Humanity could die as early as 2290, economists from the Canadian research company BCA calculated. In theory, this means that investors have less reason to save money and more - to invest in risky assets.
Humanity may have only a few centuries left to live - an extremely short period in the history of human existence, which is about 3 million years old, follows from the report of the Canadian company BCA Research, which specializes in investment research. In a review sent to clients last week entitled “Doomsday Risk” (available to RBC), the chief strategist of BCA Research Peter Berezin, a former economist at Goldman Sachs, asks a question that is not trivial for investment analysis: can the end of the world come and what is the likelihood of total death of human civilization? … Although such a hypothetical event is considered to be a so-called “tail risk”, implying an extremely low probability, it should not be underestimated. “The most disappointing thing,that our analysis assumes a high probability of disappearance of people on the horizon of several centuries, and possibly much earlier,”the review says.
Recognizing that the calculation of such probabilities is just a game of the mind, Berezin nevertheless estimates that there is a 50% probability of the death of mankind by 2290 and 95% that this will happen by 2710.
Great Filter
The emergence of intelligent life on Earth was in itself a rare event - otherwise people could expect to find at least some traces of their own kind among the 400 billion galaxies of the observed Universe. However, there are still no signs of the existence of extraterrestrial civilizations, Berezin argues. American scientist Robert Hanson in 1996 explained this using the concept of the "Great Filter", which, among other things, implies a high probability of self-destruction of mankind at the stage of advanced technological development. “We already have technologies that can destroy the Earth, but we have not yet developed the technology that will allow us to survive in the event of a disaster,” writes BCA Research.
Berezin gives an example: in 2012, scientists at the University of Wisconsin at Madison in the United States showed that it is relatively easy to breed a new strain of influenza, more dangerous than the Spanish flu, which killed 50 million people around the world in 1918. And this is not to mention the threat of a nuclear war, an asteroid strike, a pandemic, the emergence of malevolent artificial intelligence, out of control of climate change.
Promotional video:
Doomsday theorem
Berezin also recalls another well-known catastrophic hypothesis - the Doomsday argument by astrophysicist Brandon Carter. Carter reasoned this way: if people of today are in a random place throughout human chronology, chances are good that we live somewhere in the middle of this chronological scale. The economist at BCA Research takes this idea and assumes that roughly 100 billion people have lived on Earth by now. If civilization is really destined to perish, it will happen after another 100 billion people are born on the planet.
If humanity can populate other planets or create giant orbital ships, the likelihood of the extinction of terrestrial life due to some cataclysm will sharply decrease, says Berezin, but at the moment the probability of the end of the world is much higher than it was in the distant past or will be in the future. According to him, civilization, apparently, has approached a turning point - the third in its history, overcoming which humanity will be able to rapidly raise IQ levels thanks to genetic technologies. The evolving intelligence, in turn, will ensure the emergence of more and more intelligent people. However, with increasing opportunities, the risks of the end also increase, the economist argues, referring to the doomsday theorem.
The Doomsday Theorem does not state that humanity cannot or will not exist forever. It also sets no upper bound on the number of people that will ever exist, nor the date of extinction of humanity. According to some calculations (Canadian philosopher John Leslie), there is a 95% probability that humanity will die within 9120 years. But Peter Berezin suggests that the end of the world could come much earlier. In his analysis, he proceeds from the fact that the total fertility rate in the world will stabilize at 3.0 (now it is about 2.4), and comes to estimates that with a probability of 50–95%, the death of humanity will come before 3000.
Investment "ideas"
According to Berezin's arguments, if we assume that humanity will die in the foreseeable future, the accumulation of funds ceases to be so attractive. A lower savings rate, in turn, implies a higher interest rate and hence cheaper bonds, the economist argues.
Another hypothesis, which Berezin analyzes in terms of influence on the choice of an investment strategy, is the concept of "parallel universes", in each of which the same laws of nature operate and which are characterized by the same world constants, but which are in different states. Proponents of this idea, including such famous physicists as Stephen Hawking, Brian Green and Michio Kaku, assume that we live in a multiverse, which consists of many "bubble universes".
If an investor believes in the multiverse, he may be more predisposed to bets that can bring large winnings with a very low probability, and at the same time more avoid very small risks of large losses, Berezin argues. The fact is that when choosing an investment, a person will probably take into account the fact that even if he himself does not make a lot of money on it, he will be comforted by the thought that one of his "counterparts" in a distant galaxy or other quantum state will succeed.
Therefore, if we assume that there are billions of parallel universes, where billions of "versions" of each person live, then for investors more risky assets (such as stocks) are preferable to less risky assets (bonds), sums up the economist of BCA Research.