8 ms·

Why quadratic funding is not optimal

119 points by jwarden 1y ago

deleted 1y ago
[deleted]
cleak 1y ago
This looks interesting, but I have no idea what I’m looking at with the original paper. Could someone provide a simple summary that doesn’t rely on knowledge of Quadratic Voting?
- bts 1y ago
  Quadratic Voting and Quadratic Funding have some ideas in common, but they refer to separate concepts. To learn more about these topics, I would probably check out the website for RadicalxChange. IIUC RxC is the main public body attempting to realize the theoretical benefits of QF and related ideas. Here's an explanation of Quadratic Funding from their website[1], which I guess they now refer to as "Plural Funding": Plural Funding (also known as Quadratic Funding or QF) is a more democratic and scalable form of matching funding for public goods, i.e. any projects valuable to large groups of people and accessible to the general public. “Matching funding” is a model of funding public goods where a fund from governments or philanthropic institutions matches individual contributions to a project. Plural Funding optimizes matching funds by prioritizing projects based on the number of people who contributed. This way, funds meant to benefit the public go towards projects that really benefit a broad public, instead of things that only have a few wealthy backers. In Plural Funding, [total funding] for a proposal is [the square root of each contribution to it → summed up, then squared.] Plural Funding strongly encourages people to make contributions, no matter how small, and ensures a democratic allocation of funds meant to benefit the public. [1] https://www.radicalxchange.org/wiki/plural-funding/ https://www.radicalxchange.org/wiki/plural-funding/ EDIT: formatting
  - jppittma 1y ago
    So I make 1,000,000 separate donations in the amount of $0.01?
    - jwarden 1y ago
      Total funding in this case would be: (sqrt(.01) * 1000000)^2 = 10 trillion dollars.
      - nightpool 1y ago
        (10 billion, surely?)
        jwarden 1y ago
        Oh right: (sqrt(.01) * 1000000)^2 = 1.0e10
    - timerol 1y ago
      Both QF and QV rely on verifying identity, so that would be counted as one donation of $10,000. The entire point is letting numbers of people balance in some way against amounts of money, so allowing one person to count multiple times breaks the system
      - sokoloff 1y ago
        I used to think the employer drives to contribute to the company's preferred charity were bad before QF; they’re bound to get a lot worse with it, giving power to employers with lots of employees and a willingness to encourage them to donate as little as a penny.
      - jppittma 1y ago
        So I have to give it out and have people donate it on my behalf?
- jwarden 1y ago
  Here's a very brief summary of what Quadratic Funding is (which is distinct from Quadratic Voting): Quadratic Funding is a mechanism where individuals voluntarily contribute funds for some public good (e.g. an open source software project), and then these are matched such that the total funding amount is equal to the square of the sum of the square roots of the individual contributions. Under certain assumptions, this formula results in an optimal outcome, where each individual contributes an amount that maximizes their individual utility (given what others are contributing), and total utility for society is also maximized.
- jovial_cavalier 1y ago
  a more plain-english explanation from Vitalik's blog: https://vitalik.eth.limo/general/2019/12/07/quadratic.html https://vitalik.eth.limo/general/2019/12/07/quadratic.html
- gowld 1y ago
  Better to learn about Quadratic Voting, and ignore the magical thinking of Quadratic Voting.
jovial_cavalier 1y ago
I had always interpreted quadratic funding as being a tax rather than a subsidy. You donate $100 and the cause receives $100, then your next marginal $100 is discounted quadratically, and the government receives the difference. I think that just straight up resolves the first two issues.
- sokoloff 1y ago
  I think that very quickly just changes the forms of donation to be “something that doesn’t count as a donation” (buying tickets to an event or even just straight up NFTs). As soon as the quadratic decrease is more than my marginal tax rate, I’m better off buying an NFT from the cause I want to support than making a donation.
efitz 1y ago
It sounds like a kooky idea and neglects the fact that “the government” isn’t some magical source of money; it got that money from its citizens somehow (taxes or inflation). It’s a much simpler idea to just have citizens vote for what they want their tax money spent on, by voting for candidates who will represent their interests.
- taeric 1y ago
  Government can also get money through bonds, though? And government spending of these funds can be argued to go much more directly to economic growth for the region than most any other spending. Note that I don't really disagree with your second. Just pointing out that your two options for how government got money is not complete.
  - sokoloff 1y ago
    Bonds are an exchange of cash now for more cash later in the other direction. Eventually, that “cash later” is taxed or inflated away (printed), so it’s a difference in timing more than category.
    - taeric 1y ago
      Fair. Still largely a different form getting cash now, though? Particularly if you account for the fact that governments can go belly up.
  - daedrdev 1y ago
    In the long run, all government debt is going to be future taxes. There are many programs that the government spends on that are efficient and produce more growth than the taxes collected would have, and there are many that don't and produce less growth than leaving the money in the hands of the taxed. Sometimes this is due to government inefficiency, and sometimes because we decided it's what we want, like medicare for elderly who will never return the investment into their health.
    - 1y ago
gs17 1y ago
> Intuitively, this seems wrong: the art museum receives a far larger subsidy, yet many more people benefit from replacing the lead pipes, and the utility-per-individual is arguably much higher as well. Well, yes, but those many more people getting more utility didn't contribute. If the same contribution was spread out over 10x the people each contributing $10, they'd get 10x the funding. Their complaint here is really that ideal QF would also require assuming people actually get involved with it. I agree it has issues, but this isn't what I'd lead with. Coordination seems like a much larger threat to the concept.
- jwarden 1y ago
  In the example in the article, many more people did contribute to the lead pipes (100 people vs. 10 for the art museum). And they still get only a fraction of the funding that the art museum gets. Agree, coordination is a larger threat to QF. But this issue has been discussed extensively. In this article I wanted to point out all the other assumptions behind QF and what happens when they don't hold.
  - sokoloff 1y ago
    But they got 99 shares of government contribution for each share they put up for a 100x multiplier while the art patrons got 9 shares of government contribution for a 10x multiplier. Setting aside the emotional content and looking only at the math, it’s not at all obvious to me that the project with 100 donors was somehow shorted.
    - spencerflem 1y ago
      Many people would consider fixing pipes a more important project despite the fact that the wealthy contributors could front a lot more cash for their pick.
      - sokoloff 1y ago
        Great. Now, suppose the 10 wealthy people are in favor of the pipes project and the 100 average people are in favor of an art museum. Is the art museum or the pipes project more important?
j2kun 1y ago
> for funding public goods—especially in the cryptocurrency space. Sounds like a contradiction to me. Nothing about cryptocurrency should be considered a public good, even if wealthy donors are struggling to efficiently donate money to its development.
- gsf_emergency 1y ago
  If crypto is an unambiguous public bad, quadratic defunding would be a worthwhile experiment?
gbacon 1y ago
Regarding both perfect knowledge and equilibrium discovery, consider Hayek’s work on what he called the knowledge problem, beginning with “The Use of Knowledge in Society.” No person or entity possesses perfect knowledge of the current state, and no one has perfect knowledge of the follow-on simple or higher-order effects. Instead, apply the insight from public choice theory that state actors make self-interested choices. Cui bono? I am far from denying that in our system equilibrium analysis has a useful function to perform. But when it comes to the point where it misleads some of our leading thinkers into believing that the situation which it describes has direct relevance to the solution of practical problems, it is time that we remember that it does not deal with the social process at all and that it is no more than a useful preliminary to the study of the main problem. https://www.kysq.org/docs/Hayek_45.pdf https://www.kysq.org/docs/Hayek_45.pdf
- jwarden 1y ago
  great quote
  - gsf_emergency 1y ago
    May I quote the same Hayek (last page): >instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. (In the same spirit, I'm trying to move beyond dissfests towards more collaborative convos on HN) @warden I was encouraged to see "perfect knowledge" replaced by "sufficient knowledge" in at least once instance in your post. We should encourage Glen & Michael to work on seeing if weakening their assumptions as above would produce proofs of more useful natures, as a prelim to solving the knowledge problem :) (Alas collabs take work, & HN is primarily an entertainment & venting channel, due to its ephemeral design)
bee_rider 1y ago
I wonder about this kind of article. It is a big list of problems, so it seems like we’ll end up having a bunch of unrelated conversations here, which seems unfortunate. But, to start chipping away… For the wealth inequality section, I gather the goal is to let people provide a signal based on how much they are willing to spend. Shouldn’t that be corrected for their wealth, because that shows how much they value the thing? If the art patrons are all 1B-aires, and the anti-lead-pipe folks are 100k-aires (just to make the math easier), we could do: Art: 10*(sqrt(1M/1B)^2) = 1/100 Pipes: 100*(sqrt(100/100k)^2) = 1/10 Now we’ve got some measure of everybody’s preference, and can allocate the budget appropriately. Whatever the overall budgets is, 10x more for pipes than art seems… well, at least a lot closer to reasonable than ~100x more on art than pipes
- spencerflem 1y ago
  You might also want to factor the relative marginal utility of a dollar. But yes, that part does seem solvable with a correction like that even if my preferred fix would be removing the billionaires ;)
nkmnz 1y ago
I've never heard of the specific mechanism the article talks about, but it is so full of flaws that I do not consider it a good source of thought about the topic. Just the most obvious example where the author didn't put much effort into understanding their own text: > Three art patrons each contribute [money] to the local public art museum. [...] They each expect to experience [money] worth of individual utility from enjoying the [...] art. > [...] utility of saved lives is experienced only once by each of the cancer patients – the three contributors don’t experience that utility (other than feeling good about those lives being saved, but that’s not the kind of utility we’re trying to maximize). This approach of intellectual unsoundness - i.e., accepting the social and individual utility of enjoying the arts, but denying any such utility for enjoying the saved lives – is present throughout the article. And I haven't started with the author comparing random cases of contributions that differ in multiple dimensions where using a ceteris paribus approach would immediately show that his arguments are shallow...
- refulgentis 1y ago
  I'm confused, aren't those flaws the article is pointing out, not claims the article is making?
  - em-bee 1y ago
    the article claims that a contributor to art benefits from enjoying the art and a contributor to cancer research doesn't (except for feeling good), and therefore quadratic funding would favor art contributions and disfavor cancer research contributions. GP claims (and i agree) that contributors to cancer research do benefit beyond feeling good. eg because they, or someone they care about might have or get cancer later and benefit from the research. the challenge is that measuring benefit is hard.
  - zoogeny 1y ago
    I read it as claims the article was making. I too was confused, but perhaps that is just the communication? I think the article was going for a comparison between extrinsic motivation (which they seem to claim the original quadratic funding requires) and intrinsic motivation. It seems they just chose a poor example. The article attempts to quantize the expected reward for the extrinsic motivation ("They each expect to experience €6,000,000 worth of individual utility") while it fails to quantize the expected reward for the intrinsic motivation ("But in the selfish scenario, total utility is 3 times higher, because the utility is experienced independently by each contributor, whereas utility of saved lives is experienced only once by each of the cancer patients). I believe, it has to do with their narrow conception of "experience". I don't know how any rational person could expect to "experience" €6,000,000 worth of art as my first criticism. Now, it would be fair to say that the implication that the wealthy benefactors expect that experience could be seen as a criticism of quadratic funding. But to roll with that ludicrous expectation for the sake of argument and then to fail to give a similar expectation of reward from the experience of saving 60 lives is not a fair argument. If I can "imagine" the benefactor expecting €6,000,000 worth of experience for knowing the art is on display at the local museum, I could "imagine" the benefactor expecting some non-zero-euro amount of experience for knowing 60 people survived cancer. If we quantify the "experience" in euros for the first scenario, it seems unfair not to quantify the "experience" for the second scenario. In this case it is about being consistent in argument, which the article fails to do.
nlitened 1y ago
When people use examples like “wealthy patrons contribute large sums of money to art museum to experience individual utility from enjoying additional art”, it makes me think they understand money as little as they do art.
- TheRealPomax 1y ago
  They don't have to. When you only have $100, every cent matters. Once you have 10k, dollars still matter, but cents not so much. They stop having value. And that just keeps going: once you have several hundred million, a million bucks has no value. It's not just "a small amount of money", it simply has no value anymore. You're not "spending it" so much as "whatever"ing it. (Which is why no one should ever even be allowed to have that much money)
- jwarden 1y ago
  QF makes assumptions like this, but it's not because the authors assume these assumptions reflect reality. They are just simplifying assumptions that allow formal proof of properties like optimality. Also this article is explicitly challenging these assumptions.
  - math_dandy 1y ago
    I’m reading a winking, ironic acknowledgement from the authors that the mathematical definition of individual utility may not map perfectly onto the psychology of a patron of the arts.
  - saghm 1y ago
    > They are just simplifying assumptions that allow formal proof of properties like optimality. And when they're done, the proofs are recognized as being fully out of touch with with the reality we actually live in based on the fact that their assumptions are also out of touch, and nobody actually tries to use them to make decisions about how to do things in our very real and non-simplified society?
    - jwarden 1y ago
crmd 1y ago
I am very suspicious of Quadratic Funding after reading its top google result[1] which presents it as an egalitarian democratic mechanism, and this article which shows it to have the opposite effect in practice. It reminds me of the Citizens United campaign finance debate here in the US 15 years ago: aspirational sales pitch, appalling consequences. 1. https://www.wtfisqf.com/ https://www.wtfisqf.com/
cogman10 1y ago
Reading through it and how it's applied (mostly with crypto). I have to say that the biggest flaw I see isn't theoretical, it's practical. QF assumes that you can know for sure who is an individual. Yet how would you know that with crypto funding? Let's say I'm malicious and I want to pillage a QF. What stops me from setting up a bogus social project/company, registering it, and then taking my $1000 and splitting it into 1000 wallets with $1 a piece which all contribute to my scam project? If I know a QF fund is getting setup, it'd be pretty easy to create 1000s of wallets, vary the money in them, and have them all fund my scam. I can even automate some trading between these wallets to make the source of the funds look somewhat organic. Pillaging these funds seems like it's almost a trivial endeavor assuming you can get your own scam company associate with them. And the more money you have, the easier it'd be to pillage.
- numtel 1y ago
  Generally, QF protocols are paired with a form of Sybil resistance. For example Gitcoin uses passport.xyz to determine if your account is considered legitimate.
- jwarden 1y ago
  > Pillaging these funds seems like it's almost a trivial endeavor assuming It is, and in fact the authors point this out in the original paper: "…if the size of this group is greater than 1/α and the group can perfectly coordinate, there is no limit (other than the budget) to how much it can steal." > I have to say that the biggest flaw I see isn't theoretical, it's practical. Exactly. The theory is fine -- given all these assumptions hold. In practice, these assumption don't hold. For example, one of the assumptions is absence of sybil attacks, fraud, or collusion. Obviously, these assumptions may not hold. You can defend against sybil attacks in various ways. But how do you stop people from colluding (e.g. I $10 to 1000 friends, tell them they can keep $5 if they contribute $5 to my project)? There are collusion-resistant forms of quadratic funding, such as COCM, but these do not have the desirable theoretical properties (such as optimality) that vanilla QF has.
  - FabHK 1y ago
hoppp 1y ago
As somebody who is getting paid via quadratic funding almost monthly, I love it but Its also possible to cheat. There are also issues plaguing the ecosystem like delayed or missing payments
YossarianFrPrez 1y ago
From what I can understand, instead of funding various causes via "matching donations" QF is proposal for a funding body to do something like 'match in proportion to a blend of the donation amount with the number of people donating to the cause.' The point seems to be to smooth out any undue influence any one philanthropist or individual funder has and make the funding of public goods quasi-democratic. However, compare these two problems: a) not enough people who can afford to do so engage in philanthropy, and b) philanthropic funding isn't quasi-democratically distributed. I have to imagine that (a) is a much, much bigger issue than (b). I guess one could argue that because there isn't an analog of "a market" for public goods (c.f. "The Use of Knowledge in Society") somehow we aren't funding the important public goods "efficiently"? And maybe we should think about this more? Yet it's not clear that efficiency (in the economic sense) should be the goal or even applies. This is because markets are great at distilling people's the preferences for fungible goods they want to buy and fungible services they want to use when faced with multiple options for procuring some of each. But a) the vast majority of people don't have that same type of preference for which public goods should be funded, and b) public goods typically aren't fungible. (I.e., funding one scientist gives you a very different research output from funding another in the same subfield.)
- patcon 1y ago
  > a) not enough people who can afford to do so engage in philanthropy, and b) philanthropic funding isn't quasi-democratically distributed. I have to imagine that (a) is a much, much bigger issue than (b) Consider philanthropy funding as actions that terraform the future. The future is where all possibilities unfold, so shaping future landscape pays dividends to the worldview of those who materialize it. I would propose that if (b) is miscalibrated and inequitable, it might affect everything, including (a), much more than we assume. But also, I'm not trying to claim I know that one is more important, just that they're both quite important and very interrelated :)
  - YossarianFrPrez 1y ago
    Ah, interesting. So what (I think) you are saying is that if there is enough of the right type of philanthropic, in-kind donation more people will be able to donate in the future. I will admit the possibility that there may be a clever way of of doing in-kind donations that isn't wide-spread. Sort of akin to ranked-choice-voting but for donor matching.
jongjong 1y ago
Quadratic funding is a terrible idea. It doesn't make sense to separate things into quadrants. From the linked article: > So how about non-excludable goods that are rivalrous in nature? This intersection represents common goods such as fish, timber or coal. Everyone has access to these resources but there is an inherent competition when it comes to collecting them due to potential overuse or congestion. These are excludable in many countries. There are often regulations which prevent you from making a living selling fish or timber. There is a significant financial and time hurdle which needs to be cleared to obtain a boat + license to fish commercially. In terms or logging and coal mining, you are excluded based on lack of access to land + equipment + license. Not everyone legally has access to these in all countries. Also, it's not even possible to obtain a loan to do these in most countries. It's literally impossible to get started if you do not have the financial means. I would also question the 'non-excludable and non-rivalous' quadrant. Not everyone has access to clean air. Many people are trapped in urban centres with low air quality and cannot afford to leave. Some literally cannot leave because they may be in prison, on probation or it's a condition of bankruptcy. Clean air is rivalous since there are a limited number of jobs available in places where the air is clean. Privacy is certainly excludale; e.g. prison and clearly it is rivalous as we have to fight to protect it constantly.
- gsf_emergency 1y ago
  Quadrants are fine when they point to more productive re-framings of the "public X" problem. As implied by you & maybe the article you mentioned, the boundaries of the quadrants are where the theory is likely to fail.. So, if we focus on these boundaries, as honest and curious scientists & engineers, we might chance on new avenues
jongjong 1y ago
QF is an awful idea. Literally every assumption it relies on is wrong... And probably it exacerbates the situation as implementing QF likely causes further degradation of the underlying assumptions... By Goodhart's law "When a measure becomes a target, it ceases to be a good measure." It's incredible how, whenever people try to come up with some centralized framework, ideology or plan to improve things, they make things worse and the cost falls on someone else's shoulders. I've been feeling the effects of this deeply flawed philosophy in my life literally every day yet I had no say on it.
Quenby 1y ago
[dead]
nivertech 1y ago
I like TBC (Token-Bonding Curves) and friends, but the fault here is not understanding that funding public goods is a complex adaptive system, and no closed form / analytic solution with nice looking smooth curve will help to model it. These things together with the Game Theory are better left for textbooks, not real-life projects;) There is another method of funding public goods re-surfaced by crypto folks: DAC (Dominant Assurance Contracts) which is more like SiTG (Skin in The Game), and I think many blank check companies / SPACs use some elements of it BTW, that’s why economists can’t predict sh*t: they trying to use simple curves / closed form solutions, instead of using ABM (Agent-Based Modeling) or even more advanced simulation methods
Sweepi 1y ago
I am not deep enough to critique the article, but I have comment: "If the wealth equality assumption does not hold, QF is anything but optimal. Consider these two examples: Ten wealthy art patrons each contribute €1,000,000 to the local public art museum. Total Contributions: 10×€1,000,000=€10,000,000 QF allocates: (10×sqrt(1,000,000))2=€100,000,000 Subsidy: €90,000,000 One hundred lower‑income individuals each contribute €100 to replace lead pipes in their neighborhood Total Contributions: 100×€100=€10,000 QF allocates: (100×sqrt(100 ))2=€1,000,000 Subsidy: €990,000. Intuitively, this seems very wrong:[..]" Intuitively, I thought: Well, the "hundred lower‑income individuals" got there money 99x, while the "Ten wealthy art patrons" only got 9x. (1/11 for having 1/10 participants). Isn't that working as intended? Especially if you have a progressive income/wealth tax.
- jwarden 1y ago
  Author here. @sokoloff also pointed this out in their comment. You are right, the example confuses by making the group sizes different. I will update the article so it reads like this: Ten wealthy art patrons each contribute €1,000,000 to the local public art museum. Total Contributions: 10×€1,000,000=€10,000,000 QF allocates: (10×sqrt(1,000,000))²=€100,000,000 Subsidy: €90,000,000 Ten lower‑income individuals each contribute €100 to replace lead pipes in their neighborhood Total Contributions: 10×€100=€1,000 QF allocates: (10×sqrt(100))²=€10,000 Subsidy: €9,000. Here, both groups get their contributions multiplied 10x. But the high-income group gets 10,000x the subsidy. Given the assumption of wealth equality (and other assumptions), the QF paper proves that allocating more money to art maximizes social welfare, because if people contribute more to the art, it means art it has more utility. But given the reality of wealth inequality, and the theory of diminishing marginal utility of wealth, the wealthy may contribute more to art simply because they can afford it, and because 1,000,000 may not have any more utility to them than 100 has to a very poor person.
  - Sweepi 1y ago
    "the example confuses by making the group sizes different" But isn't that also realistic, since there a lot more people with little income and "small" problems than ultra-wealthy potential art patrons? Today, if I get 1000 people to give $10 to the local library or public sport place, I have $10.000. (1000xsqrt(10))² are $10.000.000. For me, an obvious fix for potential exploitation would be to cap the individual contribution to 10k or 100k. However, as I said I know nothing about qf and this has prob. already been discussed to death.

119 points by jwarden 1y ago

deleted 1y ago

[deleted]

This looks interesting, but I have no idea what I’m looking at with the original paper. Could someone provide a simple summary that doesn’t rely on knowledge of Quadratic Voting?

bts 1y ago
Quadratic Voting and Quadratic Funding have some ideas in common, but they refer to separate concepts. To learn more about these topics, I would probably check out the website for RadicalxChange. IIUC RxC is the main public body attempting to realize the theoretical benefits of QF and related ideas. Here's an explanation of Quadratic Funding from their website[1], which I guess they now refer to as "Plural Funding": Plural Funding (also known as Quadratic Funding or QF) is a more democratic and scalable form of matching funding for public goods, i.e. any projects valuable to large groups of people and accessible to the general public. “Matching funding” is a model of funding public goods where a fund from governments or philanthropic institutions matches individual contributions to a project. Plural Funding optimizes matching funds by prioritizing projects based on the number of people who contributed. This way, funds meant to benefit the public go towards projects that really benefit a broad public, instead of things that only have a few wealthy backers. In Plural Funding, [total funding] for a proposal is [the square root of each contribution to it → summed up, then squared.] Plural Funding strongly encourages people to make contributions, no matter how small, and ensures a democratic allocation of funds meant to benefit the public. [1] https://www.radicalxchange.org/wiki/plural-funding/ https://www.radicalxchange.org/wiki/plural-funding/ EDIT: formatting
- jppittma 1y ago
  So I make 1,000,000 separate donations in the amount of $0.01?
  - jwarden 1y ago
    Total funding in this case would be: (sqrt(.01) * 1000000)^2 = 10 trillion dollars.
    - nightpool 1y ago
      (10 billion, surely?)
      - jwarden 1y ago
        Oh right: (sqrt(.01) * 1000000)^2 = 1.0e10
  - timerol 1y ago
    Both QF and QV rely on verifying identity, so that would be counted as one donation of $10,000. The entire point is letting numbers of people balance in some way against amounts of money, so allowing one person to count multiple times breaks the system
    - sokoloff 1y ago
      I used to think the employer drives to contribute to the company's preferred charity were bad before QF; they’re bound to get a lot worse with it, giving power to employers with lots of employees and a willingness to encourage them to donate as little as a penny.
    - jppittma 1y ago
      So I have to give it out and have people donate it on my behalf?
jwarden 1y ago
Here's a very brief summary of what Quadratic Funding is (which is distinct from Quadratic Voting): Quadratic Funding is a mechanism where individuals voluntarily contribute funds for some public good (e.g. an open source software project), and then these are matched such that the total funding amount is equal to the square of the sum of the square roots of the individual contributions. Under certain assumptions, this formula results in an optimal outcome, where each individual contributes an amount that maximizes their individual utility (given what others are contributing), and total utility for society is also maximized.
jovial_cavalier 1y ago
a more plain-english explanation from Vitalik's blog: https://vitalik.eth.limo/general/2019/12/07/quadratic.html https://vitalik.eth.limo/general/2019/12/07/quadratic.html
gowld 1y ago
Better to learn about Quadratic Voting, and ignore the magical thinking of Quadratic Voting.

jovial_cavalier 1y ago

I had always interpreted quadratic funding as being a tax rather than a subsidy. You donate $100 and the cause receives $100, then your next marginal $100 is discounted quadratically, and the government receives the difference. I think that just straight up resolves the first two issues.

sokoloff 1y ago
I think that very quickly just changes the forms of donation to be “something that doesn’t count as a donation” (buying tickets to an event or even just straight up NFTs). As soon as the quadratic decrease is more than my marginal tax rate, I’m better off buying an NFT from the cause I want to support than making a donation.

efitz 1y ago

It sounds like a kooky idea and neglects the fact that “the government” isn’t some magical source of money; it got that money from its citizens somehow (taxes or inflation). It’s a much simpler idea to just have citizens vote for what they want their tax money spent on, by voting for candidates who will represent their interests.

taeric 1y ago
Government can also get money through bonds, though? And government spending of these funds can be argued to go much more directly to economic growth for the region than most any other spending. Note that I don't really disagree with your second. Just pointing out that your two options for how government got money is not complete.
- sokoloff 1y ago
  Bonds are an exchange of cash now for more cash later in the other direction. Eventually, that “cash later” is taxed or inflated away (printed), so it’s a difference in timing more than category.
  - taeric 1y ago
    Fair. Still largely a different form getting cash now, though? Particularly if you account for the fact that governments can go belly up.
- daedrdev 1y ago
  In the long run, all government debt is going to be future taxes. There are many programs that the government spends on that are efficient and produce more growth than the taxes collected would have, and there are many that don't and produce less growth than leaving the money in the hands of the taxed. Sometimes this is due to government inefficiency, and sometimes because we decided it's what we want, like medicare for elderly who will never return the investment into their health.
  - 1y ago

gs17 1y ago

> Intuitively, this seems wrong: the art museum receives a far larger subsidy, yet many more people benefit from replacing the lead pipes, and the utility-per-individual is arguably much higher as well. Well, yes, but those many more people getting more utility didn't contribute. If the same contribution was spread out over 10x the people each contributing $10, they'd get 10x the funding. Their complaint here is really that ideal QF would also require assuming people actually get involved with it. I agree it has issues, but this isn't what I'd lead with. Coordination seems like a much larger threat to the concept.

jwarden 1y ago
In the example in the article, many more people did contribute to the lead pipes (100 people vs. 10 for the art museum). And they still get only a fraction of the funding that the art museum gets. Agree, coordination is a larger threat to QF. But this issue has been discussed extensively. In this article I wanted to point out all the other assumptions behind QF and what happens when they don't hold.
- sokoloff 1y ago
  But they got 99 shares of government contribution for each share they put up for a 100x multiplier while the art patrons got 9 shares of government contribution for a 10x multiplier. Setting aside the emotional content and looking only at the math, it’s not at all obvious to me that the project with 100 donors was somehow shorted.
  - spencerflem 1y ago
    Many people would consider fixing pipes a more important project despite the fact that the wealthy contributors could front a lot more cash for their pick.
    - sokoloff 1y ago
      Great. Now, suppose the 10 wealthy people are in favor of the pipes project and the 100 average people are in favor of an art museum. Is the art museum or the pipes project more important?

j2kun 1y ago

> for funding public goods—especially in the cryptocurrency space. Sounds like a contradiction to me. Nothing about cryptocurrency should be considered a public good, even if wealthy donors are struggling to efficiently donate money to its development.

gsf_emergency 1y ago
If crypto is an unambiguous public bad, quadratic defunding would be a worthwhile experiment?

gbacon 1y ago

Regarding both perfect knowledge and equilibrium discovery, consider Hayek’s work on what he called the knowledge problem, beginning with “The Use of Knowledge in Society.” No person or entity possesses perfect knowledge of the current state, and no one has perfect knowledge of the follow-on simple or higher-order effects. Instead, apply the insight from public choice theory that state actors make self-interested choices. Cui bono? I am far from denying that in our system equilibrium analysis has a useful function to perform. But when it comes to the point where it misleads some of our leading thinkers into believing that the situation which it describes has direct relevance to the solution of practical problems, it is time that we remember that it does not deal with the social process at all and that it is no more than a useful preliminary to the study of the main problem. https://www.kysq.org/docs/Hayek_45.pdf https://www.kysq.org/docs/Hayek_45.pdf

jwarden 1y ago
great quote
- gsf_emergency 1y ago
  May I quote the same Hayek (last page): >instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. (In the same spirit, I'm trying to move beyond dissfests towards more collaborative convos on HN) @warden I was encouraged to see "perfect knowledge" replaced by "sufficient knowledge" in at least once instance in your post. We should encourage Glen & Michael to work on seeing if weakening their assumptions as above would produce proofs of more useful natures, as a prelim to solving the knowledge problem :) (Alas collabs take work, & HN is primarily an entertainment & venting channel, due to its ephemeral design)

bee_rider 1y ago

I wonder about this kind of article. It is a big list of problems, so it seems like we’ll end up having a bunch of unrelated conversations here, which seems unfortunate. But, to start chipping away… For the wealth inequality section, I gather the goal is to let people provide a signal based on how much they are willing to spend. Shouldn’t that be corrected for their wealth, because that shows how much they value the thing? If the art patrons are all 1B-aires, and the anti-lead-pipe folks are 100k-aires (just to make the math easier), we could do: Art: 10*(sqrt(1M/1B)^2) = 1/100 Pipes: 100*(sqrt(100/100k)^2) = 1/10 Now we’ve got some measure of everybody’s preference, and can allocate the budget appropriately. Whatever the overall budgets is, 10x more for pipes than art seems… well, at least a lot closer to reasonable than ~100x more on art than pipes

spencerflem 1y ago
You might also want to factor the relative marginal utility of a dollar. But yes, that part does seem solvable with a correction like that even if my preferred fix would be removing the billionaires ;)

nkmnz 1y ago

I've never heard of the specific mechanism the article talks about, but it is so full of flaws that I do not consider it a good source of thought about the topic. Just the most obvious example where the author didn't put much effort into understanding their own text: > Three art patrons each contribute [money] to the local public art museum. [...] They each expect to experience [money] worth of individual utility from enjoying the [...] art. > [...] utility of saved lives is experienced only once by each of the cancer patients – the three contributors don’t experience that utility (other than feeling good about those lives being saved, but that’s not the kind of utility we’re trying to maximize). This approach of intellectual unsoundness - i.e., accepting the social and individual utility of enjoying the arts, but denying any such utility for enjoying the saved lives – is present throughout the article. And I haven't started with the author comparing random cases of contributions that differ in multiple dimensions where using a ceteris paribus approach would immediately show that his arguments are shallow...

refulgentis 1y ago
I'm confused, aren't those flaws the article is pointing out, not claims the article is making?
- em-bee 1y ago
  the article claims that a contributor to art benefits from enjoying the art and a contributor to cancer research doesn't (except for feeling good), and therefore quadratic funding would favor art contributions and disfavor cancer research contributions. GP claims (and i agree) that contributors to cancer research do benefit beyond feeling good. eg because they, or someone they care about might have or get cancer later and benefit from the research. the challenge is that measuring benefit is hard.
- zoogeny 1y ago
  I read it as claims the article was making. I too was confused, but perhaps that is just the communication? I think the article was going for a comparison between extrinsic motivation (which they seem to claim the original quadratic funding requires) and intrinsic motivation. It seems they just chose a poor example. The article attempts to quantize the expected reward for the extrinsic motivation ("They each expect to experience €6,000,000 worth of individual utility") while it fails to quantize the expected reward for the intrinsic motivation ("But in the selfish scenario, total utility is 3 times higher, because the utility is experienced independently by each contributor, whereas utility of saved lives is experienced only once by each of the cancer patients). I believe, it has to do with their narrow conception of "experience". I don't know how any rational person could expect to "experience" €6,000,000 worth of art as my first criticism. Now, it would be fair to say that the implication that the wealthy benefactors expect that experience could be seen as a criticism of quadratic funding. But to roll with that ludicrous expectation for the sake of argument and then to fail to give a similar expectation of reward from the experience of saving 60 lives is not a fair argument. If I can "imagine" the benefactor expecting €6,000,000 worth of experience for knowing the art is on display at the local museum, I could "imagine" the benefactor expecting some non-zero-euro amount of experience for knowing 60 people survived cancer. If we quantify the "experience" in euros for the first scenario, it seems unfair not to quantify the "experience" for the second scenario. In this case it is about being consistent in argument, which the article fails to do.

nlitened 1y ago

When people use examples like “wealthy patrons contribute large sums of money to art museum to experience individual utility from enjoying additional art”, it makes me think they understand money as little as they do art.

TheRealPomax 1y ago
They don't have to. When you only have $100, every cent matters. Once you have 10k, dollars still matter, but cents not so much. They stop having value. And that just keeps going: once you have several hundred million, a million bucks has no value. It's not just "a small amount of money", it simply has no value anymore. You're not "spending it" so much as "whatever"ing it. (Which is why no one should ever even be allowed to have that much money)
jwarden 1y ago
QF makes assumptions like this, but it's not because the authors assume these assumptions reflect reality. They are just simplifying assumptions that allow formal proof of properties like optimality. Also this article is explicitly challenging these assumptions.
- math_dandy 1y ago
  I’m reading a winking, ironic acknowledgement from the authors that the mathematical definition of individual utility may not map perfectly onto the psychology of a patron of the arts.
- saghm 1y ago
  > They are just simplifying assumptions that allow formal proof of properties like optimality. And when they're done, the proofs are recognized as being fully out of touch with with the reality we actually live in based on the fact that their assumptions are also out of touch, and nobody actually tries to use them to make decisions about how to do things in our very real and non-simplified society?
  - jwarden 1y ago

crmd 1y ago

I am very suspicious of Quadratic Funding after reading its top google result[1] which presents it as an egalitarian democratic mechanism, and this article which shows it to have the opposite effect in practice. It reminds me of the Citizens United campaign finance debate here in the US 15 years ago: aspirational sales pitch, appalling consequences. 1. https://www.wtfisqf.com/ https://www.wtfisqf.com/

cogman10 1y ago

Reading through it and how it's applied (mostly with crypto). I have to say that the biggest flaw I see isn't theoretical, it's practical. QF assumes that you can know for sure who is an individual. Yet how would you know that with crypto funding? Let's say I'm malicious and I want to pillage a QF. What stops me from setting up a bogus social project/company, registering it, and then taking my $1000 and splitting it into 1000 wallets with $1 a piece which all contribute to my scam project? If I know a QF fund is getting setup, it'd be pretty easy to create 1000s of wallets, vary the money in them, and have them all fund my scam. I can even automate some trading between these wallets to make the source of the funds look somewhat organic. Pillaging these funds seems like it's almost a trivial endeavor assuming you can get your own scam company associate with them. And the more money you have, the easier it'd be to pillage.

numtel 1y ago
Generally, QF protocols are paired with a form of Sybil resistance. For example Gitcoin uses passport.xyz to determine if your account is considered legitimate.
jwarden 1y ago
> Pillaging these funds seems like it's almost a trivial endeavor assuming It is, and in fact the authors point this out in the original paper: "…if the size of this group is greater than 1/α and the group can perfectly coordinate, there is no limit (other than the budget) to how much it can steal." > I have to say that the biggest flaw I see isn't theoretical, it's practical. Exactly. The theory is fine -- given all these assumptions hold. In practice, these assumption don't hold. For example, one of the assumptions is absence of sybil attacks, fraud, or collusion. Obviously, these assumptions may not hold. You can defend against sybil attacks in various ways. But how do you stop people from colluding (e.g. I $10 to 1000 friends, tell them they can keep $5 if they contribute $5 to my project)? There are collusion-resistant forms of quadratic funding, such as COCM, but these do not have the desirable theoretical properties (such as optimality) that vanilla QF has.
- FabHK 1y ago

hoppp 1y ago

As somebody who is getting paid via quadratic funding almost monthly, I love it but Its also possible to cheat. There are also issues plaguing the ecosystem like delayed or missing payments

YossarianFrPrez 1y ago

From what I can understand, instead of funding various causes via "matching donations" QF is proposal for a funding body to do something like 'match in proportion to a blend of the donation amount with the number of people donating to the cause.' The point seems to be to smooth out any undue influence any one philanthropist or individual funder has and make the funding of public goods quasi-democratic. However, compare these two problems: a) not enough people who can afford to do so engage in philanthropy, and b) philanthropic funding isn't quasi-democratically distributed. I have to imagine that (a) is a much, much bigger issue than (b). I guess one could argue that because there isn't an analog of "a market" for public goods (c.f. "The Use of Knowledge in Society") somehow we aren't funding the important public goods "efficiently"? And maybe we should think about this more? Yet it's not clear that efficiency (in the economic sense) should be the goal or even applies. This is because markets are great at distilling people's the preferences for fungible goods they want to buy and fungible services they want to use when faced with multiple options for procuring some of each. But a) the vast majority of people don't have that same type of preference for which public goods should be funded, and b) public goods typically aren't fungible. (I.e., funding one scientist gives you a very different research output from funding another in the same subfield.)

patcon 1y ago
> a) not enough people who can afford to do so engage in philanthropy, and b) philanthropic funding isn't quasi-democratically distributed. I have to imagine that (a) is a much, much bigger issue than (b) Consider philanthropy funding as actions that terraform the future. The future is where all possibilities unfold, so shaping future landscape pays dividends to the worldview of those who materialize it. I would propose that if (b) is miscalibrated and inequitable, it might affect everything, including (a), much more than we assume. But also, I'm not trying to claim I know that one is more important, just that they're both quite important and very interrelated :)
- YossarianFrPrez 1y ago
  Ah, interesting. So what (I think) you are saying is that if there is enough of the right type of philanthropic, in-kind donation more people will be able to donate in the future. I will admit the possibility that there may be a clever way of of doing in-kind donations that isn't wide-spread. Sort of akin to ranked-choice-voting but for donor matching.

jongjong 1y ago

Quadratic funding is a terrible idea. It doesn't make sense to separate things into quadrants. From the linked article: > So how about non-excludable goods that are rivalrous in nature? This intersection represents common goods such as fish, timber or coal. Everyone has access to these resources but there is an inherent competition when it comes to collecting them due to potential overuse or congestion. These are excludable in many countries. There are often regulations which prevent you from making a living selling fish or timber. There is a significant financial and time hurdle which needs to be cleared to obtain a boat + license to fish commercially. In terms or logging and coal mining, you are excluded based on lack of access to land + equipment + license. Not everyone legally has access to these in all countries. Also, it's not even possible to obtain a loan to do these in most countries. It's literally impossible to get started if you do not have the financial means. I would also question the 'non-excludable and non-rivalous' quadrant. Not everyone has access to clean air. Many people are trapped in urban centres with low air quality and cannot afford to leave. Some literally cannot leave because they may be in prison, on probation or it's a condition of bankruptcy. Clean air is rivalous since there are a limited number of jobs available in places where the air is clean. Privacy is certainly excludale; e.g. prison and clearly it is rivalous as we have to fight to protect it constantly.

gsf_emergency 1y ago
Quadrants are fine when they point to more productive re-framings of the "public X" problem. As implied by you & maybe the article you mentioned, the boundaries of the quadrants are where the theory is likely to fail.. So, if we focus on these boundaries, as honest and curious scientists & engineers, we might chance on new avenues

jongjong 1y ago

QF is an awful idea. Literally every assumption it relies on is wrong... And probably it exacerbates the situation as implementing QF likely causes further degradation of the underlying assumptions... By Goodhart's law "When a measure becomes a target, it ceases to be a good measure." It's incredible how, whenever people try to come up with some centralized framework, ideology or plan to improve things, they make things worse and the cost falls on someone else's shoulders. I've been feeling the effects of this deeply flawed philosophy in my life literally every day yet I had no say on it.

Quenby 1y ago

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nivertech 1y ago

I like TBC (Token-Bonding Curves) and friends, but the fault here is not understanding that funding public goods is a complex adaptive system, and no closed form / analytic solution with nice looking smooth curve will help to model it. These things together with the Game Theory are better left for textbooks, not real-life projects;) There is another method of funding public goods re-surfaced by crypto folks: DAC (Dominant Assurance Contracts) which is more like SiTG (Skin in The Game), and I think many blank check companies / SPACs use some elements of it BTW, that’s why economists can’t predict sh*t: they trying to use simple curves / closed form solutions, instead of using ABM (Agent-Based Modeling) or even more advanced simulation methods

Sweepi 1y ago

I am not deep enough to critique the article, but I have comment: "If the wealth equality assumption does not hold, QF is anything but optimal. Consider these two examples: Ten wealthy art patrons each contribute €1,000,000 to the local public art museum. Total Contributions: 10×€1,000,000=€10,000,000 QF allocates: (10×sqrt(1,000,000))2=€100,000,000 Subsidy: €90,000,000 One hundred lower‑income individuals each contribute €100 to replace lead pipes in their neighborhood Total Contributions: 100×€100=€10,000 QF allocates: (100×sqrt(100 ))2=€1,000,000 Subsidy: €990,000. Intuitively, this seems very wrong:[..]" Intuitively, I thought: Well, the "hundred lower‑income individuals" got there money 99x, while the "Ten wealthy art patrons" only got 9x. (1/11 for having 1/10 participants). Isn't that working as intended? Especially if you have a progressive income/wealth tax.

jwarden 1y ago
Author here. @sokoloff also pointed this out in their comment. You are right, the example confuses by making the group sizes different. I will update the article so it reads like this: Ten wealthy art patrons each contribute €1,000,000 to the local public art museum. Total Contributions: 10×€1,000,000=€10,000,000 QF allocates: (10×sqrt(1,000,000))²=€100,000,000 Subsidy: €90,000,000 Ten lower‑income individuals each contribute €100 to replace lead pipes in their neighborhood Total Contributions: 10×€100=€1,000 QF allocates: (10×sqrt(100))²=€10,000 Subsidy: €9,000. Here, both groups get their contributions multiplied 10x. But the high-income group gets 10,000x the subsidy. Given the assumption of wealth equality (and other assumptions), the QF paper proves that allocating more money to art maximizes social welfare, because if people contribute more to the art, it means art it has more utility. But given the reality of wealth inequality, and the theory of diminishing marginal utility of wealth, the wealthy may contribute more to art simply because they can afford it, and because 1,000,000 may not have any more utility to them than 100 has to a very poor person.
- Sweepi 1y ago
  "the example confuses by making the group sizes different" But isn't that also realistic, since there a lot more people with little income and "small" problems than ultra-wealthy potential art patrons? Today, if I get 1000 people to give $10 to the local library or public sport place, I have $10.000. (1000xsqrt(10))² are $10.000.000. For me, an obvious fix for potential exploitation would be to cap the individual contribution to 10k or 100k. However, as I said I know nothing about qf and this has prob. already been discussed to death.