Mash's Musings

Parabola of Generosity

Published Apr. 24, 2021

I remember in my early trading days, at age twenty-five or so, when money started to become easy. I would take taxis, and if the driver spoke skeletal English and looked particularly depressed, I'd give him a $100 bill as a tip, just to give him a little jolt and get a kick out of his surprise. I'd watch him unfold the bill and look at it with some degree of consternation ($1 million would certainly have been better but it was not within my means). It was also a simple hedonic experiment: it felt elevating to make someone's day with the trifle of $100. I eventually stopped; we all become stingy and calculating when our wealth grows and we start taking money seriously.

This quote from Nassim Taleb's The Black Swan caught me off guard upon first reading and has lingered me with me since. The story itself is hardly memorable, something I'd expect to find in the memoirs of any self-absorbed Wall Street type. What really got me was the last line: that there is some unflattering and unintuitive stopping point for our generosity.

Reading this book at age twenty-five or so, when money started to become easy, this was an uncomfortable pill to swallow. After a lifetime of parsimony, which my close friends would be too eager to confirm, I was very compelled by the arguments of Effective Altruism. I had paid off my loans, gotten a healthy raise, and realized how little you need to live comfortably with no dependents. The trifle of $100, while providing almost no marginal utility to me, could provide a significant reduction in the likelihood of someone contracting malaria or prevent iodine deficiency in hundreds of others. Tipping taxi drivers generously became easy, especially since most of those tips were reimbursable.

And then, subconsciously and slowly, it became difficult. After another healthy raise and promotion, I oddly found myself second guessing my prior commitments. The argument for generosity was just as compelling as before but it felt a lot harder to give away money. Another year passes and I experience a massive increase in income; enough to start to question the purpose of money and its role in life. While this is the point where most people (naively) think they would suddenly become generous benefactors, I find myself growing even stingier! What kind of moral deficiency was I afflicted with!?

I coin this relationship the Parabola of Generosity. I'll save you the bandwidth of an image with a few words. Imagine a concave quadratic surface with the y-axis representing generosity and x-axis representing wealth. Our generosity starts off very low or negative, constrained by our complete lack of wealth, increases up to a point in as we become self-aware of our relative wealth, and then decreases sharply thereafter. The coefficients are dependent on the individual but I believe that this general shape is universal (viewed locally).

It was around the time of finding myself past peak generosity that I came across this passage from Taleb. I felt seen and understood, as if I'd been let in on some blasé rite of passage of the wealthy. Unfortunately though, I did not feel vindicated; having someone else articulate what I was feeling did not give me the sense of righteousness I would have liked.

While the Parabola provides an accurate description of experience, it does not make a claim about why an inflection point exists. I have yet to find a more satisfactory answer than what Taleb has outlined: that we start taking money seriously. Wealth goes from a feeling of abundance to a feeling of burden. I have a sense (maybe a hope) that this quadratic relationship only appears so in a local sense and upon zooming out, the relationship becomes cubic. That we reach some inflection point of "fuck you" money, after which generosity begins increasing again. This seems to hold true for the ultra-wealthy spanning from the most villainized Gilded Age industrialists to Bill Gates. According to Wikipedia, cubic parabolas are a thing so the theory still stands.

As for where I'm at now, I am glad to report that I have not stopped giving. Meditation and the occasional revisiting of works by Peter Singer and Will MacAskill help the reasoned part of my brain set up automated systems to bypass System 1. To someone experiencing something similar, I'd advise taking a step back to evaluate how your values have changed over time. If the change in wealth has outpaced the change in values, it's worth overcoming that stinginess—before we find ourselves writing our own self-absorbed Wall Street type memoirs.