Monthly Archives: November 2011

Accepted Inequality

By Robin Hanson · November 11, 2011 8:40 am · Comments (29)

David Brooks reviews socially acceptable vs. unacceptable ways to display one’s superiority. Some accepted forms:

Academic inequality is socially acceptable. It is perfectly fine to demonstrate that you are in the academic top 1 percent by wearing a Princeton, Harvard or Stanford sweatshirt. …

Fitness inequality is acceptable. It is perfectly fine to wear tight workout sweats to show the world that pilates have given you buns of steel. These sorts of displays are welcomed as evidence of your commendable self-discipline and reproductive merit. …

Sports inequality is acceptable. It is normal to wear a Yankees jersey, an L.S.U. T-shirt or the emblem of any big budget team. The fact that your favorite sports franchise regularly grounds opponents into dust is a signal of your overall prowess. …

Technological inequality is acceptable. If you are the sort of person who understands the latest hardware and software advances, who knows the latest apps, it is acceptable to lord your superior connoisseurship over the aged relics who do not understand these things. (more; HT Tyler)

A world that disapproves of most all superiority displays could be one with a distaste for overt inequality, and sympathy for the less fortunate. In contrast, a world that disapproves of only some superiority displays while relishing others looks more like a world where folks with some types of excellence have won a battle to be seen as higher status than folks with other types of excellence.

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Fear Causes Trust, Blindness

By Robin Hanson · November 10, 2011 2:30 pm · Comments (21)

Three years ago I reported on psych studies suggesting that we trust because we fear:

High levels of support often observed for governmental and religious systems can be explained, in part, as a means of coping with the threat posed by chronically or situationally fluctuating levels of perceived personal control. (more)

New studies lay out this process in more detail:

In the domain of energy, … when individuals [were made to] feel unknowledgeable about an issue, participants increasingly trusted in the government to manage various environmental technologies, and increasingly supported the status quo in how the government makes decisions regarding the application of those technologies. … When people felt unknowledgeable with social issues, they felt more dependent on the government, which lead to increased trust.

When they feel unknowledgeable about a threatening social issue, … [people] also appear motivated to avoid learning new information about it. … In the context of an imminent oil shortage—as opposed to a distant one—participants who felt that the issue was “above their heads” reported an increased desire to adopt an “ignorance is bliss” mentality toward that issue, relative to those who saw oil management as a relatively simple issue.

This effect … is at least partly due to participants’ desire to protect their faith in the capable hands of the government. Among those who felt more affected by the recession, experimentally increasing domain complexity eliminated the tendency to seek out information. These individuals avoided not only negative information but also vague information, that is, the types of information that held the potential (according to pretesting) to challenge the idea that the government can manage the economy. Positive information was not avoided in the same way. (more)

I (again) suspect we act similarly toward medicine, law, and other authorities: we trust them more when we feel vulnerable to them, and we then avoid info that might undermine such trust. It is extremely important that we understand how this works, so that we can find ways around it. This is my guess for humanity’s biggest failing.

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When See Solar?

By Robin Hanson · November 9, 2011 2:20 pm · Comments (22)

Paul Krugman:

Progress in solar panels has been so dramatic and sustained that … prices adjusted for inflation [have been] falling around 7 percent a year. … If the downward trend continues — and if anything it seems to be accelerating — we’re just a few years from the point at which electricity from solar panels becomes cheaper than electricity generated by burning coal. And if we priced coal-fired power right, taking into account the huge health and other costs it imposes, it’s likely that we would already have passed that tipping point.

Joshua Gans responds:

According to Ramez Naam in Scientific American, the cost of solar photovoltaic models has been falling at an exponential rate since 1980. Installation costs have been falling too. So much so, in fact, that in a decade, solar would outperform the average kilowatt energy cost in the US. A decade after that and it will be approaching the cheap baseload fuels.

Tyler Cowen responds:

If a solar breakthrough is now likely, in which market prices do we see it reflected? It is true that fossil fuel prices took a steep tumble in the last few months, but I’ve never heard anyone suggest that price plunge had to do with a forthcoming solar revolution. … Those shale oil and natural gas discoveries … will further raise the bar against solar power. … Is there a bubble in the stock prices of solar power specialists?  What’s the total market cap of companies selling solar panels?  Or is there a bubble in the share prices of companies which supply cheap and reliable power storage?  The evidence on these points seems weak to say the least.  Keep in mind that other countries can make the switch even if you think political conspiracy will prevent it here. …Is there any reason, based in industry-wide market prices, to be optimistic about the near-term or even medium-term future of solar power?  I don’t see it.

(I posted on this in March.)

When solar is cheaper than coal or oil, that will include the cost of supporting infrastructure, such as building power plants. But since we’ll still have lots of old plants and infrastructure, we’ll still use a lot of carbon. And since places vary in the relative attractiveness of using carbon or solar power, we may even build more carbon plants after that point. Solar getting cheaper than carbon would show up in a gradual fall in global investment in coal infrastructure relative to an alternative still-full-carbon history, and a gradual rise in investment in solar infrastructure.

A transition driven by price lines crossing in twenty years would have very little impact on current stock or commodity prices. At ordinary discount rates used for business investment, returns after twenty years hardly matter. And changing tech and business conditions make today’s top solar firms a poor vehicle for investing in a transition twenty years hence. Of course current stock prices would probably show signs of a price-line crossing if investors expected it to happen in five years. So that scenario can probably be excluded.

This is one of the reasons we could really use long term prediction markets, to more clearly see our distant future. They only require that enough folk care enough about that future to pay to create and subsidize such markets. Alas, few care.

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The Future Of Lies

By Robin Hanson · November 7, 2011 6:30 pm · Comments (19)

The Economist says lie-detectors bring “disaster”:

The truth of the matter—honestly—is that this would lead to disaster, for lying is at the heart of civilisation. … Homo sapiens has turned lying into an art. … The occasional untruth makes domestic life possible (“Of course your bum doesn’t look big in that”), is essential in the office (“Don’t worry, everybody’s behind you on this one”), and forms a crucial part of parenting (“It didn’t matter that you forgot your words and your costume fell off. You were wonderful”). … The truly scary prospect … speaking truth to power would no longer be brave: it would be unavoidable. (more)

Me-thinks they exaggerate. Yes, humans were designed for an environment between the extremes of complete transparency and complete opacity. Our ancestors got away with some but not all lies. But in the last few centuries humans have adapted reasonably well to more opaque environments. New transparency techs may just bring back forager levels of social visibility, levels to which humans are already quite well adapted.

In the modern world, people often interact with others about whom they know far less than their forager ancestors knew, and with far greater abilities to consciously manage appearances. For example, when firms and nations now deal with each other, they can often spend days thinking about their next response, and have large teams studying what that response should be. And yet it mostly works out ok.

Good lie detector tech might just bring us back to forager levels of social transparency. Clever gadgets which can read our micro expressions or subtle features of our tone of voice may just tell us the sorts of things that foragers could see because they studied the same few dozen folks their entire lives, and gossiped endlessly about their behavior and (poker-like) tells. For those of us now used to farmer and industry levels of social opacity, this transparency might take some getting used to. But it is likely well within the range of human adaptability.

The more interesting question to me is what happens when we have both kinds of tech, say face readers to show subtle micro expressions but also masks to block such reading. Voice readers to read subtle tones and voice modifiers to hide such tells. Which techs will we actually deploy?

On the one hand, we might expect people who are socially close, such as families or teams, to encourage internal transparency and discourage opacity aids. This might be seen as a sign of trust and a basis for close coordination. If you want to keep hiding things from me, maybe I should worry about what you are trying to hide.

On the other hand, we expect continued aggressive use of ways to manage appearances between distant less trusting organizations. I just don’t see big firms and nations agreeing to forego their many abilities to manage their appearances. And since the folks participating in such interactions would have high status, e.g., diplomats and CEOs, then being practiced and skilled in high opacity situations would be a sign of social status. This would encourage more opacity among lesser CEO etc. wannabes.

It seems hard to tell if on the whole they’ll have more transparency or more opacity. The safest prediction, it seems to me, is more variation in social visibility. People will have to be somewhat skilled in dealing both with high transparency and high opacity. And which situations should be which may well be a matter of great dispute.

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More Random Hypocrisy

By Robin Hanson · November 6, 2011 8:45 am · Comments (10)

In January I complained that Robert Kurzban’s book on hypocrisy focused most on an accident theory, namely:

The human mind consists of many specialized units. … While these modules sometimes work together seamlessly, they don’t always, resulting in impossibly contradictory beliefs.

Leo Katz has a new book that also explains legal hypocrisy as mainly accidental. He says that when we make decisions based on multiple considerations, each consideration is like a voter in our minds. So just as there can be voting cycles where A beats B beats C beats A, our minds can similarly have non-transitive preferences. As a result our choices depend on how they are framed. When the law does this, it leaves legal loopholes that clever lawyers can exploit.

Katz presents his theory as an alternative to:

The misguided idea … that we have loopholes because it is very hard to get laws right, … that is, … writing them in such a way that the law’s language exactly reflects its underlying purpose. (more)

Katz concludes that lawyers shouldn’t at all feel guilty about taking advantages of legal loopholes that appear to evade the law’s purpose, because, hey, there is no coherent purpose. He also excuses evading the laws of God as well as of men, as apparently one can’t expect God to be any more coherent than men, and he excuses trying to lie to associates indirectly rather than directly. It’s all good he says, no need to feel guilty.

Katz doesn’t even appear to consider the possibility I favor, that we are often designed to be hypocritical, to appear to support and follow social norms while actually evading them. Even so, Katz gives many nice examples of hypocrisy, legal and otherwise: Continue reading "More Random Hypocrisy" »

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Honesty Via Distraction

By Robin Hanson · November 5, 2011 3:50 pm · Comments (11)

From Triver’s book Folly of Fools:

When a person is placed under cognitive load (by having to memorize a string of numbers while making a moral evaluation), the individual does not express the usual bias toward self.  But when the same evaluation is made absent cognitive load, a strong bias emerges in favor of seeing oneself acting more fairly than another individual doing the identical action. This suggests that build deeply in us is a mechanism that tries to make universally just evaluations, but that after the fact, “higher” faculties paint the matter in our favor. (p.22)

This suggests an interesting way to avoid bias – make judgements fast under distracting cognitive load.

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Fixing Election Markets

By Robin Hanson · November 4, 2011 10:00 am · Comments (11)

One year from now the US will elect a new president, almost surely either a Republican R or a Democrat D. If there are US voters for whom politics is about policy, such voters should want to estimate post-election outcomes y like GDP, unemployment, or war deaths, conditional on the winning party w = R or D. With reliable conditional estimates E[y|w] in hand, such voters could then support the party expected to produce the best outcomes.

Sufficiently active conditional prediction markets can produce conditional estimates E[y|w] that are well-informed and resistent to biases and manipulation. One option is to make bets on y that are called off if w is not true. Another is to trade assets like  ”Pays $y if w” for assets like “Pays $1 if w.” A basic problem this whole approach, however, is that simple estimates E[y|w] may reflect correlation instead of causation.

For example, imagine that voters prefer to elect Republicans when they see a war looming. In this case if y = war deaths then E[y|R] might be greater than E[y|D], even if Republicans actually cause fewer war deaths when they run a war. Wolfers and Zitzewitz discuss a similar problem in markets on which party nominees would win the election:

It is tempting to draw a causal interpretation from these results: that nominating John Edwards would have produced the highest Democratic vote share. …The decision market tells us that in the state of the world in which Edwards wins the nomination, he will also probably do well in the general election. This is not the same as saying that he will do well if, based on the decision market, Democrats nominate Edwards. (more)

However, this problem has a solution: conditional close-election markets — markets that estimate post-election outcomes conditional not only on which party wins, but also on the election being close. This variation not only allows a closer comparison between candidates’ causal effects on outcomes, but it is also more relevant to an outcome-oriented voter’s decision. After all, an election must be close in order for your vote to influence the election winner.

To show that conditional close markets estimate causality well, I’ll need to get technical. And use probability math. Which I do now; beware.

Continue reading "Fixing Election Markets" »

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Status Drives Poverty?

By Robin Hanson · November 3, 2011 2:00 pm · Comments (24)

A book on poor single moms, discussing why moms break up with guys:

Conflicts over money do not usually erupt simply because the man cannot find a job or because he doesn’t earn as much as someone with better skills or education.  Money usually becomes an issue because he seems unwilling to keep at a job for any length of time, usually because of issues related to respect.  Some of the jobs he can get don’t pay enough to give him the self-respect he feels he needs, and others require him to get along with unpleasant customers and coworkers, and to maintain a submissive attitude toward the boss. (more; HT Bryan)

I suspect much of what makes some cultures more successful than others is how they help folks to avoid seeing unpleasant interactions as direct challenges to their status.

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Official Optimism

By Robin Hanson · November 2, 2011 8:30 am · Comments (14)

Governments consistently overestimate their future budgets:

Analyzing data for 33 countries, Frankel finds that the average upward bias in the official forecast of the budget balance, relative to the realized balance, is 0.2 percent of GDP at the one-year horizon, 0.8 percent at the two-year horizon, and 1.5 percent at the three-year horizon. The longer the horizon, and the more genuine uncertainty there is, the more scope there is for wishful thinking. The bias is not larger for the commodity producers, … or for the developing countries, than for others. …

Over-optimism in predicting growth appears linked to over-optimism in predicting budget balances. On average, the upward bias in growth forecasts is 0.4 percent when looking one year ahead, 1.1 percent at the two-year horizon, and 1.8 percent at three years. The bias in growth forecasting appears in the United States and most other industrialized countries, but not among the commodity producing countries in the sample. …

Over-optimism is more prominent, for both budget balances and for economic growth, during economic booms. …. Countries subject to a budget rule … make official forecasts of growth and budget deficits that are even more biased and more correlated with booms than do other countries. Evidently when such governments exceed the deficit limits set by the rules, they respond by adjusting their forecasts rather than by adjusting their policies …

As a result of budget institutions created in 2000, Chile’s official forecasts of growth and of budget balance have not been overly optimistic, even in booms. (more)

The key institutional innovation [in Chile] is that there are two panels of experts whose job it is each mid-year to make the judgments, respectively, what is the output gap and what is the medium term equilibrium price of copper, rather than leaving the job to government officials. …. A reinforcement of the Chilean idea would be to give the panels legal independence. There could be laws protecting them from being fired, as there are for governors of independent central banks. (more)

Prediction markets forecasting budget balances and growth rates would be easy, and they’d reliably resist political pressure for overly optimistic estimates. So why even bother with trying to figure out how to design expert panels that can remain both expert and independent? Either Frankel naively thinks this easy, he is ignorant of the market solution, or doesn’t really want to promote accurate budget estimates.

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Open Thread

By Robin Hanson · November 1, 2011 1:35 pm · Comments (29)

This is our monthly place to discuss relevant topics that have not appeared in recent posts.

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