Human Capital Contracts

Summary: Human Capital Contracts would allow people sell a certain % of their future income in return for upfront cash, as opposed to taking out a loan. This would be less risky for them, would give them valuable information about different college majors, and would help give people de facto ‘mentors’, among other advantages. Adverse selection could reduce the benefits, and reducing inter-state competition poses a major possible disadvantage. We also discuss two niche applications: parents and divorce.

Debt vs equity financing

There are two methods of financing for companies; debt and equity.

Debt is fundamentally very simple. I give the company $100 now; it promises to give me $105 in a year’s time. They owe me a fixed amount in return. Hopefully in the meantime the company has invested that $100 in a project or piece of equipment that produces more than $105; if so they made a profit on the transaction as a whole. Here the risk is borne by the company; they have no choice but to pay me back, even if they didn’t make a profit this year. This form of financing is familiar to most people, as they personally use savings accounts, credit cards, mortgages, auto loans and so on.

Equity, unlike debt, does not represent a fixed level of obligation. Instead the company owes you a certain fraction of future profits. If you give a company $100 in return for a 10% share, and they made a $50 profit, your share of the profit is $5. Hopefully they will make growing profits for many years, in which case your portion will grow to $6, to $7, and so on. Here the risk is borne by you; if they don’t make a profit, you get nothing. This form of financing is much less familiar to most people; about the only experience they are likely to have would be investing in the stock market, but that is now highly abstract so the underlying mechanics are obscured.

Equity: Less Risky than Debt

One of the biggest advantages of this system is it moves the risk from the individual borrower to the investor. When you borrow money, you put yourself at substantial risk. What if you struggle to find a good job after college? You’re still obliged to make repayments, which could be very difficult if you only have to accept a very low-paying job. Or if you borrow money after college, what if you lose your job? Or have a family emergency? Your circumstances have deteriorated, but you’re still obliged to make the same level of payments – meaning your post-debt income falls by even more than your pre-debt income.

With equity, on the other hand, you don’t have the risk. If you don’t find a job after college, your income will be zero, so your repayments will be X% of 0 – namely 0. If you find a low-paying job, your repayments will be low. The investors will be made whole by the people who instead find high-paying jobs – who can also afford to repay more. So equity investments better match up your repayment obligations with your ability to repay.

Here is an chart showing the difference, in terms of the % of income you’d be spending on repayment, from an example worked out later in the article:

The risk is transferred to the investor, who now loses out if you don’t have much income. But they are in a much better position to deal with the risk – they can diversify, investing in many different people, and also in other asset classes. Some human capital contracts could be a good diversifying addition to a conventional portfolio of stocks and bonds.

Education

Funding higher education is perhaps the best application for Human Capital Contracts.

Firstly, this is an extremely risky investment. There are countless stories of people who took out huge student loans to fund an arts degree and then have their lives dominated by the struggle to repay. Alternatively, if people could discharge education debts through bankruptcy, the risk to the lender would be too great, as the borrowers typically lack collateral, so loans would be available only at prohibitively high interest rates, if at all. Selling equity shares would avoid this problem; people who did badly after school would only have to repay a minimal amount, but lenders could afford to offer relatively generous terms because the average would be pulled up by the occasional very successful student.

The other appeal is the information such a market would provide students. It is fair to say that many students don’t really understand the long-term consequences of their choices. The information available on the future paths opened up by different majors is poor quality – at best, it tells you how well people who studied that major years ago have done, but the labor market has probably changed substantially over time. What students really want is forecasts of future returns to different colleges and majors, but this is very difficult! And many people are not even aware of the backwards-looking data. The situation isn’t improved by professors, who generally lack experience outside academia, and sometimes simply lie! I remember being told by a philosophy professor that philosophers were highly in demand due to the “transferable thinking skills” – despite the total lack of evidence for such an effect. Human Capital Contracts would largely solve this problem.

TIPs markets provide a forecast of future inflation. Population-linked bonds would provide similar forecasts of future population growth. Similarly, Human Capital Contracts could provide forecasts of the future returns to future degrees. Lenders would expect higher returns to some colleges and majors (Stanford Computer Science vs No-Name Communications Studies), and so would be willing to accept lower income shares for people who chose those majors. As such, being offered financing for a small percentage would indicate that the market expected this to be a profitable degree. Being offered financing only for a large percentage would be a sign that the degree would not be very profitable. Some people would still want to do it for love rather than money, but many would not – saving them from spending four years and a lot of money on a decision they’d subsequently regret.

What could make clearer the difference in expected outcomes than being offered the choice between Engineering for 1% or Fine Art for 3%?

Certainly I think I would have benefited from having this information available. Most people probably know that Computer Science pays better than English Literature, but that’s probably not a pair many people are choosing from. I was considering between Physics, Math, Economics or History for my major. I knew that History would probably pay less, but didn’t have a strong view on the relative earnings of the others. I probably would have guessed that math beat physics, for example, but in retrospect I think physics probably actually beats math.

Astute readers might object here that I am conflating the benefits of the type of financing (debt vs equity) with the mechanism for pricing the financing (free market or price fixed). If there was a free market in debt financing, lenders could charge different interest rates, and these would provide information to the students. This is true, except that 1) the interest rate would only tell you about the risk you’d end up super-poor, rather than providing information about the full distribution of outcomes, and 2) as student loans cannot be discharged through bankruptcy, there’s not really much reason for lenders to differentiate between candidates. If student loans could be discharged through bankruptcy, the interest rates charged would be informative but also probably very high. Perhaps this would be a good thing!

Education Funding – some illustrative examples.

Because it can be hard to think about these things in the abstract, I’ve tried to produce some worked-out examples. Suppose someone borrows $100,000, and then starts out earning $50,000 when they graduate. Their income grows over time, as they gain experience (maturity) and the economy grows (NGDP/capita). If we assume a 6% return for investors and a 20 year duration, they would have to give up just over 5% of their income of this time period. The repayments would be much more manageable – in year one, it would represent just 5% of their income, as opposed to 17% if they used debt.

Now, investors might demand a higher rate of return for equity investments, as they’re riskier than debt ( but then again maybe not . Here’s the same calculations, but assuming equity investors require a 10% return vs 6% on debt:

What happens if the student runs into financial difficulty later in life? Here’s what happens if their income falls by 50% and never really recovers:

with equity, the hit is affordable, but with debt they have to pay 20% of their income in debt repayments – perhaps at the same time as having medical problems.

And what about the information value? Well, the investors would be willing to offer them $100,000 for just a 5.6% share, instead of 7.85%, if they took a major that would offer a $70,000 starting salary instead.

I hoped you enjoyed these tables. They are probably the closest you will ever get to a picture on this blog. I did add color to some of them though!

Mentors – Incentive Alignment

The modern world is very complicated, and we can’t expect people to understand all of it. Which is fine, except when it comes to understanding contracts, or credit cards, or multi-level-marketing schemes. At times the complexity of the modern world allows people to be taken advantage of, even in transactions which would be perfectly legitimate had the participants been better informed.

Equity investments have the potential to help a lot here. All of a sudden I have a third party who is genuinely concerned with maximizing my income. I could ask them for advise about looking for a job. Perhaps they could negotiate a raise for me. Indeed, they might even line up new jobs for me! Obviously their incentives are not totally aligned with me. Except insomuch-as happy workers are more productive, they might not put much weight on how pleasant the job is. But true incentive alignment is rare in general; even your parents or your spouse’s incentives aren’t perfectly aligned, and the government’s certainly aren’t. Even better, it’s very clear exactly how and to what degree my inventor’s incentives are aligned with mine: I don’t need to try and work out their angle. I can trust them on monetary affairs, and ignore their advice (if they offered any) with regards hobbies or friendships or whatever else.

Indeed, you could imagine schools that funded themselves entirely through equity investments in their students, and advertised this as a strength: their incentives are well aligned with their students. They would teach only the most useful skills, as efficiently as possible, and actively support your future career progression. This is basically the model App Academy uses:

App Academy is as low-risk as we can make it.

App Academy does not charge any tuition. Instead, you pay us a placement fee only if you find a job as a developer after the program. In that case, the fee is 18% of your first year salary, payable over the first 6 months after you start working.

source

Compare this to current universities, which actively push minority students out of STEM majors to maintain graduation rates.

Progressive

A clear implication of equity financing is that people who go on to earn more for ex ante unpredictable reasons will pay more than those who are ex post unlucky. As such, this system is mildly redistributive in a manner many people find attractive – like a sort of idealized social insurance that Luck Egalitarians like talking about. The lucky rich pay more and the unlucky poor pay less. Even better, it manages to do so in a voluntary way.

Taxation

The idea of human capital contracts may sound very strange. But we actually already have something similar in taxation. Governments invest in the education, health etc. of their citizens, and then levy taxes upon them. These taxes tend to be proportional to one’s ability to pay; they are some fraction of income, or expenditures (sales taxes). So Human Capital Contracts should feel familiar to socialists and the like.

There are of course a few differences between Human Capital Contracts and taxation. For example,

• Human Capital Contracts are optional, whereas taxation is mandatory.
• Human Capital Contracts give you more choice about what you spend the money on, whereas governments typically give you little choice.
• Finally, Human Capital Contracts are customizable; you could negotiate different terms with the lender (like the % share you’re selling, or the income level at which you start repaying, or the timing of repayments), whereas individuals rarely get much choice about the taxes they will be made to pay.

Indeed, the advantages of human capital contracts suggest a new way of doing taxation: the state could simply claim a certain % ownership of its citizens. Perhaps it might demand a higher % for those who use public education or public healthcare.

The idea of the state literally owning (a stake in) its citizens, without their consent, might sound evil. But this is basically what the government already does with taxation – it claims a certain fraction of your income, leaving you no recourse. Even renouncing your citizenship will not persuade the IRS to let its property go. Human Capital Contracts just make it more explicit that the governments of most countries effectively own somewhere between 30% – 60% of their populations. Worse, if they want to they can increase their ownership stake without the consent of those affected. Compared to this, it is hard to make voluntary Human Capital Contracts sound problematic.

However, this suggests a danger with equity investments in people. At the moment you can escape most governments by fleeing abroad. The couple of exceptions are largely viewed as immoral aberrations, not the rightful state of affairs. This exit-right provides a vital check on their power, and forces them to compete to some degree. Without it they can descend to the most abusive tyranny. If equity investments became widely recognized, however, governments might start to recognize each other’s ownership of its population to a greater degree than now, which would make them harder to escape. Of course, virtually any innovation can be opposed by pointing out they make it easier for governments to oppress ‘their’ populace, from coinage to maps to cell phones. Perhaps a more powerful government would be a more benign one, as many different people have argued – though perhaps not.

Mechanics

Operationally this would be slightly more complicated than taking out a standard loan, because the amount owed to the lender would be variable. As such, they need to verify my income so they can check I’m repaying the correct amount. There are many ways this could be done, but an obvious one would be through the tax system; I would submit to the lender a copy of my tax return to show my annual income. Perhaps this could be automated through TurboTax. An even easier option would be if the payments were deducted from my paychecks – this is how English student loans work.

Possible Regulations

One option for regulating the system would be to impose a maximum amount of equity an individual could sell. This would prevent people from selling 100% of themselves, which might be a bad idea! Though for-profit investors would probably be uninterested in buying up to 100%, as the individual would lack any reason to actually work. Probably the only people interested in buying 100% ownership would be cults, communist co-ops and terrorist movements.

Another would be to regulate the contingencies that could be attached to such contracts.

A third would be to prohibit the investor from employing the investee, or vice versa.

Adverse Selection

One of the biggest impediments to such a system might be adverse selection. Students have ‘insider information’ about their future prospects – they know about their career plans. The less you expect to earn, the more attractive selling equity is over the fixed payments of debt. Conversely, the more you expect to earn, the less attractive equity is vs debt. As such, the students who opted for equity financing might be disproportionately the students with the lowest expected outcomes. This would increase the % investors would demand in return for funding, further deterring the higher-expectation students, until eventually only the very lowest-expectation students would remain in the pool.

We could imagine this being a big issue in some subjects, like physics, where there is a large variance in income for the different exit routes – grad school vs industry vs quant finance. For others it’s less of an issue; if you go to law school you’re probably aiming to become a lawyer, though even there you might choose between criminal or corporate law.

However, there are several factors which would mitigate against such an outcome. Firstly, the risk aversion we discussed earlier means students would probably be willing to pay a substantial amount to avoid the risk associated with debt. Adverse selection would mean it would be even more attractive to students pessimistic about their long-term earnings, but so long as it is attractive enough for the optimistic ones, it would still work.

Indeed, this is basically how it works for health insurance. In theory adverse selection is a problem for private health insurance; but in practice there is not much evidence this is actually a problem; healthy people still buy health insurance.

The effect would also be substantially reduced by students own lack of knowledge about their futures. Many students change their mind over the course of their studies about what they want to go on to do. So some low-expectation students might take out equity financing, thinking they were being cunning… and then change to a high paying career track! This seems to be the more common direction of travel in general; students go to college planning on becoming human rights lawyers, or engineers, or artists, but instead end up as corporate lawyers, investment bankers and advertisers.

So this is a problem I’d expect the bond/equity/insurance market to be more than capable of dealing with.

Addendum: Speculative Extensions

Here are some more ideas where equity investments in people could be useful. The idea could still be valuable even without these though; education is probably the best use-case.

Parents

Once upon a time the land was rich and fruitful, and the people were fecund with beautiful offspring.

… maybe that never happened, but fertility rates definitely have fallen over time, probably to our detriment. Future people matter, a lot! And even if they didn’t, we still need someone to fund social security.

One guess as to why fertility has dropped is once upon a time your children could be relied upon to live near you, following your customs, and supporting you in your old age, though its unclear if this ever made strictly economic sense. Now, however, children feel much less moved by filial piety, and frequently move far away. As such, parents seem much less value in having children, and only do so out of charity – raising a child takes a lot of effort, and the modern world is full of super-stimuli to distract you from productive procreation. Giving parents a small equity stake in their children would go some way towards recognizing the investment parents put into their children, and hopefully boost fertility rates.

It would also encourage parents to support their children and their careers; now the high-flying child is not merely a source of pride but also a source of retirement. A friend I discussed this with suggested that first-generation immigrants tended to give their children very practical advice about school, careers and relationships, whereas whites tend to be more wishy-washy; perhaps this would promote a return to reality-based parenting.

Divorce settlement

Another niche case where these could be useful would be divorce settlements. The classic feminist argument about divorce settlements was that the woman had invested in domestic and family labor, which was disrupted by the divorce, while the man had invested in his career, which he kept. Partly as a result of arguments like this, we now see divorce settlements where one party gets a claim to some of the resources of the other.

However, a fixed sum is not a very natural way of dealing with this. The woman, in entering marriage, assumed she would be benefiting from a certain share of the man’s output. If he were successful, this would be more; if he came upon poor fortune, this would be less – rather than taking a costly and messy court case to adjust the payments.  Human Capital Contracts would allow a divorce settlement to recognize this: in a divorce were the man were at fault, the woman might be granted a 1% equity share for each year of marriage.

Obviously if you thought permitting divorce was a mistake – “til death do us part” – then you’d have little interest in this application.

Further Reading

Further Reading: Risk-Based Student Loans

Blind Spots: Compartmentalizing

This is my contribution to the December blogging carnival on “blind spots”.

Summary: People frequently compartmentalize their beliefs, and avoid addressing the implications between them. Ordinarily, this is perhaps innocuous, but when the both ideas are highly morally important, their interaction is in turn important – many standard arguments on moral issues are dramatically undermined or otherwise effected by EA considerations, especially moral uncertainty.

A long time ago, Will wrote an article about how a key part of rationality was taking ideas seriously: fully exploring ideas, seeing all their consequences, and then acting upon them. This is something most of us do not do! I for one certainly have trouble.

Similarly, I think people selectively apply EA principles. People are very willing to apply them in some cases, but when those principles would cut at a core part of the person’s identity – like requiring them to dress appropriately so they seem less weird – people are much less willing to take those EA ideas to their logical conclusion.

Consider your personal views. I’ve certainly changed some of my opinions as a result of thinking about EA ideas. For example, my opinion of bednet distribution is now much higher than it once was. And I’ve learned a lot about how to think about some technical issues, like regression to the mean. Yet I realized that I had rarely done a full 180  – and I think this is true of many people:

• Many think EA ideas argue for more foreign aid – but did anyone come to this conclusion who had previously been passionately anti-aid?
• Many think EA ideas argue for vegetarianism – but did anyone come to this conclusion who had previously been passionately carnivorous?
• Many think EA ideas argue against domestic causes – but did anyone come to this conclusion who had previously been a passionate nationalist?

Yet this is quite worrying. Given the power and scope of many EA ideas, it seems that they should lead to people changing their mind on issues were they had been previously very certain, and indeed emotionally involved. That they have not suggests we have been compartmentalizing.

Obviously we don’t need to apply EA principles to everything – we can probably continue to brush our teeth without need for much reflection. But we probably should apply them to issues with are seen as being very important: given the importance of the issues, any implications of EA ideas would probably be important implications.

Moral Uncertainty

In his PhD thesis, Will MacAskill argues that we should treat normative uncertainty in much the same way as ordinary positive uncertainty; we should assign credences (probabilities) to each theory, and then try to maximise the expected morality of our actions. He calls this idea ‘maximise expected choice-worthiness’, and if you’re into philosophy, I recommend reading the paper. As such, when deciding how to act we should give greater weight to the theories we consider more likely to be true, and also give more weight to theories that consider the issue to be of greater importance.

This is important because it means that a novel view does not have to be totally persuasive to demand our observance. Consider, for example, vegetarianism. Maybe you think there’s only a 10% chance that animal welfare is morally significant – you’re pretty sure they’re tasty for a reason. Yet if the consequences of eating meat are very bad in those 10% of cases (murder or torture, if the animal rights activists are correct), and the advantages are not very great in the other 90% (tasty, some nutritional advantages), we should not eat meat regardless. Taking into account the size of the issue at stake as well as probability of its being correct means paying more respect to ‘minority’ theories.

And this is more of an issue for EAs than for most people. Effective Altruism involves a group of novel moral premisses, like cosmopolitanism, the moral imperative for cost-effectiveness and the importance of the far future. Each of these imply that our decisions are in some way very important, so even if we assign them only a small credence, their plausibility implies radical revisions to our actions.

One issue that Will touches on in his thesis is the issue of whether fetuses morally count. In the same way that we have moral uncertainty as to whether animals, or people in the far future, count, so too we have moral uncertainty as to whether unborn children are morally significant. Yes, many people are confident they know the correct answer – but there many of these on each side of the issue. Given the degree of disagreement on the issue, among philosophers, politicians and the general public, it seems like the perfect example of an issue where moral uncertainty should be taken into account – indeed Will uses it as a canonical example.

Consider the case of a pregnant women Sarah, wondering whether it is morally permissible to abort her child¹. The alternative course of action she is considering is putting the child up for adoption. In accordance with the level of social and philosophical debate on the issue, she is uncertain as to whether aborting the fetus is morally permissible. If it’s morally permissible, it’s merely permissible – it’s not obligatory. She follows the example from Normative Uncertainty and constructs the following table

In the best case scenario, abortion has nothing to recommend it, as adoption is also permissible. In the worst case, abortion is actually impermissible, whereas adoption is permissible. As such, adoption dominates abortion.

However, Sarah might not consider this representation as adequate. In particular, she thinks that now is not the best time to have a child, and would prefer to avoid it.² She has made plans which are inconsistent with being pregnant, and prefers not to give birth at the current time. So she amends the table to take into account these preferences.

Now adoption no longer strictly dominates abortion, because she prefers abortion to adoption in the scenario where it is morally permissible. As such, she considers her credence: she considers the pro-choice arguments slightly more persuasive than the pro-life ones: she assigns a 70% credence to abortion being morally permissible, but only a 30% chance to its being morally impermissible.

Looking at the table with these numbers in mind, intuitively it seems that again it’s not worth the risk of abortion: a 70% chance of saving oneself inconvenience and temporary discomfort is not sufficient to justify a 30% chance of committing murder. But Sarah’s unsatisfied with this unscientific comparison: it doesn’t seem to have much of a theoretical basis, and she distrusts appeals to intuitions in cases like this. What is more, Sarah is something of a utilitarian; she doesn’t really believe in something being impermissible.

Fortunately, there’s a standard tool for making inter-personal welfare comparisons: QALYs. We can convert the previous table into QALYs, with the moral uncertainty now being expressed as uncertainty as to whether saving fetuses generates QALYs. If it does, then it generates a lot; supposing she’s at the end of her first trimester, if she doesn’t abort the baby it has a 98% chance of surviving to birth, at which point its life expectancy is 78.7 in the US, for 78.126 QALYs. This calculation assumes assigns no QALYs to the fetus’s 6 months of existence between now and birth. If fetuses are not worthy of ethical consideration, then it accounts for 0 QALYs.

We also need to assign QALYs to Sarah. For an upper bound, being pregnant is probably not much worse than having both your legs amputated without medication, which is 0.494 QALYs, so lets conservatively say 0.494 QALYs. She has an expected 6 months of pregnancy remaining, so we divide by 2 to get 0.247 QALYs. Women’s Health Magazine gives the odds of maternal death during childbirth at 0.03% for 2013; we’ll round up to 0.05% to take into account risk of non-death injury. Women at 25 have a remaining life expectancy of around 58 years, so thats 0.05%*58= 0.029 QALYs. In total that gives us an estimate of 0.276 QALYs. If the baby doesn’t survive to birth, however, some of these costs will not be incurred, so the truth is probably slightly lower than this. All in all a 0.276 QALYs seems like a reasonably conservative figure.

Obviously you could refine these numbers a lot (for example, years of old age are likely to be at lower quality of life, there are some medical risks to the mother from aborting a fetus, etc.) but they’re plausibly in the right ballpark. They would also change if we used inherent temporal discounting, but probably we shouldn’t.

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We can then take into account her moral uncertainty directly, and calculate the expected QALYs of each action:

• If she aborts the fetus, our expected QALYs are 70%x0 + 30%*(-78.126) = -23.138
• If she carries the baby to term and puts it up for adoption, our expected QALYs are 70%*(-0.247) + 30%*(-0.247) = -0.247

Which again suggests that the moral thing to do is to not abort the baby. Indeed, the life expectancy is so long at birth that it quite easily dominates the calculation: Sarah would have to be extremely confident in rejecting the value of the fetus to justify aborting it. So, mindful of overconfidence bias, she decides to carry the child to term.

Indeed, we can show just how confident in the lack of moral significance of the fetuses one would have to be to justify aborting one. Here is a sensitivity table, showing credence in moral significance of fetuses on the y axis, and the direct QALY cost of pregnancy on the x axis for a wide range of possible values. The direct QALY cost of pregnancy is obviously bounded above by its limited duration. As is immediately apparent, one has to be very confident in fetuses lacking moral significance, and pregnancy has to be very bad, before aborting a fetus becomes even slightly QALY-positive. For moderate values, it is extremely QALY-negative.

Other EA concepts and their applications to this issue

Of course, moral uncertainty is not the only EA principle that could have bearing on the issue, and given that the theme of this blogging carnival, and this post, is things we’re overlooking, it would be remiss not to give at least a broad overview of some of the others. Here, I don’t intend to judge how persuasive any given argument is – as we discussed above, this is a debate that has been going without settlement for thousands of years – but merely to show the ways that common EA arguments affect the plausibility of the different arguments. This is a section about the directionality of EA concerns, not on the overall magnitudes.

Not really people

One of the most important arguments for the permissibility of abortion is that fetuses are in some important sense ‘not really people’. In many ways this argument resembles the anti-animal rights argument that animals are also ‘not really people’. We already covered above the way that considerations of moral uncertainty undermine both these arguments, but it’s also noteworthy that in general it seems that the two views are mutually supporting (or mutually undermining, if both are false). Animal-rights advocates often appeal to the idea of an ‘expanding circle’ of moral concern. I’m skeptical of such an argument, but it seems clear that the larger your sphere, the more likely fetuses are to end up on the inside. The fact that, in the US at least, animal activists tend to be pro-abortion seems to be more of a historical accident than anything else. We could imagine alternative-universe political coalitions, where a “Defend the Weak; They’re morally valuable too” party faced off against a “Exploit the Weak; They just don’t count” party. In general, to the extent that EAs care about animal suffering (even insect suffering ), EAs should tend to be concerned about the welfare of the unborn.

Not people yet

A slightly different common argument is that while fetuses will eventually be people, they’re not people yet. Since they’re not people right now, we don’t have to pay any attention to their rights or welfare right now. Indeed, many people make short sighted decisions that implicitly assign very little value to the futures of people currently alive, or even to their own futures – through self-destructive drug habits, or simply failing to save for retirement. If we don’t assign much value to our own futures, it seems very sensible to disregard the futures of those not even born. And even if people who disregarded their own futures were simply negligent, we might still be concerned about things like the non-identity problem.

Yet it seems that EAs are almost uniquely unsuited to this response. EAs do tend to care explicitly about future generations. We put considerable resources into investigating how to help them, whether through addressing climate change or existential risks. And yet these people have far less of a claim to current personhood than fetuses, who at least have current physical form, even if it is diminutive. So again to the extent that EAs care about future welfare, EAs should tend to be concerned about the welfare of the unborn.

Replaceability

Another important EA idea is that of replaceability. Typically this arises in contexts of career choice, but there is a different application here. The QALYs associated with aborted children might not be so bad if the mother will go on to have another child instead. If she does, the net QALY loss is much lower than the gross QALY loss. Of course, the benefits of aborting the fetus are equivalently much smaller – if she has a child later on instead, she will have to bear the costs of pregnancy eventually anyway. This resembles concerns that maybe saving children in Africa doesn’t make much difference, because their parents adjust their subsequent fertility.

The plausibility behind this idea comes from the idea that, at least in the US, most families have a certain ideal number of children in mind, and basically achieve this goal. As such, missing an opportunity to have an early child simply results in having another later on.

If this were fully true, utilitarians might decide that abortion actually has no QALY impact at all – all it does is change the timing of events. On the other hand, fertility declines with age, so many couples planning to have a replacement child later may be unable to do so. Also, some people do not have ideal family size plans.

Additionally, this does not really seem to hold when the alternative is adoption; presumably a woman putting a child up for adoption does not consider it as part of her family, so her future childbearing would be unaffected. This argument might hold if raising the child yourself was the only alternative, but given that adoption services are available, it does not seem to go through.

Autonomy

Sometimes people argue for the permissibility of abortion through autonomy arguments. “It is my body”, such an argument would go, “therefore I may do whatever I want with it.” To a certain extent this argument is addressed by pointing out that one’s bodily rights presumably do not extent to killing others, so if the anti-abortion side are correct, or even have a non-trivial probability of being correct, autonomy would be insufficient. It seems that if the autonomy argument is to work, it must be because a different argument has established the non-personhood of fetuses – in which case the autonomy argument is redundant. Yet even putting this aside, this argument is less appealing to EAs than to non-EAs, because EAs often hold a distinctly non-libertarian account of personal ethics. We believe it is actually good to help people (and avoid hurting them), and perhaps that it is bad to avoid doing so. And many EAs are utilitarians, for whom helping/not-hurting is not merely laud-worthy but actually compulsory. EAs are generally not very impressed with Ayn Rand style autonomy arguments for rejecting charity, so again EAs should tend to be unsympathetic to autonomy arguments for the permissibility of abortion.

Indeed, some EAs even think we should be legally obliged to act in good ways, whether through laws against factory farming or tax-funded foreign aid.

Deontology

An argument often used on the opposite side  – that is, an argument used to oppose abortion, is that abortion is murder, and murder is simply always wrong. Whether because God commanded it or Kant derived it, we should place the utmost importance of never murdering. I’m not sure that any EA principle directly pulls against this, but nonetheless most EAs are consequentialists, who believe that all values can be compared. If aborting one child would save a million others, most EAs would probably endorse the abortion. So I think this is one case where a common EA view pulls in favor of the permissibility of abortion.

I didn’t ask for this

Another argument often used for the permissibility of abortion is that the situation is in some sense unfair. If one did not intend to become pregnant – perhaps even took precautions to avoid becoming so – but nonetheless ends up pregnant, you’re in some way not responsible for becoming pregnant. And since you’re not responsible for it you have no obligations concerning it – so may permissible abort the fetus.

However, once again this runs counter to a major strand of EA thought. Most of us did not ask to be born in rich countries, or to be intelligent, or hardworking. Perhaps it was simply luck. Yet being in such a position nonetheless means we have certain opportunities and obligations. Specifically, we have the opportunity to use of wealth to significantly aid those less fortunate than ourselves in the developing world, and many EAs would agree the obligation. So EAs seem to reject the general idea that not intending a situation relieves one of the responsibilities of that situation.

Infanticide is okay too

A frequent argument against the permissibility of aborting fetuses is by analogy to infanticide. In general it is hard to produce a coherent criteria that permits the killing of babies before birth but forbids it after birth. For most people, this is a reasonably compelling objection: murdering innocent babies is clearly evil! Yet some EAs actually endorse infanticide. If you were one of those people, this particular argument would have little sway over you.

Moral Universalism

A common implicit premise in many moral discussion is that the same moral principles apply to everyone. When Sarah did her QALY calculation, she counted the baby’s QALYs as equally important to her own in the scenario where they counted at all. Similarly, both sides of the debate assume that whatever the answer is, it will apply fairly broadly. Perhaps permissibility varies by age of the fetus – maybe ending when viability hits – but the same answer will apply to rich and poor, Christian and Jew, etc.

This is something some EAs might reject. Yes, saving the baby produces many more QALYs than Sarah loses through the pregnancy, and that would be the end of the story if Sarah were simply an ordinary person. But Sarah is an EA, and so has a much higher opportunity cost for her time. Becoming pregnant will undermine her career as an investment banker, the argument would go, which in turn prevents her from donating to AMF and saving a great many lives. Because of this, Sarah is in a special position – it is permissible for her, but it would not be permissible for someone who wasn’t saving many lives a year.

I think this is a pretty repugnant attitude in general, and a particularly objectionable instance of it, but I include it here for completeness.

May we discuss this?

Now we’ve considered these arguments, it appears that applying general EA principles to the issue in general tends to make abortion look less morally permissible, though there were one or two exceptions. But there is also a second order issue that we should perhaps address – is it permissible to discuss this issue at all?

Nothing to do with you

A frequently seen argument on this issue is to claim that the speaker has no right to opine on the issue. If it doesn’t personally affect you, you cannot discuss it – especially if you’re privileged. As many (a majority?) of EAs are male, and of the women many are not pregnant, this would curtail dramatically the ability of EAs to discuss abortion. This is not so much an argument on one side or other of the issue as an argument for silence.

Leaving aside the inherent virtues and vices of this argument, it is not very suitable for EAs. Because EAs have many many opinions on topics that don’t directly affect them:

• EAs have opinions on disease in Africa, yet most have never been to Africa, and never will
• EAs have opinions on (non-human) animal suffering, yet most are not non-human animals
• EAs have opinions on the far future, yet live in the present

Indeed, EAs seem more qualified to comment on abortion – as we all were once fetuses, and many of us will become fetuses. If taken seriously this argument would call foul on virtually ever EA activity! And this is no idle fantasy – there are certainly some people who think that Westerns cannot usefully contribute to solving African poverty.

Too controversial

We can safely say this is a somewhat controversial issue. Perhaps it is too controversial – maybe it is bad for the movement to discuss. One might accept the arguments above – that EA principles generally undermine the traditional reasons for thinking abortion is morally permissible – yet think we should not talk about it. The controversy might divide the community and undermine trust. Perhaps it might deter newcomers. I’m somewhat sympathetic to this argument – I take the virtue of silence seriously, though eventually my boyfriend persuaded me it was worth publishing.

Note that the controversial nature is evidence against abortion’s moral permissibility, due to moral uncertainty.

However, the EA movement is no stranger to controversy.

• There is a semi-official EA position on immigration, which is about as controversial as abortion in the US at the moment, and the EA position is such an extreme position that essentially no mainstream politicians hold it.
• There is a semi-official EA position on vegetarianism, which is pretty controversial too, as it involves implying that the majority of Americans are complicit in murder every day.

Not worthy of discussion

Finally, another objection to discussing this is it simply it’s an EA idea. There are many disagreements in the world, yet there is no need for an EA view on each. Conflict between the Lilliputians and Blefuscudians notwithstanding, there is no need for an EA perspective on which end of the egg to break first. And we should be especially careful of heated, emotional topics with less avenue to pull the rope sideways. As such, even though the object-level arguments given above are correct, we should simply decline to discuss it.

However, it seems that if abortion is a moral issue, it is a very large one. In the same way that the sheer number of QALYs lost makes abortion worse than adoption even if our credence in fetuses having moral significance was very low, the large number of abortions occurring each year make the issue as a whole of high significance. In 2011 there were over 1 million babies were aborted in the US. I’ve seen a wide range of global estimates, including around 10 million to over 40 million. By contrast, the WHO estimates there are fewer than 1 million malaria deaths worldwide each year. Abortion deaths also cause a higher loss of QALYs due to the young age at which they occur. On the other hand, we should discount them for the uncertainty that they are morally significant. And perhaps there is an even larger closely related moral issue. The size of the issue is not the only factor in estimating the cost-effectiveness of interventions, but it is the most easily estimable. On the other hand, I have little idea how many dollars of donations it takes to save a fetus – it seems like an excellent example of some low-hanging fruit research.

Conclusion

People frequently compartmentalize their beliefs, and avoid addressing the implications between them. Ordinarily, this is perhaps innocuous, but when the both ideas are highly morally important, their interaction is in turn important. In this post we the implications of common EA beliefs on the permissibility of abortion. Taking into account moral uncertainty makes aborting a fetus seem far less permissible, as the high counterfactual life expectancy of the baby tends to dominate other factors. Many other EA views are also significant to the issue, making various standard arguments on each side less plausible.

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1. There doesn’t seem to be any neutral language one can use here, so I’m just going to switch back and forth between ‘fetus’ and ‘child’ or ‘baby’ in a vain attempt at terminological neutrality. ↩
2. I chose this reason because it is the most frequently cited main motivation for aborting a fetus according to the Guttmacher Institute. ↩