Non-Fungible Costs

post by hawkebia (hawk-ebia) · 2022-02-18T17:15:12.897Z · LW · GW · 14 comments

You and your partner live in a cozy one-bedroom in the city. You enjoy being in the city bustle. It's got a quiet, sunny, plant-filled patio; and is close to all your favourite bars and restaurants.

But you've just had a baby. Work is a 40 minute commute. You can afford the current rent, but it feels expensive for the size. And you're just not visiting those bars and restaurants as often. Maybe you should move to that large apartment outside the city, and closer to both your offices?

So like good rationalists, you reason through the benefits, costs, degrees of certainty etc. and decide to move.

A few months in, your partner says they may be having regrets. You aren't. You feel great about the decision. But you're a loving and supportive partner. You both review the decision making process again with an open mind; and your partner arrives at the same decision. Yes, moving made sense.

You end up having to repeat this a few more times, till it all blows up in a big fight. How can they be so irrational?! How can one regret a decision, yet chose it over and over again? Either they have no clue what they want, or just aren't being honest while evaluating choices.

Or, there is another explanation - that unlike money, the costs and benefits are not fungible. They represent mostly independant sets of desires, which can't be substituted for one another. Sure your partner values the convenience, space, affordability etc. more than the bustle and social life of the city. But the cost of losing those things didn't suddenly go to zero once the decision was made.

Outside of pure monetary decision making, most choices pit at least some independant desires against one another. There is a case to be made that the negative reaction to a non-fungible cost, would be the same as if there were no offsetting benefit at all! And that should be considered completely expected and rational.

This applies to everything from life decisions, to public policy, altruism and company values. eg.

Automation / Moving to Renwables will lead to some people losing their jobs, but a net increase in well-paying jobs. But people, their livelihoods, their personal dignity aren't fungible; or at least they shouldn't be!

Facebook / Social Media is a net benefit to society. Leadership at these companies strongly believe this, as do I. It removes gatekeepers and democratizes speech. The increased access to information, ideas, and as a tool for organizing and dissent outweighs much of the nastiness, misinfomation and it's use as a tool by authoritarians. But not all information and ideas are fungible, or at least they shouldn't be! Two truths and one lie doesn't make one truth. A thousand likes don't offset one death threat.

Often critics focusing on the costs will be accused of not having perspective. Of being irrational, unfair, or worse. They talk as if there is no benefit at all! That's because they've identified non-fungible costs*.

BUT, you may retort, if you wouldn't change the original decision, aren't the negative reactions, criticism and regret completely useless. What insight or action is one to glean from this?

And I think the answer lies not in changing the old decision, but in making some new ones. Not just ones that continue to increase the original benefit (which most peple already do). But decisions that actively bring in benefits that are directly fungible against these costs. Of course you may not be able to zero out these costs, but that's not the point. You can make headway in reducing them.

Host and attend more social events, and more trips out to the city etc. for the benefit of your partner. Have a concrete plan for the people who may lose their jobs due to changes in technology. Invest more in the teams that catch the low hanging fruit of spam, death/rape threats and political likes-boosting bot networks.

Make these an integral part of your plan; not because you want to change some perception or get good PR; but because without identifying non-fungible costs in your original decision, you end up leaving a lot of potential benefit on the table. And many of the people criticising your "net-benefit" decision making, will have good rational reasons to do so.

EDIT: Some more formalization in response to variations of "there is some flaw in the original decision making".

The Non-Fungible Cost approach isn't changing what you decided. Nor is it claiming these decisions are not possible. It only clarifies WHAT you actually decided. To demonstrate:

CityValue:80
SuburbValue:100
Since SuburbValue > CityValue, choose Suburb.

Till here everything is fine. Now, the traditional approach:

NetBenefit=100−80=20
So, there is a 20 point increase in satisfaction

Compare this to recognizing that the costs are not fungible with the benefits: 

SuburbOutcome={100,−80}
There will be more moments of satisfcation than dissatisfaction.

My claim is that the traditional approach is superficially conclusive. It hides the cost. Your satisfaction has increased by 20 points, so grumbling feels irrational. It's not providing any further signals. The non-fungible approach, simply through framing, drives you to look at that -80. To understand the moments of dissatisfaction. And most importantly - it drives you to action in order to reduce it.

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* I understand that not all types regret and criticism has this insight lying within it. But I think there are enough cases such that it warrants some introspection.

**Implications for Effective Altruism is a large part of what got me thinking about this (Omelas Child etc.), but I purposely kept that out for now. Still piecing together some of my thoughts for how it applies there.

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