Arnold Kling  

James Miller's Challenge Bet

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The Economics and Philosophy o... Holding Pen Update...

In my latest essay, I wrote,


In my opinion, James Miller is making a bad bet. If you want to bet against Ray Kurzweil, you should look for patterns of prediction errors. As this essay will show, Kurzweil has been systematically overly optimistic concerning some forms of artificial intelligence. But in forecasting developments based on brute computation and nano-scale engineering -- which are what is needed to solve the problem of fabricating a large, perfect diamond -- Kurzweil has been, if anything, a bit conservative.

Miller emailed me, asking

So the obvious question I have for you is "will you accept my bet?" How much would I have to pay you today for you to promise to give me a10-meter-diameter solid diamond sphere in 2030, 2040 or 2050?

My view is that the cost of producing the diamond has a bimodal distribution. It might be something like this:

Yearprobability that cost = $100probability that cost = $10 million
2030.7.3
2040 .9.1
2050.99 .01

I think that from my end, the bet is worth much less than the expected value, because (a) I am risk averse and (b) I think that the value of money will be inversely related to the pace of technological change--if we can fabricate a 10-meter diamond cheaply in 2030 then my "winning" will not mean much because my family will be so fabulously wealthy anyway. In terms of state-preference theory, the state of the world in which I would really value wealth is the state in which technological progress is slow and the diamond is expensive.

But even if I were risk neutral, given those numbers and a 3 percent real interest rate, I would ask for a lot of money. Yet I think that the chances are it will be really cheap to produce the diamond.

UPDATE: In a follow-up email, Miller points out that if I expect that we will be rich in 2030, then I should be eager to take money today in exchange for having to pay out in 2030. In other words, I ought to use a higher discount rate than 3 percent.



COMMENTS (6 to date)
Scott Scheule writes:

So you're copping out?

Mike Linksvayer writes:

Why would you expect conflict to decrease (or anything with a significant non-technology component to change) exponentially?

dsquared writes:

Arnold, I think you're underestimating the cost of raw materials here; you're talking about a sphere of radius 5m. That's 523m^3 of solid carbon which would weigh somewhere north of 1000 tonnes. I can't think of any reasonable way of getting hold of that much carbon for $100.

dsquared writes:

In other words, the estimate of $10m in the right hand column there is a number that clearly has to be wrong by orders of magnitude. Absent the kind of technical progress Kurzweil is talking about, $10m would buy you a diamond roughly the size of an apricot and a 10m-diameter diamond is a completely impossible item to make. I will offer Arnold a much better bet; I will swap him the current price of 10 carats of diamonds today for (physical delivery of) 200 carats of diamonds in 2030.

Glen Raphael writes:

What struck me about the optimistic column was that it tended to require significant cultural change as well as technological. Students certainly can learn basic skills such as reading and math readily with interactive learning software, but they don't because they don't need to. The teacher's unions have great lobbyists ensuring that you pay for the presence of teachers whether you're using them or not and using human teachers works tolerably well, so there's little demand for this technological service. Knowledge-based systems that can aid medical diagnosis have been around for 20 years, but doctors don't use them for various social and legal reasons. Blind people were interacting with automated personal reading systems back in 1994 (probably earlier, but that was when I knew a guy who used one), but there's little reason for speech recognition to replace typing as the input mechanism. And so on.

Several of those technologies aren't going to come about soon because there isn't sufficient demand; the existing solutions work well enough for most people. There's no huge unsatisfied need for these technologies.

With that in mind, a ten meter diamond is ludicrously large. Nobody needs a solid diamond that large - how would you transport it? Where would you keep it? - so there's no reason to expect the technology and source material to make and deliver one would become cheap anytime soon. Maybe offer to sell him a canteloupe-sized diamond that you could make in your desktop fabricator at home...

Bob Knaus writes:

Actually the sphere would weigh about 1842 tonnes, given carbon's specific gravity of 3.52 in diamond form.

In the US, Powder River coal from Wyoming is probably the cheapest carbon-containg mineral, although its carbon percentage at 60% is lower than premium Appalachian coals. Prices have recently spiked to $11/US ton from a low of $5 on supply disruptions due to derailments.

A US ton = 1.1 tonnes. Assuming $10 as a long-range price, this would yield a carbon cost from the coal of $18.37 per tonne. Your 10M diamond sphere would have a carbon cost of more than $33,000.

Diamond burns well. If I were a homeowner, at $100 per 10M sphere, I would buy one every year and crack it to bits for use in my wood stove. Cheaper than any fuel now available!

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