Status Affiliation Puzzles

Recently I posted on otherwise puzzling behavior that can be easily explained via seeking status via affiliations.

I see more examples:

  • Voters far prefer representatives over direct democracy or random selection.
  • Donors prefer to picking grantees, over giving prizes to whoever succeeds.
  • Homeowners don't give good money incentives to real estate brokers.
  • Investors prefer actively managed funds that lose on average.  
  • Decision markets lose overwhelmingly to heroic "decider" managers.

In all these cases standard economic accounts seem to seriously miss the mark by ignoring strong human desires to gain status via affiliation.  As most of my institution design efforts suffer this problem, understanding this better is, to me, of the highest priority.

Added 3Mar:  It is usually possible to make up many explanations for any puzzling behavior, and some of these may fit well with our own conscious explanations for our behavior.  But the details in most of these cases seems hard to fit with most of the other proposed explanations, and we know that status is very important to people yet they do not like to admit they do things for status. 

The key to taking this idea further is to better understand just what sort of relations most confer status via affiliation.  It seems to me that arms-length formal relations where you each minimize your risk from the other's bad behavior do not show a mutually trusting relation, which as a closer connection confers more status via the relation.  So people are eager to trust high status affiliates, without evidence and even against the evidence. 

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  • Stuart Armstrong

    Just a minor query:
    strong human desires to gain status via affiliation

    Do you see this as an actual desire or more some type of `adaptation execution’?

  • salacious

    “Investors prefer actively managed funds that lose on average.”W

    Without denying that status-affiliation plays a role here, I think other biases drive most of the decisionmaking in this scenario. Specifically, people need to feel that someone is in control, ideally themselves. Picking a managed mutual fund (a)means that an “intelligent” person is in control of the investor’s money and (b)flatters the investor’s ego since they selected that manager. It’s akin to the fear people have of computer-operated transportation, when statistically they are far more likely to die driving their own car.

  • http://profile.typekey.com/robinhanson/ Robin Hanson

    Stuart, I usually don’t distinguish conscious, unconscious, or adaption execution desires in my language, as I usually can’t tell where they lie.

    salacious, feeling flattered by picking an affiliation with a smart manager is very close to the status affiliation I’m talking about.

  • salacious

    You have to distinguish that from investors flattering themselves as having selected the right manager. Managed mutual funds give people the opportunity to wallow in their own overestimated intelligence; broad index funds do not. (Except maybe for rationality geeks=D)

  • http://profile.typekey.com/michaeljameswebster/ michael webster

    Robin, do you see this phenomena as different in kind from the Ellsberg paradox? (Which demonstrated that people will state preferences and may be even choices which minimize real uncertainty.)

    Your examples, which are convincing, seem to be examples of people who have to choose between two outcomes, with a least two dimensions of value. And in one of those dimensions, the choice is clear.

    The other dimension is hard, and tradeoffs are harder, so the natural inclination is to go with the easier choice to calculate.

  • http://profile.typekey.com/robinhanson/ Robin Hanson

    Michael, people don’t like to admit they do things for status, they prefer to think the connection to status is a coincidence, or at most a heuristic to get other things.

  • http://atheorist.livejournal.com Johnicholas

    The status effect may be strong, but it is not unalterable.

    Repeated accusations, if they are truthful and therefore difficult to answer, could pull down high-status individuals or groups, or prompt them to adopt things like forecast track records.

    Good track records would become badges of status – but competing for status by striving for a good track record is still the kind of behavior that you want to see, regardless of the proximate cause.

  • http://profile.typekey.com/sentience/ Eliezer Yudkowsky

    Managed mutual funds give people the opportunity to wallow in their own overestimated intelligence; broad index funds do not. (Except maybe for rationality geeks=D)

    =D?

    This is a bit more important of an observation than just a smiley would indicate.

  • spacenookie

    People have a strong desire for affiliation regardless of whether it confers status. e.g. people affiliate with sports teams (even when they are losing), religious sects, brands of beer, NASCAR, the rebel flag, etc.

  • HH

    People have a strong desire for affiliation regardless of whether it confers status. e.g. people affiliate with sports teams (even when they are losing), religious sects, brands of beer, NASCAR, the rebel flag, etc.

    Posted by: spacenookie | March 02, 2009 at 11:02 AM

    Agreed, though I’d say that the in-group/out-group mode of thinking is a different bias from the desire for affiliation with high status people. The in & out bias is likely a remainder from a time where groups had to be strong and well-organized to survive, and signaling loyalty was important lest you were ostracized and left on your own. The desire for affiliation with high status people, I think, kicks in once you’re inside a group, and you try to affiliate with the high-status people in it.

  • J

    Hey Mr. Hanson:

    Could you please elaborate on why prefering representative democracy over direct democracy is due to status affiliation?

  • josh

    Here in Virginia, teachers are required to have masters degrees despite lack of evidence that this is in any way beneficial to students (and abundant anecdotal evidence that it is not at all).

    The informal ban on hiring anyone without a college degree for a professional position probably goes beyond signaling.

    The widespread phenomena of Wikipedia-bashing despite our everyday experience in which most of us find it incredibly useful.

  • Douglas Knight

    or at most a heuristic to get other things

    What is the evidence against this?
    In particular, anything done by evolution is a heuristic to get other things.

  • Russ Andersson

    Robin:

    Yes, this is a very interesting topic that would warrant some serious research because its obviously core to the human decision making process. In a previous post I alluded to my not being able to find much research on status, but that doesn’t mean much. Maybe it may have something to do with the fact that its very difficult to quantify status in any meaningful way. There is a bit out there but its very high level and not very granular. (see Socioeconomic Approach to Status Measurement (With a Guide to Occupational and Socioeconomic Status Scores)

    I guess the two challenges would be:

    A). How do you measure status?
    B). How do you measure the value people place on status in terms of the economic choices they make?

    One possible approach may be to measure people’s desire for status by some sort of questionnaire that ranks on a scale of 1 to 100, … some people value status highly (80 plus), and some people less so (20 less), and then to see how their economic choices differ for a given set of circumstances. This might allow you to extract out some form of status premium.

    It is very subjective process, but maybe it can be done with the right set of questions, for example, Seligman is able to measure optimism reasonably accurately through a questionnaire like this, and his measurements have proven to be reasonably accurate predictors of future behavior and choices. (http://www.stanford.edu/class/msande271/onlinetools/LearnedOpt.html) Maybe you could do a similar thing for status, and that might be a reasonable place to start quantifying it.

  • Unnamed

    Could you elaborate on your new examples, Robin? I’m not sure that I understand the realtor example – is the idea that seeking a high-status realtor prevents people from attending to other features of the realtor, like their incentives? The voter, investor, and decision market examples seem to have other straightforward alternatives, such as people wanting control to either be in their own hands or in the hands of an expert. And why isn’t affiliating with the successful prizewinner just as good a status boost for donors?

  • http://profile.typekey.com/robinhanson/ Robin Hanson

    Johnicholas, yes we might make track records as status badge, but it will be far from easy.

    josh, wanting people to have useless degrees seems a prime example of signaling.

    Unnamed, the more arms-length the relation, the less it confers status via affiliation.

  • http://michaelkirkland.org/blog Michael Kirkland

    I’d point out that there are alternate explanations for most of these. “Succeeding” is just an alternate method of picking who gets granted prizes. It’s entirely rational for donors to prefer using their own criteria over someone else’s. They’ll believe their criteria is rational, even if it isn’t.

  • Jess Riedel

    Robin, it seems to me that your status explanation for representative democracy vs. direct democracy isn’t nearly as convincing as the standard one: citizens do not have the time and expertise for making all the legislative decisions so they dedicate the responsibilities to congressmen who represent their interests. There is some disagreement over the degree to which they should be removed from the process (ranging from referendums to, say, the appointment of senators by state legistlators). It may even be true that powerful minorities, like the founding fathers, set up the system to insulate the government from a populace making poor choices. But none of that necessarily has anything to do with status.

    How could we tell the difference between your explanations and (what I call) the standard one?

  • josh

    Robin,

    I guess I mean more than ability signaling. Degrees signal status as well.

  • Grant

    Students prefer distracted profs who grade and recommend corruptibly.

    This is explainable without any status-seeking (good grades + no work = any student’s dream). However, the engineering profs at my college who employers actually listened to did not recommend so wantonly. A letter of recommendation from an extremely difficult professor could get you flown out to an interview somewhere. A letter from many others didn’t matter much at all.

    Patients prefer docs with prestigious affiliations over health success rates.

    Judging status is a lot harder than health success rates. Its been a while since I tried to look up any statistical information on medical procedures, but if I remember correctly it isn’t at all easy. Your average person may not even be capable of making rational decisions based on the information.

    To really see how people might choose status over efficacy, you have to make the cost of acquiring information on each the same. It seems like a controlled study could be done with this. Take a group of people with the same diagnosis, give them accurate information about two or more doctors who’s credentials differ, and ask them to make a choice.

  • Chad

    >Homeowners don’t give good money incentives to real estate brokers.

    It is clear that the incentives are not well-aligned (per your earlier posts on real estate) but is this really a status based problem?

    How do the outcomes for people representing themselves compare against brokered deals?

    Real estate agents likely won’t bother representing homeowners who try to change the incentives substantially outside the traditional 3% to each agent.

  • http://profile.typekey.com/halfinney/ Hal Finney

    Maybe a lesson from this is that new institutions should be oriented towards professionals rather than the general public. Position them as decision aids that can allow a professional to increase his status and prominence. Imagine a fund manager who secretly follows some index, perhaps with a bit of noise to disguise his moves, and is skilled at coming up with plausible stories for why he is trading that way. Imagine a doctor who makes medical decisions based on outcome based measurements, but justifies them on the basis of his extensive medical experience and considered judgement. Imagine a policy maker who follows an Idea Futures market but again is able to creatively explain his recommendations.

    One issue is that the pro might be caught, that is someone might notice that he’s just following publicly available data. “What am I paying you for then?” would be a common reaction. However this is probably not too likely, at least for pros who are good at making up stories and telling them.

    Another issue would be resistance on the part of pros to subjugating their own judgements, with credibility inflated by overconfidence, to objective data. We might face the familiar problem that people will tell the best stories about their deep analysis when they believe those stories, versus when they know they are faking and just dressing up a mechanical decision.

  • frelkins

    @J
    Could you please elaborate on why prefering representative democracy over direct democracy is due to status affiliation
    and
    @Jess Reidel
    citizens do not have the time and expertise for making all the legislative decisions so they dedicate the responsibilities to congressmen who represent their interests

    I think these are easy to consider together. Jess, if we were concerned about “time,” then we would appoint men of leisure with large fortunes who could nothing but govern with no time pressure; but we do not. We appoint or elect wealthy people, but set the system up so that they in fact have little time for governing, instead they spend most of their time raising money, campaigning, and politicking – legislators have so little time in the current system that it’s common for bills to pass nearly unread by those voting on them. Thus, not time.

    If we were concerned about “expertise,” then we would appoint or elect clear experts to govern. Yet we do not. Most legislators are lawyers, successful businesspeople, a few are doctors or former professors, with the occasional celebrity tossed in. The vast majority are not known for the expertise in the areas overseen by their committees. They are not widely cited for their intellectual capacity or brilliance. Thus not expertise.

    So why do we elect or appoint mostly wealthy white men who tend to have gone to Harvard, Yale or other Ivy League institution? Even the minorities tend to be at least stamped with seal of Ivy League approval.

    Certainly when you consider what characteristics unite our current governing class, markers of wealth, a certain narrow range of schools, and a dollop of charisma appear to be it. Why these people? Isn’t because these folks are high-status?

    We bemoan the effectiveness of our legislators, yet incumbents are routinely re-elected. Why? The system of government rewards long-serving legislators with more and more powerful committee positions. Thus the longer the legislator serves, the more powerful and high status he becomes. But still, he is not much more effective at getting things done – certainly few voters could tell you the track record of their legislator. But they re-elect him anyway. Why?

    Isn’t it because they enjoy being represented by a powerful high-status committee chair? In fact didn’t we see this clearly in Connecticut, where altho’ few appeared to actually approve of J. Lieberman’s political positions, he was after some drama re-elected – based on his powerful committee position, yes?

  • Doug S.

    My Congressman is just fine. It’s all those other guys that aren’t any good! ;)

  • Mike

    I don’t doubt that people seek status by affiliation, and although I gave counter-rationale in a previous comment, I agree this is nevertheless a major factor in choice of college.

    Yet I think you are stretching it. Consider this: a person wants to buy a HDTV, and they have many options. Many people buy the Sony (or another major brand name) even though there are plenty of other options that are cheaper. At the store, one can even compare the pictures side by side. Do they do this because they want to elevate themselves by association with the prestige of Sony? I don’t think so. I think they are mindful of the long-term operation of the TV, and they simply trust Sony Corp. more than a company they never heard of. Now, if they read and trust Consumer Reports, and Consumer Reports recommends a brand they never heard of, they might now go with that instead of the Sony, because they now have more information to inform the decision.

    I think the same applies to hospitals and doctors. Without knowing anything else, one goes for the affiliation one recognizes (and prefers the more prestigious affiliation), because one trusts the reputation. If one is given more information (like personal anecdote from someone they trust, or a careful analysis by someone or some institution they trust), then they might choose otherwise.

    Also the same for academic advice. If you don’t know anything about an academic subject, one trusts most the commentary of academics with the most prestigious affiliations. If one knows more, one uses that information to inform who to listen to and who not.

    I think some of the other examples fall in line with this.

    Now, I’m not saying this trust in reputation is always warranted. As you are aware, one might trust a person who makes a living managing investments would do better than an index; yet most of they time one would be wrong. Perhaps one is wrong when one assumes the Sony HDTV is more likely to be higher quality than the unheard-of brand. My point is just that I think this has much more to do with trust than with seeking prestigious affiliation.

  • asdf

    I think most of the examples are better explained not as people trying to gain status through affiliation with high-status individuals, but as people believing that status is the best indicator they have for the qualities or outcomes that they really care about (making money, having a successful operation, improving the economy or covering my ass if things don’t improve, etc.).

    In the macro scenario, for example, it’s more plausible that advisors are selected because the selector thinks that high-status is the best indicator of success. Likewise for the doctor example. Perhaps the patient (justifiably in some cases) thinks there are confounding factors in success rate stats, or maybe he just doesn’t trust numbers. Similarly, people don’t choose heroic fund managers because they think there will be a status transfer. They do it because they don’t trust academic measures and statistics, and they think that status is the most likely predictor for success.

    Most people believe “numbers are bunk, reasoning is for eggheads, and status reflects ability and is the best predictor for success.”

  • http://profile.typekey.com/1227585392s27146/ Philip Goetz

    I think you’ve got a wide mix of different phenomena here.

    “Investors prefer actively managed funds that lose on average.”

    As someone else observed, this is probably a matter of people wanting someone to be in charge. You dismissed this as “feeling flattered by picking an affiliation with a smart manager”. I don’t think that’s what’s going on at all. When I used to work in artificial intelligence, the resistance people put up against using AI was incredible. Even if you could make a very strong case, as in air traffic control, that using AI would save many lives, billions of dollars per year, a lot of fuel, and a lot of time, most people just hated, hated, hated the idea, and would reject it firmly and finally with less than a second of thought. How much more would they reject the “null AI” of a non-managed fund?

    “Homeowners don’t give good money incentives to real estate brokers.”

    I don’t understand this one.

    “Students prefer distracted profs who grade and recommend corruptibly.”

    Students prefer famous colleges because they are consciously aware of how many tangible benefits they’ll get from its status. This is different from cases where it happens subconsciously.

    “Patients prefer docs with prestigious affiliations over health success rates.”

    Pre-now, prestige was the best indicator of track record. Even today, you have no way of inspecting the track record of a doctor.

    There is conflation of association with status, and status as a cue to competence. Historically, status may have usually been the only cue to competence available.

  • billswift

    Students prefer distracted profs who grade and recommend corruptibly.
    Voters far prefer representatives over direct democracy
    – Are better explained by simple laziness.

    Voters far prefer representatives over random selection.
    Donors prefer to picking grantees, over giving prizes to whoever succeeds.
    Investors prefer actively managed funds that lose on average.
    – Are better explained by “the delusion of control”. Like college admissions thinking they could do a better job picking candidates by multiple criteria than using test scores alone, and being wrong.

  • http://profile.typekey.com/robinhanson/ Robin Hanson

    I just added to the post.

    Jess, it is the random selection option that could most clearly be expanded greatly relative to choosing representatives.

    Mike and Philip, but docs with more prestigious affiliations are not healthier.

    Philip, resistance to AI air traffic control sounds interesting.

    Bill, why “better”?

  • Douglas Knight

    asdf:
    Most people believe “numbers are bunk, reasoning is for eggheads, and status reflects ability and is the best predictor for success.”

    That bears repeating.
    But how can one distinguish it from RH’s scenario?

  • Michael Bishop

    Since status-seeking has negative externalities it would make sense to tax it. This is difficult to do directly, but a progressive consumption tax would help.

  • billswift

    “Better” because simpler and more direct. There is no need to come up with convoluted “explanations” for these when simpler and more direct explanations are adequate.

    I’m not claiming status-seeking has no influence on these, but status-seeking influences almost everything neurotypicals do, it just doesn’t seem likely that it is the most important influence on these particular behaviors.

  • http://profile.typekey.com/halfinney/ Hal Finney

    One thing to note is that although people may have an instinctive feeling that affiliations like these will increase their status, actually they do not, for the most part. Yes, there are some cases where you can say “I voted for Obama” or “I went to the Mayo Clinic” and perhaps gain some status, but just having voted for a congressman or having a doctor with a good diploma doesn’t confer much status at all.

    In tribal days, affiliations with the big boss or other VIPs really made a difference, but in our society those instincts don’t do us much good. And as in many of these examples, they just get in the way of potentially desirable institutional change.

    Whenever I hear about an irrationality, I always have the same, first instinctive thought: How can I make money off of this? Usually I can’t think of a way, or else there’s already a thriving industry built around it, like insurance or gambling.

    So how can you make money out of people’s mistaken belief that they gain status by affiliating with high-status individuals, even when the affiliation is rather remote and they are just one of millions participating?

  • frelkins

    @Hal

    So how can you make money out of people’s mistaken belief that they gain status by affiliating with high-status individuals, even when the affiliation is rather remote and they are just one of millions participating?

    Steve Jobs is the master at this, of course. Try showing off your Zune instead of your iPhone. The industry associated with this is called “marketing.”

  • http://profile.typekey.com/sentience/ Eliezer Yudkowsky

    Is the desire to gain status by affiliation an overwhelmingly powerful urge that overrides our better knowledge? Or is it just that high-status affiliation is the only emotionally native feeling we can comprehend, while all the statistics just seem like numbers on paper?

  • http://profile.typekey.com/robinhanson/ Robin Hanson

    Eliezer, while hardly overwhelming it is stronger than we want to admit, and we commonly let it win even when we can comprehend other relevant considerations.

    Bill, I don’t see how this is more convoluted than the explanations you suggest.

  • Doug S.

    So how can you make money out of people’s mistaken belief that they gain status by affiliating with high-status individuals, even when the affiliation is rather remote and they are just one of millions participating?

    Celebrity gossip magazines?
    Product endorsements?
    Charge admission?

  • Matthew Hammer

    You might consider this idea in terms of near/far bias, as you are essentially suggesting that the great mass of socially distant people are governed by a stable trait (status seeking) over a wide range of different contexts.

    That should give you pause when dismissing detailed accounts that don’t generalize over the whole class of activities.

  • here comes everybody

    mentioning that you were treated by a high status doctor will not improve your rank within most sub-communities. such things have limited ‘social currency’: they are very rarely assigned much weight when determining intra-group rank. if someone cannot demonstrate or signal social value through an affiliation it seems unlikely status motivated them to seek it out.

    the simplest explanation is that patients assume status represents quality.

  • http://profile.typekey.com/SoullessAutomaton/ a soulless automaton

    I don’t see any reason to assume that status affiliation behavior bears any resemblance to rational methods of actually increasing one’s own status in modern society; people may take irrational methods of reaching unacknowledged, irrational goals. A matryoshka model of irrationality, one could say. Status affiliation would have made more sense in a tribal environment, however, likely bringing the whole thing into the realm of an irrational heuristic with semi-optimal results.

    The other viable explanation is, of course, that people will accept status as a proxy substitute for almost any other metric, especially metrics that are more difficult to evaluate quickly. It’s not clear that this is actually a bad first-order approximation, either.

    The two models are not necessarily contradictory and assuming one probably fully explains the other. I’m not sure how one would tell the difference.

  • http://profile.typekey.com/robinhanson/ Robin Hanson

    Matthew, any theory of common social phenomena is a “far” theory. Are you suggesting we should give up on social science?

    here, see here.

    soulless, if there is an ancient to modern error I think it is more likely to be in what folks are credited status for, rather than how people react to the crediting of others. It seems to me that people do in fact get higher status from the affiliations I describe; it is less clear if others should be granting them status for these affiliations.

  • http://profile.typepad.com/SoullessAutomaton a soulless automaton

    I don’t dispute that people do get some status from these affiliations; I just don’t expect it to be much or to have wide-ranging influence. i.e., people who already know the individual in question may be slightly impressed but it won’t broadly impact that person’s wider social standing.

    To clarify, these kinds of affiliation are typically unidirectional and observers will likely note this and discount the affiliation effect strongly, while the person seeking status affiliation will, from their own perspective, only see that they’ve gotten closer to a person of high status. To use a more direct example, the fact that you (the blog owner) replied directly to me (an obscure commenter) is more likely to push my subconcious status affiliation reward buttons than it is to actually change my perceived status among other commenters on the blog. For this reason, people will seek status affiliation out of proportion to the actual status benefit they gain from it.

    I’m not sure that arguing what people should grant status for would be fruitful. I expect that the affiliation effect in particular is a biologically-driven bias, not a cultural one; though I could certainly be wrong.

  • Matthew Hammer

    No, I’d prefer not to give up on Social Science.
    That said, it seems that you are over-generalizing. Status seeking may be a significant element of some of these activities, while still being a minor factor in others. Likewise there are no doubt individuals engaged in each activity who are significantly influenced by status affiliation, but how explanatory is the idea over the broad mass of people?

    Given the temptation to buy into a bold, simple theory of wide applicability I think we need a higher ratio of evidence to anecdote.