At the risk of getting bogged down in a trivial example, I’m not sure you understand the difference between background noise and life-ruining level. The reason I used this particular example was because my new neighbors, a group of Irish college students, keep me up until 4 AM with their partying, which tends to involve really loud music and getting into semiregular fights. I wear expensive, high-quality earplugs and have a white noise machine on high power, and I still can’t get to bed until 4 in the morning. When I ask them to stop, they threaten to kill me, and they’re obviously drunk enough to try. The police have been by a few times, but it hasn’t helped. I eventually had a choice of failing all of my exams because I can’t stay awake during classes or moving out to a more expensive place (I’m moving on Saturday). I’m just glad I didn’t own the place, or I’d be selling it at a huge loss.

Just because you managed to deal with some traffic okay doesn’t mean anyone else will ever have a legitimate complaint.

Other more powerful examples to get the point across: someone buys the property next to yours and builds a slaughterhouse on it, which smells terrible. Someone buys the property next to yours and builds a bar on it, and every morning you wake up with beer bottles and vomit all over your lawn and the occasional broken window. Someone buys the property upriver from you and dumps industrial waste in the river, turning it green and mildly radioactive.

It’s very easy to tell other people “Oh, just tough it out”, but it doesn’t lead to very happy people or a society anyone wants to live in for very long. As Will points out, the harm principle can certainly be overused, but we can’t scrap anything where we can’t elegantly distinguish legitimate and illegitimate uses.

The reason I thought the Wilkinson quote was incorrect is because visual signals have further reach, as explained in my other comments. The research you linked to merely states that people say they would rather be relatively smart than have relative advantages in some other areas. But that is different than saying that being “smart and funny when we talk” signals as strongly as our car.

Does that make sense?

Sorry that my last comment was so sloppy on this point.

Even without mentioning my skepticism of peer reviewed journal articles (doesn’t GMU host the Econ Journal Watch?), the research you found is moot:

The link to the last paper you gave didn’t work for me, and it’s the only one that claims intelligence is among the most positional goods. However, there is a difference between positional goods (the desire to be relatively better off than others), and using positional goods to signal (the Wilkinson quote discusses signals). I stick by my statement that visible signals are the mostly widely broadcast. There are other signals that may be verbal, but they can only be signaled to people whose attentions are already captivated. You may have gone to Harvard and Oxford, but no one will know it if they aren’t listening to you. Or perhaps you’ve bought a Harvard sweatshirt, in which case the sweatshirt is the positional good of interest, because it is visible. There are other settings of course where education and intelligence is used directly as a positional good for signaling: in job seeking, or when you already have someone’s attention. But note that even in job seeking, it becomes a matter of visibility on the resume.

From another paper you linked to:

A study of the visibility of private goods found that high-visibility goods (as determined by surveying a random sample of Americans), such as clothing, cars and jewelry, have higher total expenditure elasticities than low-visibility goods, such as utilities and home telephone service (Heffetz 2004). Luxury goods tend to be high-visibility goods, perhaps because status-seeking operates best when consumption is visible.

Sounds like that supports my case for visibility.

Also, one more item. In an earlier post, you ask:

Since sport effort seems especially positional, should we tax sports, instead of subsidizing them as we often do now?

In The Winner Take All Society, Frank addresses sports in a few ways. The basic premise of the book is that in an age of low distribution costs (via television, cheap shipping, and presumably the soon-to-explode internet), relatively small differences in talent can reap large rewards for the winners of various competitions (you can think of each “winner” as not a singular winner, but a collection of winners who dominate various industries). It’s easiest to understand in entertainment. The three tenors could record music and sell it around the world, but how much better were they than the fourth best? I’m no expert, but it’s hard to imagine a large discernible difference. The same idea not only easily applies to movies and sports, but any business with global reach (iBankers, CEOs of large companies, top lawyers, etc). He relates this to the tragedy of the commons by suggesting that the products of these competitions don’t get much better when an additional contestant decides to enter; the NBA doesn’t become that much more successful because one more person decides to pick up a basketball and pursue it. However, each person who decides to pursue the riches in the NBA lowers the probability that everyone else with the same dream will make it. People are overconfident in their chances to make it and so too many people decide to compete. Not many will make it into the NBA, and those who do not are now left without useful skills. One reason he favors a heavily progressive consumption tax is to curb the perceived benefits of “winning” these competitions, in hopes that they will pursue more productive activities.

He also points to incentives to use steroids and take other health risks for the potential rewards. And with regard to college sports, he believes that the investment is clearly too large now that the financial benefits of winning are so large for universities. This leads some universities to reap the rewards of their athletic investments while many of the losers regret their investments when they come up short. They’ve also charged ordinary students mandatory fees to subsidize these programs.

He also has a whole chapter on the battle for educational prestige. Perhaps you would be interested in reading the book. I’m not going to take the job to defend all of his positions (and also, he had a coauthor), but just wanted to let you know that he has some opinions that you can find, since you asked.

billswift, do you also think pollution or street crime should just be dealt with? I’m open to the possibility, but I don’t want to be quick in dismissing what seems evidently a loss of utility for many people.

the happiness cost-benefit councils
Reminds me of James Q. Wilson’s Commission on Life Enhancement and Preservation from Bureaucracy.

I work nights. I have arranged things so that I can sleep through the day with traffic, lawn mowers, amd all the other urban noise sources. If I can do that then there is no reason to impose on others who want to have noisy parties or whatever during the night. It’s your problem, you deal with it.

Do you agree that real harms do exist? For example, do you believe there should be some system in place to prevent someone moving into the property next to yours and playing loud music all night long that makes it impossible to sleep?

If so, do you have a clear theoretical underpinning that allows that to be a real harm without also admitting the other harms that Will wants to dismiss as silly? It seems unfair to demand a theoretical basis from people you disagree with without providing one yourself.

“They usually just seek support for pre-existing intuitions.”

Isn’t this the opposite of supporting a pre-existing institution? If you ask the entire population whether not they would support taxes on conspicuous consumption, 50% would say “no” and 50% would be so confused they wouldn’t even understand the question. It seems disingenuous to oppose people seeking a radical reform probably opposed by a vast majority of trying to “support pre-existing institutions” while giving the motives of people who want to support the status quo a pass.

“So I won’t rule taxing such things out of hand.”

This sounds kind of like an attempt to signal impartiality, and thanks to you, I am suspicious of signals nowadays. To cure me of my cynicism, can you link me to some posts where you finally decide to advocate government regulation or taxation of something to solve a controversial problem?

I think the more fun thing would be to have these same people explain how they would structure the happiness cost-benefit councils that would reach conclusions about new products and services. Who would be on the councils? Would it be economists, community representatives, psychologists? (Frank may discuss this; I’ve only read Miller’s book.)

Miller uses the iPod and universities as examples of activities that would not be subject to taxes. But there are good arguments that these are great examples of items that should be taxed. As you and your fellow econbloggers point out again and again, and as Miller notes, high-priced liberal-arts universities might be the most expensive signals in the world. Who gets to decide that Ivy League degrees are not taxed while Ferraris are?