Things have value. We can talk about this value in monetary terms, but for better or for worse, everything has a value – how much someone is willing to pay for something. In the world of economics and finance, we often extend this idea into present value (PV) – how much something is worth to us right now – and future value (FV) – how much something will be worth to us in the future. However, the concept of future value as it’s normally conceived is actually rather short-sighted in my opinion. I recently happened upon an argument that I think can serve to illustrate this quite well.
About a week ago, Daniel Kuehn made this remark almost as an aside in a post about scientific research:
I take a long-term perspective on growth too. I’m not just thinking of the next Apple… I like to think about the next planet we settle too.
It’s a fair point – essentially, Daniel’s saying that he’s not just looking at specific technological innovations that will help people right now – he’s also looking down the road at a more amorphous set of potential innovations that will help people in the future.
Ryan Murphy replied with a rather in-depth response to Daniel’s statement by pointing out that the perceived benefits of space exploration far outstrip their actual usefulness:
Ultimately, I believe that space exploration is just the most preeminent example of a white elephant in developed countries. It is a project chosen because it is big and flashy, not because it will pass a cost-benefit test under a reasonable parameterization.
I would highly encourage anyone who reads this to read Ryan Murphy’s entire response. He goes into a lot of depth, and his argument is well put together, although I think he’s ultimately wrong.
Daniel replied to Ryan’s response by mostly agreeing with him (as do I) but then pointing out the major fallacy in Ryan’s logic:
The point is that in one hundred years humans are living on Mars and the moon and we are thinking about how to get to the stars. As an added bonus, the human species is more robust to catastrophes on Earth. It will be an inflection point in the history of the human species that will be remembered for millennia. The industrial revolution will be considered a minor antecedent to the point when we “slipped the surly bonds of Earth”. When I think of what science can do, more gadgets that we enjoy today are always nice, but I think of the millennia of humans to come and how they will live as well. Think of what a big difference it makes that you’re alive in 2013 rather than 1913 or (God forbid) 1813. The idea of living in 1013 is unthinkable. The point isn’t an Apple product, although that’s obviously great (I’m told – I have no Apple products – my wife has one). The point is a new level of human existence and mastery of its surroundings. This, of course, is not necessarily going to motivate a welfare maximizing individual on Earth today, even with relatively low discount rates. That, of course, is part of the problem. Human flourishing is both a product of optimizing behavior and a hostage to optimizing behavior.
The long now
Daniel’s absolutely right here. He’s talked in the past about a concept called “temporal autarky“, and I think his analysis is spot on. (And really, I could not love that term any more if I tried. I will be using it to talk about this concept from now on.) We can’t interact with people from the future, so we’re certainly not going to be concerned with trading with them or improving their welfare. For all intents and purposes, we as primarily selfish economic agents are concerned only with things that will affect us within our lifetimes. We spend money now to purchase things for ourselves now. We invest money now so we’ll have more money in the future. Occasionally we invest in education or other things that don’t directly give us benefit, but we’re still concerned with our legacies and how it will affect us and others’ memories of us. We are optimizing our behavior for us and possibly for our direct descendants.
I am a member of an organization called the Long Now Foundation. I mention this only to explain a little bit of my perspective here. The Long Now Foundation is based around the idea that our human perspective is quite limited, and that we should be at least partially focused on the far-off future, not just what we normally think of as the future. As an example, one of our quirks is that we number years beginning with 0 (so for example, we are currently in the year 02013, not 2013) – we do this so that we get in the habit of thinking of the implications of the Year 10,000 switchover.
Yes, I know it’s silly. But I have a point here. It’s actually tied up with the name of my blog: Extraordinary Insignificance. I am one of the more than 7 billion humans on earth. I am one of the more than 100 billion humans who have ever lived. I am one of the unfathomably large number of humans who ever will live. Essentially, I am utterly insignificant in the grand scheme of the universe.
Except that I’m not insignificant. I have significance to my loved ones. I have significance to my employers. I will have significance one day to the people I hope to one day teach. I will have significance to the academic community… and so will my ideas. In fact, my ideas, if they are of any value, will hopefully have significance long after I’m dead to people who are not yet born. Let’s expand it further into the realm of the improbable and say that my ideas touch off some new area of research of which I can’t even conceive right now.
Clearly, the value of my ideas to me would be less than the value of my ideas to people in the future. But take a look again at the normal language of present value and future value. The entire framework that we use for investing and depreciation works only over the lives of those making the assessment. In this situation, the PV of my ideas and FV of my ideas are absolutely dwarfed by future value to future humans (FVFH) of my ideas.
The FVFH of space exploration
The PV of space exploration is rather low. We got some cool stuff out of the Space Race, and ongoing research is giving us a steady trickle of things that make our lives better. I agree with Daniel and Ryan that this trickle is not worth its cost. The FV of space exploration is also rather low. We might be able to get some better satellite orientations and find out how we can more effectively live and work in zero-G situations within our lifetimes. Daniel and Ryan both talk about the psychic benefits of space exploration: Daniel is somewhat positive toward them, Ryan is downright dismissive of them. I probably side with Ryan more on this – the psychic benefit of space exploration was probably a lot higher during the 80′s when most people still cared about this stuff. These days, probably not so much.
But the FVFH of space exploration… I don’t want to gush, but just think about it for a second! If there were a colony on Mars, and we had found some way to terraform it and set up a stable, liberal government free from all of earth’s baggage? Come on. The FVFH of that scenario is astronomical (pun intended). Daniel brings up the point that humanity is better protected from disasters in that scenario. All that’s going through my mind is the trade and innovation that would spur. And think about it – if there’s a mechanism to have a permanent colony on another planet, what’s to stop future humans from building a colony ship and going even further out? Again, the trade and innovation possibilities alone are astounding in this situation.
The problem, of course, is that none of that future value accumulates to any of the people making investment decisions now. And just like in so many other problems with disconnected incentives, there is a conflict between the people making a decision and some of the people that decision affects. And in this case, the people who are adversely affected by the decision can’t even give their input or register their discontent, since most of them won’t be born for a very long time.