you’d be at 70% as fair value if you hadn’t seen the market, but you respect the market and know you’re often wrong. But if the market wanted to move higher, you’d offer no objections. In this case, looking at the gambler’s limit prices improves my calibration score, because I was overconfident in the overall arc of the pandemic and our reactions to it, which is why my log score was highly unimpressive. In Hard Mode, we consider everything including reasoning, so such calculations are mostly set aside either way. I encourage you to follow along by reading my previous thoughts in the original post as you go down the list of questions, to get the full explanations, as for space reasons I’m cutting them short here. Questions False. The biggest mistake I made in this pandemic was vastly underestimating the strength of the control system. My explanation on this question makes that very clear. I thought it wasn’t likely that people would be willing to continue containment that didn’t make progress even until June, and I was very wrong. Should have been higher than 60%. I consider this prediction a rather large error. False on Scott’s grading. They did relax things somewhat in between, so I’d view this as ambiguous. Under my read at the time I think there was a major (but far from total) relaxation that was then rescinded. Despite this, 10% was a really bad prediction here no matter the interpretation, there clearly was a plausible path for fully sustained lockdowns thanks to the control systems and the way California was choosing its risk tolerance levels. This needed to be at least 25%. False. This one comes out looking correct. By the time the prediction was made this was sub-1%. False. This was closer than I would have expected, seasonality helped a lot and I underestimated it. My guess is the right guess was a little higher than this, something like 35% or 40%. True. I essentially say ‘I think this is higher than 90% but for various reasons it’s tough to bet things up higher than 90%.’ In hindsight this is so high a threshold it’s essentially a Can’t Happen, but given information at the time I don’t think 90% is crazy low – it’s plausible 95% is a better prediction but I don’t think more than that would have been wise. True. I did win this one but again feels overconfident given what we knew at the time, and I bet this one up a bit too high, although China’s presumed willingness to fudge numbers matters. 85% would have been a better stopping point. True. On reflection, giving a full 10% to ‘China has the worst death toll but officially denies it’ seems crazy high, and I’m fine with this one at 80% with only a 5% difference between the two numbers. I didn’t think hard enough about that question at the time. True, I got this overturned ‘on appeal’ via a Twitter poll. My logic at the time goes on to explicitly say that I expect this to remain the narrative even if it’s no longer true, rather than being a prediction that almost never does another city end up getting hit harder. On reflection, indeed do many things come to pass, narratives shift in strange ways and 90% was the better prediction. False. This was either damn close (95,963!) or not close at all because China cares about round numbers and was only going to let it cross 100k if they had no choice, and they had plenty of choice. I was surprised to see China’s case count had risen this much, and it’s kind of suspiciously close to 100k given that a lot of people have incentives not to report cases and China doesn’t want to cross round thresholds. I’m going to say that 40% was a pretty good prediction. True! Vaccine timelines being so fast was a huge outlier. We succeeded here, but only by a few weeks, despite things going mind-blowingly right and seeing much better results than anyone expected. AstraZeneca messed up their trials but that was the only major thing that went wrong, and it’s hard to see where things could have gone much better short of some small country going rogue. I’m not sure whether 40% or 50% was the better prediction here, but that seems like a good range. 11. Best scientific consensus ends up being that hydroxychloroquine was significantly effective: 20% Sell to 15% or so, while noting that I think the chance of it actually being effective is much higher than that. False. I like this assessment in hindsight. We now more fully understand the extent to which The Narrative pushes hard on things like this, and would have made it exceedingly difficult for HCQ to be accepted as effective even if it was effective. It would have needed to be a game changer. 12. I personally will get coronavirus (as per my best guess if I had it; positive test not needed): 30% Sell to 20% at least, and also what the hell? False. Yeah, I didn’t sell enough of this, no way he was at 20% risk to catch this and his prediction here seems even siller now. 13. Someone I am close to (housemate or close family member) will get coronavirus: 60% Sell to 40%. False. This seems like a more reasonable place to have stopped than the 20% from #12. I want to say still a bit high, but room here for some people who might not take good precautions. Note that the 2:1 ratio here between these two questions is definitely silly and selling them both down a third indicates a mistake somewhere. 14. General consensus is that we (April 2020 US) were overreacting: 50% 15. General consensus is that we (April 2020 US) were underreacting: 20% “General consensus will be that we were reacting stupidly. We reacted wrong. That’s an easy call. The question is, will that be widely seen as an underreaction, an overreaction, something that’s neither, or will there be a lack of consensus? What does it take to get a ‘consensus’? Who counts? My guess is that there flat out won’t be consensus. …so I’m going to sell the overreacting contract down to 30%, but stop there because people are bad at such things and find ways to rewrite history to suit their narratives. I’m going to hold the 20% on underreacting” False on both, as expected there’s no consensus apart from the consensus that we were acting stupidly. Which is hard to avoid as a conclusion, given we did contradictory things in different places and at different times, and also dropped some rather important balls. But even then I’m not super confident you’d call it a ‘consensus.’ By only going down to 30% and 20%, I seem to be implying I’m not that confident in a lack of consensus, so this seems like I should have been somewhat bolder. 16. General consensus is that summer made coronavirus significantly less dangerous: 70% True. Again consensus can be tough, so 70% seems reasonable or even a bit high. I don’t think we could be super confident in this at the time. 17. …and there is a catastrophic (50K+ US deaths, or more major lockdowns, after at least a month without these things) second wave in autumn: 30% True. I stand by this being a substantial underdog for exactly the reason I noted, which is that this is a parlay of several things that each must happen – we need to go under the bar, then back over the bar, on multiple fronts. There were Major Lockdowns each month, but it’s not clear there were ‘more major lockdowns’ each month, so I do think technically this evaluates to true as written, but as far as intent it’s not clear to me this fully happened because it’s not clear lockdowns sufficiently lifted. Parlays are hard to win! 18. I personally am back to working not-at-home: 90% False. Seeing this as different from the lockdown percentage seems clearly right in hindsight, and the reason I’m still too high on this is that I got the lockdown probability wrong. If we compound that 25%+ with another 10% here we get that this can be at most around 65%, and also other things can always happen so 60% seems like a more reasonable maximum. 19. At least half of states send every voter a mail-in ballot in 2020 presidential election: 20% False. I don’t think this was ever close to happening, exactly for the reasons I laid out. Not moving markets too far when you’re anchored, especially betting on a big favorite, is always good policy. 20. PredictIt is uncertain (less than 95% sure) who won the presidential election for more than 24 hours after Election Day. 20% True. Thinking about all the right things here, still getting to the wrong answer. Seeing accusations of fraud as unlikely looks silly in hindsight, especially given the extended willingness of the market to stay insane long after the verdict was in. You can say it should have been under 95% for 24 hours, but you can’t say that for a month out. So that reasoning wasn’t great. The question is how close the election had to actually be in terms of tipping point margin of victory, in order to allow it to be thrown into question, in each direction, and thus how likely such a result was. The tipping point state was Biden+0.6%. My guess is that Biden+3% or Trump+1% would have settled things quickly. That range seems more like a 30% shot than a 10% or 20% shot, but also we got a very large amount of fraud accusation versus reasonable priors in April even given that we should have expected a lot more fraud accusations than people did expect. I think 20%-25% seems like the right range in hindsight. I also looked at Scott’s non-Covid predictions, but we’ll postpone looking at those until Scott grades them. Appendix: Metaculus Monday Links Thoughts 1. Hypermind looks promising at first glance. 1. Vitalik Buterin talks about his adventures winning50,000 betting against Trump on Ethereum prediction market Augur.

My takeaway from Vitalik’s journey is that it took $50,000 worth of time and technical expertise to make that$50,000, and the only reason it made sense for Vitalik to do it was because of the value of reporting on the results and in learning by doing. Essentially this is a start-up style operation to see if things can scale, and even with the completely insane market and uniquely huge event the opportunity size wasn’t great. Perhaps in 2024 such things will be ready for prime time but for now I would treat the operational risks involved as bigger than the profit margins offered.

What’s most weird to me is that the various prediction markets stayed in line with each other, despite very different participation restrictions and costs of doing arbitrage. My guess is that a lot of people involved were not thinking about real costs and effective odds, rather thinking about whether the market prices lined up and were ‘fair’ in some sense.

1. This week on Metaculus: will a third-party candidate win 5%+ of the popular vote in 2024? Users say 15% chance

Scott is betting against. I’m not. Not only Perot in ‘92 and ‘96 but Anderson in ‘80 broke this barrier for 3 of the last 11, there are plausible known routes to this in ‘24 (e.g. Trump as 3rd party, Trump (or someone in his image) as Republican causing a third party run, Libertarians running Amash or Romney, or a proper run somehow by Kanye West or another billionaire, or even a Warren/Sanders style scorched earth campaign on the left if Biden runs again). Hell, the way things are weirding who knows who will run. If anything I’d be at 20% rather than 15%.

1. Also, will Bitcoin outperform the US stock market over the next five years, at 51%. I started out thinking – of course it’s 50-50! By the efficient market hypothesis, if any asset was obviously going to do better than another, people would change the price until it wasn’t. But on second thought that’s wrong – stocks have a higher than 50% chance of beating treasuries over the same period because of a risk premium. Maybe there’s no intuitive way to think about this, you have to have opinions on the underlying fundamentals, and it’s only 51% by coincidence?

It’s at exactly 50/50 now! I quoted Scott in full above to ensure I fully represent his thinking here. Looking at this market tricked me into trying to put in a prediction, despite that then putting a burden on me (in theory anyway) to update that prediction continuously or lose points, but it said I was Forbidden to do that, so I didn’t.

This does not reflect well on Metaculus. The 50% number is crazy, or at a minimum, it represents a very strong rejection of the Efficient Market Hypothesis, and would make Bitcoin what is known as a Screaming Buy.

This comes up every time I see Bitcoin price distribution predictions. Bitcoin can only go as low as $0. Bitcoin could, in theory, go up not only to$100k but to 1 million or more. If the Bitcoin distribution centers on zero, it is a screaming buy compared to the stock market, and you should put a substantial portion of your net worth into BTC. If Bitcoin is priced efficiently now, then that implies it is more likely to fall than rise, even with a substantial risk premium, because that’s the only way for the math to come out even. The alternative is to both think BTC is priced fairly and that almost none of that value is the potential to rocket to the moon, which doesn’t seem right to me at all. If you think BTC can’t rocket, BTC is a bad buy. Perhaps Metaculus thinks Bitcoin is indeed a screaming buy. That’s not a crazy thing to think. But if it does think that, it seems like an awfully big coincidence that this landed on exactly 50%. There’s no trade, since (as many people reminded me) Metaculus is not a prediction market and you can’t trade on its values, but there’s still a big contradiction with market prices here. None of this is investment advice in any way, but: My model of BTC at the moment is that expected returns for holding BTC are positive, in excess of its fair risk premium, but that in a large majority of worlds it will be outperformed by the stock market, often that involves very large declines, and also you have to account for tax liability and the chance someone will steal your bitcoins. The weekly Covid update will be posted on Thursday as per usual. Discuss ### Kelly isn't about logarithmic utility 23 февраля, 2021 - 15:12 Published on February 23, 2021 12:12 PM GMT Deep breath. Kelly isn't about logarithmic utility. Kelly is about repeated bets Kelly isn't about logarithmic utility. Kelly is about repeated bets Kelly isn't about logarithmic utility. Kelly is about repeated bets Perhaps one reason is that maximizing E log S suggests that the investor has a logarithmic utility for money. However, the criticism of the choice of utility functions ignores the fact that maximizing E log S is a consequence of the goals represented by properties P1 and P2, and has nothing to do with utility theory. "Competitive Optimality of Logarithmic Investment" (Bell, Cover) (emphasis mine): Things I am not saying: • Kelly isn't about maximising logarithmic utility • Kelly is the optimal strategy, bow down before her in awe • Multiperiod optimization is different to single period optimization(!) The structure of what I am saying is roughly: 1. Repeated bets involve variance drag 2. People need to account for this 3. Utilities and repeated bets are two sides of the same coin 4. People focus too much on the "Utility" formulation and not enough on the "repeated nature" 5. People focus too much on the formula Repeated bets involve variance drag This has been said many times, by many people. 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On any given day, the expected value of the stock tomorrow is the same as the stock today: E(X1)=12⋅X0⋅(1+1%)+12⋅X0⋅(1−1%)=X0 But what happens if you invest in it? On day 1 it goes up 1%, on day 2 it goes down 1%. How much money do you have? 1.01⋅.99=0.9999<1 Another way of writing this is: (1+r)⋅(1−r)=1+2(r−r2)−2(r22) The −r22 term is "variance decay". (Or volatility dray, or any of a number of different names) This means that over a large sequence of trials, you tend to lose money. (On average over sequences "you" break-even, a small number of your multiverse brethren are getting very lucky with their coin flips). Let's consider a positive sum example (from "The ergodicity problem in economic" (Peters)). We have a stock which returns 50% or -40%. If we put all our money in this stock, we are going to lose it over time since (1+.5)⋅(1−.4)=1+.1−.2<1 but on any given day, this stock has a positive expected return. The ergodicity problem in economics (Figure 2) [I think there is a sense in which this is much more intuitive for gamblers than for investors. If your typical "investment opportunity" (read bet) goes to 0 some fraction of the time, investing all your "assets" (read bank roll) in it is obviously going to run a high risk of ruin after not very many trials.] People need to account for this In order to account for the fact that "variance is bad" people need to adjust their strategy. To take our example from earlier. That stock is fantastic! It returns 10% per day (on average). There must be some way to buy it and make money? The answer is yes. Don't invest all of your money in it. If you invest 10%. After one day you will either have 90%+1.5⋅10%=1.05 or 90%+(1−.4)∗10%=.96. This is winning proposition (even long term) since 1">1.05⋅.96=1+.01−0.0020>1 Kelly is (a) way to account for this. Utilities and repeated bets are two sides of the same coin I think this is fairly clear - "The time interpretation of expected utility theory" (Peters, Adamou) prove this. I don't want to say too much more about this. This section is mostly to acknowledge that: • Yes, Kelly is maximising log utility • No, it doesn't matter which way you think about this • Yes, I do think thinking in the repeated bets framework is more useful People focus too much on the "Utility" formulation and not enough on the "repeated nature" This is my personal opinion (and that of the Ergodicity Economics crowd). Both of the recent threads talk at length about the formula for Kelly for one bet. There seems to be little (if any) discussion of where the usefulness comes from. Kelly is useful when you can repeat and therefore compound your bets. Compounding is multiplicative, so it becomes "natural" (in some sense) to transform everything by taking logs. People focus too much on the formula Personally, I use Kelly more often for pencil-and-pap`er calculations and financial models than for making yes-or-no bets in the wild. For this purpose, far and away the most important form of Kelly to remember is "maximize expected log wealth". In particular, this is the form which generalizes beyond 2-outcome bets - e.g. it can handle allocating investments across a whole portfolio. It's also the form which most directly suggests how to derive the Kelly criterion, and therefore the situations in which it will/won't apply. - johnswentworth I think this comment was spot on, and I don't really want to say too much more about it than that. The really magic takeaway (which I think is underappreciated) is. "maximise log your expected wealth". "Optimal Multiperiod Portfolio Policies" (Mossin) shows that for a wide class of utilities, optimising utility of wealth at time t is equivalent to maximising utility at each time-step. BUT HANG ON! I hear you say. Haven't you just spent the last 5 paragraphs saying that Kelly is about repeated bets? If it all reduces to one period, why all the effort? The point is this: legible utilities need to handle the multi-period nature of the world. I have no (real) sense of what my utility function is, but I do know that I want my actions to be repeatable without risking ruin! It's not about logarithmic utility (but really it is) There is so much more which could be said about Kelly criterion for which this is really scratching the surface. Kelly has lots of nice properties (which are independent of utility functions) which I think are worth flagging: 1. Maximises asymptotic long run growth 2. Given a target wealth, is the strategy which achieves that wealth fastest 3. Asymptotically outperforms any other strategy (ie E[X/X_{kelly}] <= 1) 4. (Related to 3) "Competitive optimality". Any other strategy can only beat Kelly at most 1/2 the time. (1/2 is optimal since the other strategy could be Kelly) Conclusion - Zvi (Kelly Criterion) What I am trying to do is shift the conversation away from discussion of the Kelly formula, which smells a bit like guessing the teacher's password to me, and get people to think more about how we should really think about and apply Kelly. The formula isn't the hard part. Logarithms aren't (that) important. Further Reading Discuss ### Support vs Advice & Holding Off Solutions 23 февраля, 2021 - 04:12 Published on February 23, 2021 1:12 AM GMT What I'm calling support vs advice is a fairly standard division. Both kinds of discussion start with one person talking about something that bothers them. In a support conversation, they're looking for empathy, and the other person shows that they care by listening, showing that they understand, and emotionally comforting. In a problem-solving conversation, they're looking for solutions, and the other person engages by making suggestions. This distinction is important to recognize mainly because it's easy for the second person to get confused about which type of conversation they're in, and engage in the wrong way; in particular, offering solutions when the other person wants support can be pretty bad, because a person who wants support can perceive advice as criticism. Here's the standard amusing youtube link. I'm not sure what to call it; I think it's been discussed on LessWrong before, but I'm not finding it by searching. Other possible terms for it: • care vs help; • emotional support vs problem-solving; • feeling-oriented conversation vs solution-oriented conversation. LMK what the more standard terms for this are, if indeed there are any. Anyway, I'm not writing this post to communicate the support-vs-advice model; rather, to name a third conversational mode which has some advantages of the other two. I'll tentatively call this a problem-oriented conversation. First, note that one of the main ways to show empathy is to show that you care about what's going on with the other person, and to demonstrate that you understand. To listen well, get curious. Second, note that it's not advisable to propose solutions right off the bat. People come up with better solutions if they first discuss the problem in more detail. Hold off on proposing solutions. You can probably see where I'm going: in a "problem-oriented conversation", the second person responds with curiosity to the problem, asking questions instead of proposing solutions. They hold off proposing solutions, instead just trying to understand what's going on for the other person. Consider: • The initial framing of a problem is rarely the right one. Often the problem turns out to be totally different if you talk about it a little while. • Your "obvious solutions" are probably just as obvious to the other person, if they're thinking about the problem the same way you are. Once both of you see the problem in the same frame, it's probably not necessary to propose actual solutions. • (Though, sometimes, proposing "obvious" solutions can be incredibly helpful; I'm not saying you should never do that! Just that you should consider holding off.) • Even when I want solutions, it's often unhelpful for the other person to get too far into "debugging mode" before they understand the problem in as much detail as I do. Their suggestions won't deal with my real problem. The problem-oriented mode is not without its own problems, however. I've recently found myself in a few conversations where I try to take a problem-oriented stance (sometimes as 'transmitter' and sometimes as 'receiver'). Some issues: • When the other person really wants advice, the problem-oriented stance can be baffling. I found myself in a position where my questions were being misinterpreted as advice. "I just don't see what you're proposing that I do." Sometimes people take it as an axiom that a line of questioning isn't helpful if it's not connected with a proposed solution. A problem-oriented conversation is then axiomatically 'unhelpful'. • Similar, as a 'transmitter' seeking a problem-oriented discussion of some issue, I might get frustration from others because I'm not pursuing solution-oriented lines of thought. The conversation might get shut down as unfruitful before I've gotten the understanding I was looking for. • Another problem is that problem-oriented conversations can get too meta and make a bigger problem out of things. For example, lots of specific household issues turn into "communication problems" if you keep looking for the larger root of the problem. You can end up in a conversational frame where it sounds like you need to have a big intervention. • More generally, things will go poorly if there's an implicit assumption that any aspect of the problem you talk about, you're saying needs to be changed. There needs to be room to explore the problem without necessarily suggesting action. Otherwise it isn't possible to explore things from all angles. Still, this strikes me as an important mode of conversation. Discuss ### I’m a 19-year-old Terminal Patient. Medical Brain Preservation Should not be Difficult to Discuss or Adopt 23 февраля, 2021 - 03:42 Published on February 23, 2021 12:42 AM GMT From the BPF blog (of which I’m a volunteer) here’s the story of a kid with a terminal illness who is holding out for the development of brain preservation for future uploading. In the comments he justifies not signing up for cryonics with Lack of medical accountability and support from the scientific community are shortcomings of cryonics that are unacceptable for many, including me. To address that, I think the neuroscience and medical establishment should start supporting and developing brain preservation [ASC] in a hospital setting today. These shortcomings prevented me from choosing cryonics, and I want people to have far better options at the end of their lives than I did. Discuss ### The Comprehension Curve 23 февраля, 2021 - 01:51 Published on February 22, 2021 10:51 PM GMT Tl;Dr: You might comprehend and learn more quickly by slowing down your reading, rather than by speeding it up. This post is mainly about laying down some terminology that I think is conceptually clarifying in thinking about learning, comprehension and reading speed. Speed Reading According to Google Trends, interest in speed reading has been on a pretty steady decline since 2004. It briefly became more popular in March 2014, perhaps due to an Atlantic article published that month, on the speed reading app Spritz. Nevertheless, when a person starts thinking about "learning how to learn," speed reading is one of the natural things to investigate. Am I reading fast enough? What's the maximum possible words per minute to still comprehend the material? Couldn't I compensate for low comprehension just by reading much, much faster? And so they Google "speed reading," and resurrect an old conversation. The fundamental idea of speed reading is that by reducing wasted motion in the physical eye movements involved in reading, people can dramatically increase the number of words per minute (WPM) that they can read, without sacrificing comprehension. Speed reading advocates point to evidence that speed reading champions suffer no loss of performance on comprehension tests. Such research would need to be executed and interpreted with care, as I describe below. Speed reading is most obviously helpful under a narrow set of conditions: 1. The document you have to read is your only source of the information. 2. The information is easy for you to understand. 3. You still need to read the document for some reason. Real-world examples might include a lawyer reading boilerplate, a teacher reading young student essays, or a businessperson reading memos. Another might be a student who wants to honestly be able to say they "read the Scarlet Letter," but who really doesn't care about the book very much and plans to study for the test using CliffNotes. One of the nice things about reading speed is that it's easily quantifiable. You can paste text into an app like Spreeder and set the speed as fast as you'd like to go. But if you primarily want to comprehend quickly, then it's not fundamentally your reading speed, but your comprehension rate that you want to maximize. Unfortunately, comprehension is far less tidily quantifiable, for reasons we'll talk about below. The Comprehension Curve But there is one graph we can make to help drive this point home. It's similar to the Laffer Curve. The point of the Comprehension Curve is that each person, for a certain text at a certain time, has an ideal reading speed (WPM) that maximizes their comprehension rate. It's hard to determine how to measure comprehension rate, in order to determine one's ideal reading speed. But on a purely conceptual level, anybody interested in maximizing their comprehension rate should be interested in identifying their ideal, not their maximum, reading speed. The vertical axis is hardest to understand. "Comprehension rate" has four important pieces of nuance: 1. It's about comprehension, not learning in general. Comprehension is hard to define, but think of it as that first step in importing words on the page (or an oral speech, a picture, graph, or sensation) into your mind. It's that form of learning that you can achieve at the same time as you read/listen/pay attention. 2. It's the rate of comprehension, not an amount. A student at the start of their study session has comprehended only a small amount, but may be comprehending at a fast rate. 3. It's personal and contextual, not with reference to some human average or theoretical limit. Comprehension rate is specific to a particular text, reader, environment, level of background knowledge, and level of reading skill. The Comprehension Curve lets us see that "speed reading" starts with the assumption that most people, most of the time, are on the left side of the Comprehension Curve. If true, then they could increase their rate of comprehension by reading faster. But the personal and contextual nature of reading suggests that in many cases, this is not a plausible assumption. If a person hears that the average reader has a 250 WPM reading speed, and that skilled speed readers can go 1,000 WPM, then tries to paste their biology textbook into a speed-reading app, they might run into problems. Compounding this practical problem, some speed reading advocates suggest to novices that they should continue practicing speed reading, despite their (initial) lack of comprehension. For example, an article on MindTools.com states: "You will probably find that you retain very little information at first, but, as you train your brain and you become more comfortable with the technique, your comprehension should improve." It's OK to accept a temporary setback in order to train in a more powerful method. For example, a pianist who learned poor technique might temporarily play worse as they learn better technique. But this is only true if the method is indeed more powerful once mastered. If people who are trying to comprehend at a faster rate are on the right-hand side of the Comprehension Curve, then even mastery of speed reading will harm their comprehension. Training people to accept and ignore a harm, under the assumption that it's a temporary harm, is a dangerous, if sometimes necessary, message. The Natural Pace Hypothesis And The Difficulty With Comprehension Tests It doesn't seem plausible that we could speed up our reading from our natural pace and maintain equal comprehension. After all, don't people naturally find a pace that optimal fort their own brain and needs? Let's call this the "natural pace hypothesis." If we accept the natural pace hypothesis, then it's an unlikely hypothesis that altering a person's reading speed could improve their comprehension, or whatever other outcome they're optimizing for. We therefore need a lot of strong evidence to make us accept it. One way that speed reading advocates claim to test this hypothesis is by administering comprehension tests to speed readers and normal readers, and comparing the results. If the speed readers do at least as well as the normal readers, then speed reading hasn't harmed their comprehension. Rayner, et al provide an excellent review both of the technique of speed reading and the flaws in many of these comprehension tests. Given these issue, we should be especially concerned about advocating that users of a speed reading technique accept an initial negative impact on their comprehension. It may never improve back to baseline. It's important to bear in mind that "speed reading" can be defined across three orders of magnitude. If the average pace is 250 WPM, is "speed reading" 500 WPM? 2,500 WPM? 25,000 WPM? When we have study results, we shouldn't extrapolate too much from them to other types of texts, learners, or reading speeds. But more importantly, what do we make of it when a study shows that we find no significant difference between speed readers and normal readers, for a given technique, text, and reading speed? We can interpret this in three ways: 1. The studied approach to speed reading allows faster reading with no loss of comprehension. Speed reading works! 2. The comprehension test was too hard, or it wasn't hard enough. As an example of a too-easy test, imagine that the text is a children's book, and the questions are asking about the basics of character and plot. If this test is given to proficient adult readers, they might be able to pick everything up based on a quick scan. An example of a too-hard test would be having a group of chemistry students read a passage on the derivation of the Michaelis-Menten equation. If the comprehension test questions ask them to extend and apply that equation to difficult word problems, it may be that both of them would have such a hard time that neither group was able to answer the questions correctly. To do a good comprehension test, you'd need to find a good operationalization for "normal" and "speed" reading. Perhaps you could establish a "normal range" of reading speeds by asking a group of subjects to read the text once, at their own speed, and to then determine the interquartile range - the range between the top 75% and bottom 25% of reading speeds. Then you'd establish a corpus of texts that all reliably produce the same "normal range," and test to see whether or not individual people tend to read all texts from this corpus at around the same speed. Once you had a corpus of such texts, you might expose speed readers to them, presenting some texts at "normal range" speeds, and others at the speed reading rate you're testing. If the speed reading rate produced significantly different comprehension than the normal rate, this would be evidence of whether or not speed reading would be beneficial for most people, at that speed and for similar texts. From "Speed Reading" To "Eye Technique" If you read the article on speed reading, you'll notice that speed reading is about refining one's physical eye movements. • Fixations: how often and how long the eyes fix in place. • Saccades: how far the eyes move between fixations. • Regressions: how often the eye travels to an earlier point in the text. What if we referred to the collection of techniques meant to optimize these motions not as "speed reading" but as "eye technique?" This might make it easier to see that if these techniques represent improved eye technique, this improvement need not be in terms of reading speed. It could be, for example, that a reader with excellent eye technique reads at exactly the same speed as the average population, yet has improved comprehension nonetheless. If true, this could be because more carefully coordinated eye motions produce greater visual clarity of the text itself, or otherwise help the reader identify and focus on the most important parts of the text. So it may still be that the eye techniques that are normally referred to as "speed reading" are still useful to learn, even if the "natural pace" hypothesis is correct and most people read at their ideal reading speed. Another way of stating this is that advocates and detractors of "speed reading" tend to conflate a couple of different hypotheses: 1. Practice with a particular set of eye techniques can be useful to readers. 2. Rate of comprehension is bottlenecked by words read per minute. Even if the "reading speed bottleneck" hypothesis is false, it could still be that improved eye technique could be useful in improving reading speed, if that is the goal, or comprehension, if good eye technique is employed at the ideal reading speed. Where's The Comprehension Bottleneck? Thinking in terms of a comprehension bottleneck can point to what we really want to know. Is the average person's natural approach to reading for comprehension - their eye technique, speed, cognitive reflection - their ideal approach as well? In other words, can the rate of comprehension be improved by some form of technique that can be learned and practiced? And if so, what is the limiting factor, or bottleneck? If we aren't achieving our personal maximum comprehension rate, what aspect of poor technique is holding us back? It could be choice of text or information source: perhaps we should be more discerning in the textbooks, teachers, or other resources we choose to learn from. It could also be about the order and amount of learning a person tries to achieve in a given time period: taking two classes or three, grouping related classes in immediate succession or spreading them out over time. It could also be issues in our environment, such as a habit of studying in distracting environments. It could be eye technique. It could be other study and health behaviors, such as taking notes, getting adequate exercise, taking breaks, or using a prescribed medication. Or perhaps it's what we could call mental technique, the voluntary thought-behaviors that we can control, such as our ability to visualize and activate our sensory imagination, control our inner monologue, or remember. An individual interested in experimenting with finding and improving the technique that is their comprehension bottleneck might best approach this by having a rich set of techniques with which to experiment. Some techniques are addressed by specialists, such as psychiatrists who can prescribe medication for ADHD. Other professional specialties that seem like they would be useful are deeply unconventional. How often does a professional researcher consult with a reading teacher to see if their technique can be improved? By contrast, even highly accomplished musicians continue to work with music teachers throughout their career. What book or professional would a "professional reader" - a lawyer, journalist, scientist, anybody in a knowledge profession - turn to in order to assess and improve the broad range of techniques that factor into their comprehension bottleneck? The problem is fractured into bits, each dealt with either by a different professional or with no expert attention at all. Finally, it seems valuable to contextualize comprehension as one possible learning bottleneck. A person might, for example, achieve a very fast rate of comprehension when they read a textbook, yet fail to remember almost any of it a year later. If their goal is long-term retention, then improving their rate of comprehension is not the bottleneck for their learning. Yet there could be a relationship between these facets of learning. For example, a faster rate of comprehension would mean that a student could devote more time to reviewing previously-learned concepts, which might improve long-term retention. Likewise, better comprehension might improve performance on applied work, such as labs or problem sets, or improve motivation. Being able to think clearly about the difference and relationship between comprehension and learning, and to view learning as a decomposable set of processes, akin to chemical reactions, each with a technical limiting factor and theoretical maximum rate, seems like the correct approach. In this state of insufficiency, the goal of this article is to bring some conceptual clarity to the subject of reading speed and comprehension. The most important concepts are the "comprehension rate," the Comprehension Curve, the comprehension and learning bottlenecks, and the revisionist concept of "eye technique" and "mental technique" as part of a set of linked reading comprehension techniques. Discuss ### Aim to get rejected often 23 февраля, 2021 - 01:38 Published on February 22, 2021 10:38 PM GMT This is a linkpost for https://amirbolous.com/posts/rejection Introduction I get rejected at least one to two times a week. In busier periods, this can often be closer to five to fifteen rejections a week. These rejections come in many shapes and forms: internship applications, fellowship applications, cold-email/DM requests, you name it. Anything you can get rejected from, I have probably done so. I'm going to convince you a. why it's ok to get rejected b. why you should get rejected often Why it's ok to get rejected In the past, I used to be devastated by rejections because I thought they were a reflection of my self-worth or achievement. "I didn't get into X because I'm not good enough." In reality, there are hundreds of variables that come into play here (most notably, a good amount of luck) but we don't like complex systems. We like simple ones. So understanding the nuances can be tricky. In fact, there's a whole field of literature around this when it comes to finding explanations in science. Occum's razor is a theory that says "the simplest solution that explains something is probably the correct one." In theory, this usually works well. As people trying to rationalize decisions, this works incredibly poorly. For example, someone who has no idea of what gravity is may conclude that the wind is why things fall when you drop them. The problem with finding simple explanations is that they are not calibrated against our knowledge and biases. If we have faulty evidence, our inferences (what we conclude) are likely going to be wrong. This happens all the time when we think about rejections. I realized that it didn't make sense concluding why I got rejected when I have no idea of what happened behind the scenes. Maybe I wasn't good enough. Maybe I was. Maybe I got unlucky. Maybe I got lucky. When I realized that there were hundreds of variables out of my control, I took a step back. Suddenly, it felt silly to try and rationalize or conclude why something happened the way it did. More importantly, it meant that a rejection did not say anything about who I am as a person or what my future would look like. Why you should get rejected often Some of the best opportunities and experiences I've had happened on a whim. I applied to something I didn't think I'd have a shot at landing, I reached out to someone who I'd been following for a long time, and I met my best friend by accident. I've realized that there is no upper bound on the number of cool things to do and the number of cool people you can meet. But these experiences, opportunities, and people have to be sought after. You have to **intentionally seek them out**. You have to "shoot your shot." Critically, there is an asymmetric upside when you do this. That means you lose very little on your side in terms of time and effort (when you apply, cold-email someone etc.) but there is no upper bound on what you may potentially gain! That is, the upside is unlimited! In fact, this is exactly the model that angel investors and venture capital firms operate on. They invest in many companies that they think will succeed - some of these may fail, others may be stagnant. But the very few, the one or two (or more) that go on to become million/billion dollar businesses generate the majority of their revenue. They're the ones that generate 10,000x+ returns which dwarf all of the other losses and gains. The same principle holds across all domains. People who launch successful companies, develop relationships with people they never would have otherwise met, apply to grants/internships/funding and so forth. So when there's so much to gain and so little to lose, the question should never be why, it should always be why not? Closing Thoughts Doing cool things and meeting cool people is a priority that I optimize for. Ironically, this also means I encounter failure and rejection more often. Most of the time, I'm indifferent about the rejections. Some of the time, I'm absolutely crushed. As much as I'd like to adopt a Stoic attitude towards getting rejected, I recognize that this is difficult in practice. However, the main takeaway isn't that you shouldn't feel sad when you get rejected. It's that you should never let it stop you from shooting your shot. Discuss ### Media Bias 23 февраля, 2021 - 00:14 Published on February 22, 2021 9:14 PM GMT In the days following confirmed person-to-person transmission of COVID in the United States, my company went on Fox News to promote ourselves. What makes this otherwise bog-standard collusion between business and media interesting is our representative was a Marxist who knew COVID would be a disaster for the United States. His story was used to support Fox News' thesis that the entrepreneurial spirit of America's small businesses would crush COVID. In exchange, my friend received media coverage which helped him sell product. Everyone won. A common misconception about propaganda is the idea it comes from incorrect news or from money changing hands. In my personal experience colluding with the media no money changes hands and no (deliberate) lies are told. Lying and corruption on the part of media outlets tends to be unnecessary in all but the most extreme cases (like North Korea). Most media bias actually takes the form of selective reporting. Selective Reporting Investigative reporting costs money. Media outlets' job is primarily curation i.e. republishing information from others in the know. "Others in the know" is mostly companies with products to sell and political parties with ideologies to sell. The cheapest information to access is public datasets (like NOAA weather reports), public records (like Florida state records), public drama (Twitter) and press releases. Press releases are the best because you don't have to write your own article. News outlets cannot report everything. If you report only some of the available information then your choice of what to report reflects your bias. Bias and curation are two sides of the same coin. You cannot curate information without imposing bias. Curating information is the imposition of a bias. Combine the Chinese Robbers Fallacy with a large pool of uncurated data and you can find facts to support any plausible thesis. Lest you think this is a partisan problem, check out this hatchet job by the New York Times and compare it to the reality. The fact news outlets don't have to broadcast lies doesn't mean they don't. Quotes News outlets don't have direct access information like what the military is doing. The military does. Militaries lie. If a newspaper says Colonel Kurtz says air strikes don't kill noncombatants then the newspaper is not lying even though they are broadcasting a lie. Even a news outlet is broadcasting a lie a government is unlikely to prosecute them for promoting official government policy. Newspapers abnegate responsibility for truth by quoting official sources. You get away (legally) straight-up lying about medical facts if you are quoting the CDC. News outlets' unquestioning reliance on official sources comes from the economics of their situation. It is cheaper to republish official statements without questioning them. The news outlet which produces the cheapest news outcompetes outlets with higher expenditure. Besides, it is rarely a good idea to antagonize the government against you—even in a democracy. If you antagonize the government they might stop feeding you press releases about the wars they're winning. (Noam Chomsky writes about this dynamic ad nauseam in Manufacturing Consent.) This is true even for small independent operations. It's rare for podcast hosts to argue with their guests. This isn't necessarily unethical. The number of people who dislike you is dominated by the size of your audience, not by how wrong you are. If you have a large audience then people will call you wrong all the time and the right thing to do is ignore them. This applies to both hosts and guests. If an adversary invites you onto their show it is because they think the exchange will net benefit their platform. Unless you are playing a non-zero-sum game. The parity inverse of a meme is the same meme—at a different phase in its lifecycle. Two-sided conflicts are extremely virulent memes because they co-opt potential enemies. Debugging Attention When thinking about things scientifically, it is helpful to ask yourself "What do you think you know and why do you think you know it?" Media bias is not a game of science. It is a game of memetics. Memetics isn't about truth. It is about attention. Ask yourself "What are you thinking about and why are you thinking about it?" Discuss ### The slopes to common sense 22 февраля, 2021 - 22:22 Published on February 22, 2021 7:22 PM GMT Usually, I try to outline the thing I'm talking about first. But in this case, it's best to start with an example. i - Why we sleep In 2017 the book "Why We Sleep" was published. This book was essentially trying to muster a very strong scientific argument for why one should sleep 8 (self-reported) hours a night. In that, it argued the health and cognitive benefits of sleep are so great that sleeping less than 8 (self-reported) hours a night is insane from a cost-benefit analysis perspective. Two years later, Alexey Guzey stumbled upon the book and wrote a pretty stark rebuttal of the first chapters, essentially showing that the epidemiological evidence does not exactly support the author's conclusion and some of the smaller claims that reinforce it. It should be noted that in some cases "Why We Sleep" doesn't only ignore the evidence on the subject, but outright engages in data manipulation. To me this seems like a fairly clear case of "chunk the book in the junk science bin, try to tell people not to read it and move on". So was that the internet's reaction? Well, that's hard to say, the top discussion threads around the article as shown by Google are: Hacker News /r/ssc /r/sleep /r/sleephackers I find it very interesting that in all 4 discussion threads it seems like the consensus opinion is something like "yeah, but the book is still pretty good" plus a bunch of people upvoting comments that criticize the rebuttal without having read it (i.e. the answer to their criticism is found in the rebuttal itself). It should be noted here that /r/sleephackers and /r/sleep are supposed to be specialized communities, i.e. the kind that would care about even minor factual errors regarding this topic. And /r/ssc, as well as HN, should boast an audience that's educated enough not to confuse science with a new global religion. So why is everyone still agreeing with the core thesis of the book? I don't know, but I can speculate it stems from a line of thought that goes something like this: Yeah, ok, maybe it's not proven that 8-hours of self-reported sleep is the ideal. Maybe there are +/-3 hr variations depending on the individual and environmental factors. Maybe short sleep is not correlated with that many negative things, or not that strongly. Still, the general point that it's cautious to try and sleep as much as you feel you need to, and not set an alarm sooner than 8 hours after bed, seems sound. This is fair... except for the fact that you are not agreeing with the book in making the above statement, you are agreeing with literally every single mother and grandmother in the world. The general idea that you shouldn't force yourself to sleep less than you feel like and that 8 hours a night is a rough guideline for a good amount of sleep if you have to set a clock is... I assume, at least as old as fixed-schedule jobs and alarm clocks. I won't go around digging for citations now, but quickly browsing through some 19th-century novels should be all it takes to prove my point. The pattern above has as its first ingredient a commonly accepted view (why it is so is irrelevant, it might be true or not, it might also be so deeply embedded into society that questioning its truth value is pointless.) In our case, that view is: Sleep however long you feel like you need to, try sleeping during the night, as a general rule of thumb (e.g. if you have to set an alarm clock) aim for 8 hours a day. If you're sleeping less than 5 or more than 11 hours something is probably off, so just in case, go see a doctor. But you can pull that commonly accepted view in different directions. For the sleep claim, for example, I could pull a bit towards the "less sleep" direction: Sleep however long you feel like you need to, try sleeping mostly during the night, as a general rule of thumb (e.g. if you have to set an alarm clock) aim for at least 6 hours a day, but you can go up to 8 if that feels better. If you're sleeping more than 10 hours something is probably off, so just in case, go see a doctor. Or, as "Why We Sleep" does, I can pull it towards the "more sleep" direction: Sleep however long you feel like you need to, always sleep during the night, sleep at least 8 hours a day, but 9 might be better. If you're sleeping less than 7 hours something is probably off, so just in case, go see a doctor or review your sleep habits. Now, you might not be perfectly on-board with me on what the "commonly accepted" view of sleep is, so feel free to construct your own definition here and then construct 2 alternative definitions, one higher and one lower on the "amount of sleep" axis. Done? Ok ii - Directions of common sense Hopefully, you'll note an interesting phenomenon here. Or at least some of you will. The "more sleep" variation of the common-sense view probably sounds more reasonable to you. As in, the burden of proof for "more sleep" is probably less than for "less sleep". It's true that neither are as convincing as the common-sense view, otherwise, it would lose its namesake, but it's obvious that the common-sense view doesn't glide in a "linear" way. Indeed, any argument for not improving sleep quantity and quality (you shouldn't care about your mattress, PJs are overrated, room temperature doesn't matter, feel free to use your phone before bed, you don't need a fancy pillow, always set an alarm clock) sound much ickier than any argument for improving sleep quantity or quality (reverse the above list). Basically, a common-sense view on any axis can be thought of as a local-minium, but the slop on one side (e.g. sleep less) can be much steeper than the slope on the other side (e.g. sleep more). In other words, there's a steep direction in which you can try taking a common-sense view, where you'll encounter more opposition and a flat direction in which you will encounter less. Granted, I don't think this applies to every common-sense view, but I really like the model. Going back to my original question about "Why We Sleep": So why is everyone still agreeing with the core thesis of the book? In principle, I think it's because "Why We Sleep" unintentionally pulls a dirty trick: 1. Align yourself with the common-sense view. 2. Argue for shifting the common-sense view towards the flat side. What happens then is that anyone arguing against you seems to be arguing for shifting the common-sense view towards the steep side. Even if this is not true. The takeaway from the rebuttal of "Why We Sleep" is not "sleep less", it's just "change your opinion about sleep's health benefits to back where it was before you read the book". In case this is not obvious, think about it the following way: Telling anyone anything will create some opposition, some anger because now they have to adjust their model of the world. But the amount of anger generated is asymmetrical depending on the direction you tell them to shift their view towards: https://i.imgur.com/RNalLdd.png So tell someone that they should shift that view towards the flat direction, e.g people should sleep more, and they might get a bit annoyed, but they will weight in the potential utilities, your credentials, the empirical evidence (just kidding) and they might suppress that tiny annoyance and turn it into interest and gratitude or even agreement with the new information. But tell them that they should shift that view towards the steep direction and they will very quickly become very pissed off at you. iii - Broader phenomenon I swear I don't have a bone to pick with "Why We Sleep" more than I have with 99% of popsci. I am giving it as an example here since it's the only thing I can think of where this gradient issue is obvious, that most people will be familiar with, and that isn't very politically involved. The problem with this steep/flat distinction is that it often applies to issues that are heavily politicized, indeed, I think having a very flat and a very steep direction of change might be the very thing that makes an issue get into politics, to begin with. Think about it, you pick an issue "A" and argue for shifting common sense towards the flat side. Some people might grumble a bit, but overall, whatever, at most nobody care, at best a lot of people agree. But politics involves opposition, if your opponents agree with you they are made to seem dumb for not having figured it out first... and if they disagree with you, well, you can now paint them as arguing for going in the steep direction, and suddenly they go from mild-mannered politician to "literally the devil". At most your opponent has to add a lot of disclaimers, like: Yes, I know the steep direction exists, I'm not arguing for going that way, all I'm saying is that the common-sense view as it is right now is best and my opponent wants to shift it. I'm not arguing we shift it the other way, I'm just arguing we leave it be as it is. Yes, where it was is indeed closer to the steep part of the curve but it is a minimum, and nobody is forcing us to push it the other way... And as we all know, the more someone is forced to talk about something, the more they are being affiliated with that thing. You on the other end, are going in the flat direction, you needn't care about being associated with anything bad, even if you are saying "let's go x in the flat direction" and the opposition paints it as "let's go 2x in the flat direction", you are still safe, 2x in the flat direction is still not as bad as 0.01x in the steep direction. The worrying acceptance selectively taking some of the things someone says out of context as gestalt psychology, instead of taking them at face value, probably also fuels this whole thing more. In this model, political polarization comes from groups of people disagreeing about which directions are flat and which are steep. It's also a model that allows for a worldview where people are mostly in agreement since they all hold common-sense views. But can be polarized very quickly by a politician trying to instigate their opponents into seeming to argue the steep side of an issue. And this model fits my understanding of people much better than other models of politics I saw, which require heavily agentic behaviour from the voters, something I never see IRL. It also moulds very well on the consensus making social dynamics in friend groups, or at work and so on. iv - The difficulty with scepticism Finally, one thing I often noted is that, whenever I try to argue for a sceptical viewpoint on an issue, i.e. argue that we know nothing about the subject, I fall into this problem where people think I am taking "the other side". For example, I might say something like: The scientific method was not designed for or tested at the kind of scale where it can make speculations about the origins of the universe. The models which got stretched to create theories about the origins of the universe have never functioned without the scientific method to back them up with the experiments whenever they stretched a few inferential steps away. But the origin of the universe is essentially an infinity of inferential steps away given the sheer scale of the issue. By which I mean: While one can speculate about the origin of the universe for fun, the speculations remain empty and even hinting that they fall under the umbrella of science is wrong. We can't make any meaningful factual claims about the origin of the universe. We are too limited to understand an event like this. ... Which seems to be the common-sense view. Most people in principle seem to agree they have no fucking idea about why things are instead of not being and that the very question is stretching the limits of language/reason. But for some reason, a few people will hear me say something like: Well, fuck this physics bullshit, I think superstitions are a much better model for explaining the origin of the universe. I expect I'm making the same fallacy myself in regards to other views, I'm not patting myself on the back for being "wise and sceptical" here, I probably just have sharp/flat distinctions for subjects that other people don't and vice versa. Scepticism might be an ability to recognize sharp/flat distinctions in order not to be pulled towards the "flat" side for fear of taking the "sharp" way. Or maybe scepticism is an ability to view something in enough detail to figure out someone is arguing for the "common sense" minimum rather than being a few short steps away on the sharp side. At any rate, I think that this might be a good model for introspecting on my sceptical model of the world, how I convey it to others, and in which situations I might be using it to make isolated demands for rigour. v - The rest On the whole, this model is overly simplistic, the main things I'm glancing over are: Common sense may not really exist regarding some issues. Common sense might not mean the same thing for different people on different issues. The function defining ease of acceptance is not composed of two lines intersecting at "common-sense", it can have a very complex shape. For example, a short "sharp" area might be followed by a rather long flat one, or even by a dip leading to a new minimum. The sharp/flat distinction should probably be done in an n-dimensional space (n = numerically quantifiable elements of a view), not a 2d one. But I think scaling this up keeps everything intact, I'm not sure though. Thinking of most beliefs as numerically quantifiable in a somewhat linear fashion is probably wrong. However, most beliefs to have "goals" associated with them, and those goals are usually sequential (e.g. a belief in communism might be: revolution -> abolish private property -> abolish money -> abolish government), so really it might be that "sharp" or "flat" is really a distinction regarding the next goal on the axis of a particular belief once we shift away from the commonly held view. Does this leave me with a model that can be of any use? I don't know, time will tell. I'm not "big enough" to use my own models in my own works, at least not those that I hope to be coherent for a new audience. If I find this model allows me to generate a few interesting conclusions I might expand on it and those conclusions in a future post. If not, maybe somebody finds it useful. At most I'll finally be able to sleep more soundly, having potentially resolved some confusion, and common sense tells me this will improve my health. Discuss ### How can I protect my bank account from large, surprise withdrawals? 22 февраля, 2021 - 21:57 Published on February 22, 2021 6:57 PM GMT Today's Money Stuff describes large charges for electricity auto-withdrawn from customer's accounts: Last week there was a brief surprising spike in the spot price of electricity in Texas... Prices went from something like20 per megawatt-hour in early February to something like $9,000 last week... [A customer of an electric company] and her husband, Doug Robinson, 42, used less energy in February than they did the prior month. Still, their bill, typically around$100 a month, was more than $6,500 in 17 days. Because Griddy is connected to customers’ credit or debit cards to make automatic withdrawals, her credit card bill is now more than$2,500 — which she cannot afford to pay. She canceled her card before she could face more charges.

I called my bank (US Bank) to see if they could put in a rule to protect my account for this kind of thing, for example, allow no auto-withdrawals over \$1,000 dollars. The guy on the phone said no - they could set up after-the-fact alerts about large withdrawals, but nothing for before the horse is out of the barn.

My question: what are some ways to defend myself against this kind of large surprise withdrawal? I like the convenience of auto-paying, and would like to keep as much of that convenience as possible, but it looks like I will have to sacrifice some of it. I would have never guessed, if I lived in Texas, that I might be at the kind of financial risk described above, so I am looking for a method that doesn't require me to know a lot about what specific thing might be about to incur a large charge.

Discuss

### Calculating Kelly

22 февраля, 2021 - 20:32
Published on February 22, 2021 5:32 PM GMT

Jacob Falcovich tells us that we should Kelly bet on everything. I discuss whether we should Kelly bet when we'd normally make small-money bets on disagreements. Lsusr reminds us that we aren't very good at intuitively grasping what the Kelly formula actually will say.

Due to Lsusr's post, I took another look at how I actually calculate Kelly. I'll describe the improved formulation I came up with. I'm curious to hear everyone else's thoughts on the quickest ways, or what formula you prefer, or how you intuitively estimate. If you already have opinions, take a moment to think what they are before reading further.

In the comments to my post on Kelly, Daniel Filan mentioned:

FWIW the version that I think I'll manage to remember is that the optional fraction of your bankroll to bet is the expected net winnings divided by the net winnings if you win.

I've found that I remember this formulation, but the difference between "net winnings" and "gross winnings" is enough to make me want to double-check things, and in the few months since writing the original post, I haven't actually used this to calculate Kelly.

"expected net winnings divided by net winnings if you win" is easy enough to remember, but is it easy enough to calculate? When I try to calculate it, I think of it this way:

This is a combination of five numbers (one being a repeat). We have to calculate probability of failure from the probability of success (ie, 1-p). Then we perform two multiplications, one addition, and one division -- five steps of mental arithmetic.

But the formula is really a function of two numbers (see Lsusr's graph for a vivid illustration). Can we formulate the calculation in a way that feels like just a function of two numbers?

Normally the formula is stated in terms of b, the net winnings if you win. I prefer to state it in terms of r=b+1. If there's an opportunity to "double" your money, r=2 while b=1; so I think r is more how people intuitively think about things.

In these terms, the break-even point is just p=1r. This is easy to reconstruct with mental checks: if you stand to double your money, you'd better believe your chances of winning are at least 50%; if you stand to quadruple your money, chances had better be at least 25%; and so on. If you're like me, calculating the break-even point as 1r is much easier than "the point where net expected winnings equals zero" -- the expectation requires that I combine four numbers, while 1r requires just one.

The Kelly formula is just a linear interpolation from 0% at the break-even point to 100% on sure things. (Again, see the graph.)

So one way to calculate Kelly is to ask how much along the way between 1r and 1 we are.

For example, if r=2, then things start to be profitable after p=50%. If p=80%, we're 3/5ths of the way, so would invest that part of our bankroll.

If r=3, then things start to be profitable after p=33.¯¯¯3%. If p=66.¯¯¯6%, then it's half way to 100%, so we'd spend half of our bankroll.

If you're like me, this is much easier to calculate than "expected net winnings divided by the net winnings if you win". First I calculate 1r. Then I just have to compare this to p, to find where 1r stands along the way from p to 1. Technically, the formula for this is:

p−1r1−1r

That's a combination of three numbers (counting the repeat), with four steps of mental arithmetic: finding 1r, two subtractions, and one division. So that's a bit better. But, personally, I find that I don't really have to think in terms of the explicit formula for simple cases like the examples above. Instead, I imagine the number line from 0 to 1, and ask myself how far along p is from 1r to 1, and come up with answers.

This also seems like a better way to intuit approximate answers. If I think an event has a 12% chance, and the potential payoff of a bet is to multiply my investment by 3.7, then I can't immediately tell you what the Kelly bet is. However, I can immediately tell you that 1037 is less than halfway along the distance from 12% to 100%, or that it's more than a tenth of the way. So I know the Kelly bet isn't so much as half the bankroll, but it also isn't so little as 10%.

Keep in mind that the most you ever invest is p. For very small probabilities of very large payoffs, the percentage of your bankroll to invest remains small. You still want to check whether p is more than 1r. For example, a 1% chance of a 1000x payoff is good, because 1% is 1100, which is more than 11000. The amount you actually invest is a little less than p: in our example, p is almost 1100th of the way from 11000th to 1, so we know we'd invest about 1%. (The actual number is 9999, so, a little more than .9%.)

So, what's your favorite version of the Kelly formula? Do you think you can beat mine in terms of ease of calculation?

Discuss