Category Archives: Status

Spent = Gold + Schlock

On Sunday I reviewed Frank's Luxury Fever, which advocated taxing "conspicuous" relative to "inconspicuous" consumption.  I noted:

Frank offers no evidence whatsoever that the activities he dislikes and wants to tax in fact cause more inefficient status-seeking than the activities he likes and wants to subsidize.

But soon after I reported on data others have collected on this, and summarized their implications for policy.  This morning I gave the main argument from Geoffrey Miller's new book Spent

  1. Signaling infuses most human activity.
  2. Consumer capitalism marketers trick us into using unreliable signals.
  3. We'd be better off to talk and customize more, and work and buy less.
  4. Laws aren't the answer; let's make better social norms.
  5. Let's also adjust a consumption tax to compensate for side effects.

On point 1, I completely agree; Miller's detail here is golden; spectacular really.  And points 4 and 5 make a lot of sense.  But points 2 and 3 are, alas, schlock.

Frank and Miller seem to dislike pretty much the same activities, but while Frank complains that we use them to "conspicuously" show off, Miller admits pretty much everything we do shows off.  Miller complains instead that showing off via purchases is "redundant" and "misleading" and not as "efficient," "rich," and "unique" as other ways to show off. 

Yet like Frank, Miller offers no evidence whatsoever that the signals he wants to discourage cause more inefficient harm than the signals he wants to encourage.  Specifically, Miller offers no evidence that:

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Spent‘s Main Argument

Geoffrey Miller's The Mating Mind is probably the one book that has most influenced my thinking.  So I'll honor Miller by taking several posts to discuss his new book, Spent.  Yesterday I reviewed its predecessor, Robert Frank's Luxury Fever.  Today I give Spent's main argument, in Miller's own words:

1) Signaling infuses most human activity:

We are social primates who survive and reproduce largely through attracting practical support from kin, friends, and mates.  We get that support insofar as others view us as offering desirable traits that fit their needs.  Over the past few million years we have evolved many mental and moral capacities to display those desirable traits.  Over the past few thousand years, we have learned that these desirable traits can also be displayed through buying and displaying various goods and services in market economies. (p75)

2) "Consumer capitalism" marketers trick us into using unreliable signals:

The standard self-display strategy in most developed societies is to seek the highest-paying full-time employment permitted by one's intelligence and personality, and to use the resulting income to buy branded goods and services at full retail price. … As a self-display strategy, it is very inefficient. … Almost every other way of acquiring and displaying human artifacts or experiences sends richer signals about one's personal qualities. (p257) …

Buying new, real, branded, premium products at full prices from chain-store retailers is the last refuge of the unimaginative consumer, and it should be your last option.  If offers low narrative value – no stories to tell about interesting people, places, and events associated with the product's design provenance, acquisition, or use. It reveals nothing about you except your spending capacity and your gullibility, conformism, and unconsciousness as a consumer.  It grows no physical, social, or cultural roots into your local environment.  It does not promote trust, reciprocity, or social capital.  It does not expand your circle of friends and acquaintances.  It does not lead you to learn more about the invention, manufacture, operation, or maintenance of the things around you. … The alternatives listed above try to minimize retail spending not just to save money, but to maximize trait display power. (p270) …

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Against Makeup?

Though yesterday I complained:

[Robert] Frank offers no evidence whatsoever that the activities he dislikes and wants to tax in fact cause more inefficient status-seeking than the activities he likes and wants to subsidize.

A few hours later I reported that others have published evidence on which particular goods and activities induce more inefficient status efforts. So now the key question is:

Will folks like Frank consistently apply these results to recommend taxes or subsidies to reduce wasteful positional effort, wherever such waste may lie, or will they selectively cite only results favoring pre-existing political positions?

Some policy implications of this data on positional effects seem easy for folks like Frank to swallow.  While our evidence so far is tentative, it does seem to support subsidizing health, including air quality and device safety (though not necessarily medicine if it has little relation to health).  It also supports subsidizing insurance more generally; bads being less positional than goods gives a new reason to avoid inequality from bad outcomes, such as crime.  Our evidence also supports taxing work relative to leisure, though since we already have large taxes just like this, this evidence does not obviously support larger work taxes.

Many other policy implications, however, seem much harder for Frank to swallow.  Since sport effort seems especially positional, should we tax sports, instead of subsidizing them as we often do now?  Since education seems to be at least as positional as income, should we drastically reduce educational subsidies, or even tax it?  And since government spending seems far more positional than income, shall we greatly reduce our unprecedented levels of such spending? 

Perhaps Frank would suggest that other compensating side effects justify vast government spending as well as sport and education subsidies.  But what about personal beauty, which our evidence suggests is one of our most positional goods?  Yes, exercise also improves health, but it is very hard to see any large compensating side effects justifying makeup, hairdressing, and nice clothes.  Will folks like Frank at least agree that severely taxing beauty aids is one of the clearest policy implications of our evidence on positional effects?

Also, we observe a huge amount of variation in who sees what to be how positional.  This suggests that perhaps policy can influence this distribution of envy.  Shouldn't it be a top priority to find ways to influence folk's attitudes toward the gains of others, so that they don't feel as envious of such gains?

Added 19May: Actually the wording of these surveys has them capturing folk's expectations about all side effects created by these choices. So it is mostly side effects of which these folks were unaware that could compensate for these results.

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Mea Culpa: Positionality Data

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Earlier today I said about Luxury Fever:

Frank offers no evidence whatsoever that the activities he dislikes and wants to tax in fact cause more inefficient status-seeking than the activities he likes and wants to subsidize.

While that was true of that book, I wondered if Frank had offered evidence elsewhere.  I didn’t find any mentioned in a half dozen academic articles I read at his website, but searching more widely I found four articles with data on comparative positionality. 

In Economica in 2007, Carlsson, Johansson-Stenman and Martinsson reported:

Based on a random sample in Sweden, income and cars are found to
be highly positional, on average, in contrast to leisure and car safety.

In the Journal of Economic Behavior and Organization (JEBO) in 2005, Alpizar, Carlsson, and Johansson-Stenman reported:

Goods widely considered positional, like houses and car ownership, are also found to be more positional than goods typically seen as non-positional, such as vacation and insurance. Income is in between. … Positionality is considerable also for vacation and insurance. … Women care more about relative income and consumption than men do. … Students majoring in economics, law, and social sciences tend to make more positional choices than … technology, natural sciences, and other subjects.

In the American Economic Review in 2005, Solnick and Hemenway reported:

We did not find any significant influence of age, gender or income. … Goods (e.g. eat out at a restaurant, playgrounds in the neighborhood) were more positional than bads (e.g. unpleasant dental procedures, potholes in your neighborhood). … Subjects were more likely to make positional choices for public goods than for private goods. … Health and safety issues were among the least positional.

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Luxury Fever

I'll start discussing Geoffrey Miller's new book Spent soon.  But first let me review its main predecessor: Robert Frank's book Luxury Fever, from 2000. Miller on Frank:

I owe Gad Saad and Robert Frank a great debt for their groundbreaking work. … Frank's reasoning, like mine, is that many purchases function as positional goods that display one's wealth, status, or personality traits rather than yielding true happiness benefits or fitness payoffs to the purchaser. … All my arguments are highly supportive of Robert Frank's proposal for a progressive consumption tax. (p27,312)

Frank begins Luxury Fever complaining about $5000 barbecue grills, whose main purpose he presumes is to show off how much money its owners can spend.  Frank wants to discourage "conspicuous" rather than "inconspicuous" consumption: 

If we all lived in smaller houses, or drove less expensive cars, we could all take more weeks of vacation each year. … Vacations offer the opportunity to see new places, visit with distant relatives and friends, take up a new sport, read books, lie on a beach, hike in the wilderness. ….

The degree to which workers enjoy autonomy and choice with respect to which tasks they do and the manner in which they perform them. … Workers tend to find greater satisfaction in jobs that provide greater opportunities to make use of their skills. … Job satisfaction increases with the variety of tasks workers are called on to perform. … If pay were the same, people would choose safe jobs over risky ones, quiet jobs over noisy ones; jobs with convenient parking over those without; jobs with security over those without; and so on.

What … I call "inconspicuous consumption" – freedom from traffic congestion, time with family and friends, vacation time, and a variety of favorable job characteristics.  In each of the examples discussed, the evidence suggests that subjective well-being will be higher in the society with a greater balance of inconspicuous consumption. 

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We Like Pride

A recent Psychological Science article describes experiments where subjects were randomly induced into either an proud or a neutral mental state, and then worked with a group on solving a problem:

Proud individuals not only took on a dominant role within the group problem-solving task, but also were perceived as the most likeable interaction partners. These findings suggest that pride, when representing an appropriate response to actual performance (as opposed to overgeneralized hubris), constitutes a functional social emotion with important implications for leadership and the building of social capital.

This seems a somewhat odd conclusion to draw, since in this experiment the pride was not an appropriate response to actual performance; it was randomly induced! 

Nevertheless, this does seem to confirm pride as a signal of social status.  We like folks who signal high status, except if they are a rival or we think they are bidding for more status than they can support. 

Added: This NYT article from a month ago reviews this and other pride studies.

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Prestige Matters More For Smarts

There are many kinds of attractive attributes of people.  Some of these attributes, such as height, youth, beauty, or strength, are relatively easy for most anyone to observe.  Other attributes, such as cleverness, insight, or artistic judgment, are harder to observe.  In particular, people who have such hard-to-see attributes can usually better discern those attributes in others. 

If this were the end of it, hard-to-see attributes would just be less valuable, all else equal, in attracting mates and allies.  After all, hard-to-see attributes would then only be useful in attracting people with similar abilities, and those similar others would on average have more options.

But this analysis misses the possibilities of prestige and status.  Social institutions can let people translate their hard-to-see abilities into much easier to see prestige and status.  For example, other smart people might certify you as smart via an award that everyone can see.  So we should expect people whose best abilities are hard-to-see to focus more than most on achieving prestige, while those whose abilities are easier for all to see to focus more on just directly showing off their abilities.

This roughly explains, I think, an important part of the variation in who cares more versus less about degrees, awards, etc.  From a conversation with Helen Yang.

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Choke To Submit?

An old western movie truism (e.g., my fav Unforgiven) says good gunfighters are mainly those calm enough to aim straight.  This may seem trite, but I can attest that a big success factor in life is just being calm enough to do the obvious when it really matters.  A new Review of Economic Studies paper (ungated here) shows humans really do choke:

To test whether very high monetary rewards can decrease performance, we conducted a set of experiments in the U.S. and in India in which subjects worked on different tasks and received performance-contingent payments that varied in amount from small to very large relative to their typical levels of pay. With some important exceptions, very high reward levels had a detrimental effect on performance.

For example, rural Indians paid 4, 40, or 400 Rupees for doing well on a mental task did much worse when paid 400 (above one month's spending). Subjects did worse when they were watched, but better when the task was mostly physical (just pushing keys). 

So why did humans evolve to choke?  And why are we so terrified of, and bad at, public speaking?  And I've heard:

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Status Prudes

Most people think a lot about sex, and often in relation to the people around them.  In some subcultures it is OK to say most such thoughts out loud, but most societies prudishly discourage sex talk, except in unusual circumstances.  This avoids awkward situations, but also forces people to use weaker clues to infer folks' sexual interests. 

Societies also vary in how "prudish" they are about status talk.  Social status, a shared perception of individual quality, is central to every society.  In some societies, like high school or the ghetto culture as depicted on The Wire, it is mostly OK to directly jockey for status; you can tell someone you are better than them, or that they have a loser car.  In contrast "egalitarian" societies  discourage such talk; such jabs must be made indirectly enough to allow plausible deniability.

Now as with sex, discouraging status talk avoids awkward situations; direct status jabs often escalate into challenges and battles.  But this prudishness also reduces the signals people have to infer the social status of others, and this influences what counts for social status; societies vary in the relative weight they put on wealth, beauty, physical power, achievement, awards and degrees, popularity, institutional affiliations, and so on.

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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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