Counterfactual Value

There are a few ideas that can completely change your decision making and behavior. This is one of them.

Say you’re somebody who cares about having an impact in the world. It’s possible to have an entire life devoted to your loved cause (say, by becoming a physician and serving thousands of patients) which turns out to be an utter waste because you didn’t consider this concept.

The question that matters for impact is ‘what would happen if I didn’t take this action?’. That question leads to very different outcomes. You may not realize that medical school admissions are capped, and so you’re not increasing the total number of physicians by going into medicine (but rather just replacing the person who barely got into your medical school with yourself).

The counterfactual impact on each of the patients you serve isn’t that they don’t get seen. It’s that they get seen by the person they’d have gone to if you weren’t there, or who would have been hired in your place.

This is general across all areas where impact is possible. Some companies wouldn’t have been founded otherwise - some would have. Some politicians are cookie cutter replacements of one another. The counterfactual impact question is a very different question than the impact question.

Many positions create value no matter who is in the position. It can be very difficult to disentangle the value of the particular person in the position from the position’s default value. And critically, the economy values the position much more than the person. There is certainly some room to argue that counterfactual impact also goes up with compensation, but often these are zero sum or near-zero sum games. Many jobs are about beating the competition and contribute nothing (think lawyers advocating for one company over another, or marketing and sales professionals pushing one product over another). All of this activity is nearly impactless from an impact perspective, despite there being dramatic sums paid to the parties on each side. The value paid can far outstrip counterfactual value.

The way this affects personal decision making is you need to think about how to build the company that wouldn’t be built if you didn’t build it, rather than just asking which company to build. You need to ask what research wouldn’t be done if you didn’t build it, or wouldn’t be popularized if you didn’t popularize it. An extension to collective behavior is asking how to reward people for counterfactual impact rather than for objective impact. At scale, a redesign of capitalism structured around this new notion of value would produce societies that dramatically outcompeted our own, and our market mechanisms would be obsolete in comparison.

Not to self: Write some science fiction where this mechanism has been discovered, and describe what happens to each kind of society.