Tag Archives: economics

Economists too thoughtful to be kind

A result the media loves to report is that people who study economics are more likely to react like jerks when asked to respond to game theoretic predicaments like the prisoners’ dilemma. Are economists naturally mean? I can’t rule it out, but I always thought a more likely explanation was that they have just thought about these puzzles ahead of time, and simply respond with a memorised ‘correct’ answer, such as the Nash equilibrium. So I was glad to see this paper in Nature finding that anyone who has a while to think about how to react to these situations also becomes more selfish:

Cooperation is central to human social behaviour. However, choosing to cooperate requires individuals to incur a personal cost to benefit others. Here we explore the cognitive basis of cooperative decision-making in humans using a dual-process framework. We ask whether people are predisposed towards selfishness, behaving cooperatively only through active self-control; or whether they are intuitively cooperative, with reflection and prospective reasoning favouring ‘rational’ self-interest. To investigate this issue, we perform ten studies using economic games. We find that across a range of experimental designs, subjects who reach their decisions more quickly are more cooperative. Furthermore, forcing subjects to decide quickly increases contributions, whereas instructing them to reflect and forcing them to decide slowly decreases contributions. Finally, an induction that primes subjects to trust their intuitions increases contributions compared with an induction that promotes greater reflection. To explain these results, we propose that cooperation is intuitive because cooperative heuristics are developed in daily life where cooperation is typically advantageous. We then validate predictions generated by this proposed mechanism. Our results provide convergent evidence that intuition supports cooperation in social dilemmas, and that reflection can undermine these cooperative impulses.

A take-away would be that if you want someone to cooperate with you, you could put them in a situation where they need to make a decision on the spot. And if you want to come across as a naturally nice guy, go with your cooperative instincts and don’t think too much. Greater selfishness should be expected as a downside to letting people go into a detailed ‘near’ mode, where they concretely reflect on strategic choices and the likely outcomes. Calculation makes you calculating.

What about those brave behavioural economists, sent onto the front lines to study human psychology? Maybe they should ask for extra pay to compensate for the risk their work presents to their personalities.

GD Star Rating
loading...
Tagged as: ,

In the long run, we’re all still exposed to risk

Many of you will be familiar with the fact that past returns from notable stock indices, such as those in the US, are a biased indicator of the likely future returns to investing in equities. The problem is that due to war, government interference, and financial collapse, some stock markets disappeared altogether, wiping out investors. In some countries this has even happened multiple times. Historical stock indices that went to zero tend not to be remembered, and so are under-sampled. The result is ‘survivorship bias‘, a problem that shows up in many other research questions as well. When these defunct investments are put back in the sample, average returns are quite a bit lower than when you look at just, for example, the NY stock exchange.

A lesser known result is that a broader and representative sample of stock histories shows that investing over long time horizons doesn’t reduce the variability of your return. Contrary to convention wisdom, even young savers need to diversity across different assets types and countries in order to get that effect and be confident of retiring in comfort:

“One of the most enduring question in finance is the persistence of investment risk across time horizon. This issue of time diversification is crucial to long-term asset allocation decisions.

There is a widespread view that the longer the horizon, the more investors benefit from investing in equities. Young investors, for instance, are typically advised to allocate more to equities than those whose retirement is imminent, on the grounds that equities are less risky over long horizons. A common rule of thumb is that the percentage of stock allocation should equal 100 minus an investor’s age.

Some researchers claim to have found empirical evidence that equities are less risky over long horizons because of mean reversion. Mean reversion implies that the variance of stock retums does not grow linearly with time, contrary to a random walk. As a result, several authors have claimed that greater equity allocations are justified on the grormds that shortfall risk lessens as the horizon is extended.

This conclusion seems hardly justified. Previous findings of mean reversion have considered seventy years or so of U.S. data. For long-horizon retums, say ten years, this implies only seven truly independent observations, which seems insufficient to support robust conclusions about the risk of ten-year equity investments. The problem is that, with a fixed sample size, the number of efiective observations diminishes as the investment horizon lengthens. Another problem is that markets with long histories may not represent investment risk for reasons of survivorship bias.

One solution is to expand the sample by adding cross-sectional data. We describe the distribution of long-term returns for a sample of thirty countries for which we have long series of equity prices. The empirical evidence expands on the work of Jorion and Goetzmann (1999) and substantially extends results described by Dimson, Marsh, and Staunton (2002), who analyze a century of stock market returns in fifieen countries.

The results are not reassuring. We find no evidence of long-term mean reversion in the expanded data sample. Downside risk declines very little as the horizon lengthens. In addition, U.S. equities appear systematically less risky than equities of other markets.

Mean reversion is analyzed first in terms of variance ratio tests. There is no evidence of mean reversion from variance ratio tests across this sample, taking into account statistical properties of these tests. Furthermore, markets that sufiered interruption displayed mean aversion, or the opposite of mean reversion. Therefore, statistical properties such as high average retums and mean reversion may be an artifact of survival. Probabilities of losses on equities are reduced very slowly, if at all, with the horizon. In fact, shortfall measures such as value at risk (VAR) sharply increase with the horizon.

There is, however, some positive news. Diversification across assets pays. Over this century, a global stock market index would have displayed less downside risk than any single market. The conclusion is that across-country diversification is more effective than time diversification.” (HT Ben Hoskin)

GD Star Rating
loading...
Tagged as: , ,

Is US gun control an important issue?

After the shocking massacre in Connecticut it looks like gun control is going to draw a lot of attention from Obama and Congress this year. This got me thinking about how important gun control might be as a political cause. The potential good achieved by focussing on this policy is in large part determined by the damage done by guns in the first place. In that light, does it deserve it?

A natural measure of the importance of the problem is the number of years of healthy life lost due to gun violence. At  the moment there are a bit over 8,000 murders with firearms each year in the US, some two thirds of the total. If we guess that the typical age of death from gun violence is 30, then the average survivor would have enjoyed another 50 years or so of healthy life. Firearm homicides would than lead to the loss of 400,000 years of healthy life each year. We would then have to add health problems among survivors of gun violence. To confirm that these figures are sensible I looked up the World Health Organisation’s Global Burden of Disease, which suggest ‘intentional violence’ as a whole cost the US and Canada about 1,100,000 years of healthy life each year. Two thirds of this would be 650,000 years, a figure which amounts to about 0.8% of the total burden of disease and injury in the US.

Another even larger problem than murder – at least as far as years of healthy life lost – is suicide. Easy access to guns makes suicide attempts more likely to succeed. The US suicide rate is 12 per 100,000; tragically high, though sadly unexceptional by international standards. If the typical suicide victim would have lived another 45 healthy years, this amounts to an annual burden of 1,600,000 each year, roughly the WHO’s figure. [1]  Firearms are used for about half of these suicides, so we’ll say they have a burden of 800,000 years of healthy life, or about 1% of the total burden of disease and injury.

How much could the US hope to reduce these figures? Of course the relationship between the number of guns and violence is contested, and I don’t really want to get drawn into that debate. I will just assume, for the sake of argument, that gun control policies could indeed help reduce violence. For that purpose, let’s imagine it could get firearm violence and suicide down to the average of other OECD countries. [1] Doing so would reduce the gun death rate (and I will assume injuries too) by 80% from ~10 to ~2 per 100,000. This is wildly optimistic given the other drivers of violence and suicide in the US, and the timidity of any likely gun control laws under the Second Amendment. Even if guns did become hard to access, we would expect to see substitution to other weapons. Nonetheless, it offers a useful upper bound.

An 80% drop in firearm deaths and injuries would prevent the loss of 1.15 million years of healthy life each year, or around 1.4 per cent of all the damage done by disease and injury in the US. This falls inconveniently between ‘very little’ and ‘quite a bit’. How can we put this figure in perspective? One option would be to consider how much people claim to value their lives, while another would be to compare it to other available options for saving lives. Here I will use the latter to give some idea of how focussing on gun control compares to other policies or causes that might improve the health of Americans.

How much does it cost to save a life in the US?  The NHS in Britain conveniently uses £30,000 (around $US50,000) for each year of healthy life as the highest price at which a treatment is worth funding. The US has no central body for making these decisions, so no generic ‘marginal cost’ exists. A conclusion of the classic paper, Five-hundred life-saving interventions and their cost-effectiveness, is that the cost of extending lives varies across several orders of magnitude depending on the approach you take. Nonetheless, many interventions in medicine and general safety fell between $5-50,000 for a year of life, at least in the mid-90s. A quick search turns up vaccination of US girls against HPV, which buys a year of healthy life for about $44,000, total knee arthroplasty for $18,300, HIV screening for under $25,000 and flu vaccination at $8,000-52,000. The availability of all of these could be expanded. At a rounded $50,000 figure, the equivalent of 1.15 million years of healthy life could be saved for $57 billion, or 0.38% of US GDP – a significant sum, though under a fifth of long run annual growth. By comparison, the US Federal Government already spends about 24% of US GDP, and all healthcare spending accounts for some 15%. Based on Robin’s work on the inefficacy of much US healthcare spending, redirecting some of that enormous budget to truly life-saving activities would go a long way.

If American activists or voters currently preoccupied with gun control were willing to look farther afield in their desire to prevent unnecessary death, directing government spending to provide bed nets to protect children in developing countries against malaria could save 30,000 kids for a meagre $70 million, or 0.00000046% of GDP. Sadly, the effectiveness and size of US foreign aid is barely discussed.

Of course this health story is not the full picture of the damage done by gun violence. We ought also consider the:

  • Costs incurred in trying to stay safe
  • Costs of caring for the injured
  • Loss of human capital from adults dying
  • Resulting distress and fear
  • Reduced urbanisation as a result of crime (which lowers productivity, among other things).

I would appreciate attempts to quantify these costs but don’t have time to pursue them myself right now. I would note in passing that many other interventions that improve health and safety would also reduce these harms to some extent.

My interpretation of the above is that gun violence is a serious issue in the US. It is not being blown out of proportion like shark attacks or terrorism. At the same time, the impact of guns on US health-span is modest, and lower than many common and avoidable diseases or accidents which fail to inspire a national conversation. Guns have become a hot issue because of their grisly and visible results, as well as fierce identity politics, rather than the absolute scale of the damage they do. If the main goal of gun control advocates were to save lives, their cause would not stand out as low-hanging fruit, especially if they cared about foreigners as well as Americans. Given the host of major problems facing the US, the limited attention of Congress and the White House, and the improbability of achieving a significant reduction in the number of dangerous weapons available, it is not a cause I would jump on.

[1] Some would say that a death by suicide isn’t as bad as a murder, because someone who is preventing from committing suicide probably has a low quality of life. There is some truth to this but I will ignore it, consistent with my desire to define an upper bound.

GD Star Rating
loading...
Tagged as: , , , ,

US laissez-faire serves a greater global good

Liberals across the developed world are very concerned by inequality within the United States, as demonstrated by global interest in the Occupy Wall Street movement. This is peculiar because poverty within the United States is less common, and less severe, than it is in most countries around the world. The US does have a high level of inequality for a developed country, but it is not extreme by global standards Unfortunately, this disproportionate concern for Americans leads to attempts to narrow income inequality that may increase poverty and inequality worldwide. [1] I’ll explain how.

The US has long been one of the most innovative countries in the world, and exports the technologies it develops everywhere it can. This is, at least in part, due to its relatively cut-throat culture and laissez-faire economic system. Low taxes and ungenerous welfare mean the benefits of working hard, taking risks and making it big, are higher in the US than most other developed countries. More importantly, weaker regulation in the US means incumbents are less protected from competition, and talented people can more easily start new firms and overturn the status quo. Conversely, daring entrepreneurs are less rewarded in countries which redistribute a great deal of wealth to the poor, or build thickets of regulation that unintentionally (or intentionally) slow down disruptive businesses and technologies. While tempering the ravages of the market may on balance improve the welfare of current Americans, doing so is likely to lead to less experimentation in science, equipment, software, art, business models and so on.

Such innovation generates enormous and enduring positive externalities because the successes are copied at low cost across the world and enrich everyone’s lives. Economic theory would predict that coordinating to stimulate more of these costly but invaluable innovations would be a major concern in international diplomacy. But for some reason it is not, and so it is up to individual countries and the people within them to take these risks on behalf of us all.

Miserly social security and weak regulation in America at most harm 0.3 billion people as long as such policies persist; any resulting innovation spillovers help the remaining, poorer 6.7 billion for centuries to come because improvements in technology persist and compound over time. We all continue to benefit from the hard work of those who developed the telephone and prompted the development of an ever-growing number of related products.

This is not to say that the Occupy movement does not have some important points; it is crucial to oppose the US’s many ‘crony capitalist’ policies which enrich the wealthy while also stifling competition and creative destruction. [2] Nor would the ideal necessarily be a minimal government; there is a prima facie case that government investment in education, R&D, natural-monopoly infrastructure, and so on, can spur technological change. Unfortunately, a higher and higher share of US government spending is going to the opposite: the military, Medicare, Medicaid, unemployment benefits and pensions. These programs are not investments in the future, and generate few if any positive spillovers for future Americans and the rest of the world. And because these programs are funded by taxes on the hard-working and successful, they blunt the incentives to invent things that help the whole of humanity.

Anyone who cares about lowering poverty and inequality, and doesn’t believe that American citizens are dramatically more important than everyone else, should think carefully before encouraging the US to follow the European economic model. If the US were go even further and slip into the sclerotic ‘extractive‘ economic model found in most of the developing world and some of southern Europe, it would be a global catastrophe. Resisting any movement in this direction is one way that heartless US conservatives are inadvertently more compassionate than they look.

Update: Turn out I’m I’m not the first person to notice this problem!

Update 2: Many people below doubt whether the US is more laissez-faire, and whether a laissez-faire model does as a general rule foster innovation. If you doubt these things, at least take away the point that whichever policies you think do stifle innovation, whichever countries they are found in, are much more harmful than they first seem. I will research and write up more on the topic of which broad economic settings lead to the most innovation in the future.

[1] The effect on wealth inequality is unclear, but the effect on ‘welfare inequality’ is likely to be negative.

[2] Though perversely, lousy healthcare policies have led to very high prices for medicine in the US, which has driven investments in new procedures and drugs, which have been borrowed by other countries. My guess is that effort probably would have been better directed at other industries.

GD Star Rating
loading...
Tagged as: , , ,

Invent yourself and think through your impact – graduation ceremony speech

I was lucky enough to be chosen to be the student speaker for my graduation ceremony. Unsurprisingly, I decided to talk about some key ideas emerging from the effective altruist movement, in which I have recently started working.

It was a challenging event to write for, because I am too cynical to be sentimental or outright wrong, but nor did I think it would be productive to spurn the social norms surrounding this kind of tradition altogether. I’ll let you judge whether I did a good job of riding the line.

The speech is below the fold. The personal content comes first; if you would like to skip that, click here.

Chancellor, Vice-Chancellor, ladies and gentlemen. Good afternoon, and thank you for the opportunity to speak with you today.

Continue reading "Invent yourself and think through your impact – graduation ceremony speech" »

GD Star Rating
loading...
Tagged as: , , ,

Can a tiny bit of noise destroy communication?

If everyone knows a tenth of the population dishonestly claims to observe alien spaceships, this can make it very hard for the honest alien-spaceship-observer to communicate fact that she has actually seen an alien spaceship.

In general, if the true state of the world is seen as not much more likely than you sending the corresponding false message somehow, it’s hard to communicate the true state.

You might think there needs to be quite a bit of noise relative to true claims, or for acting on true claims to be relatively unimportant, for the signal to get drowned out. Yet it seems to me that a relatively small amount of noise could overwhelm communication, via feedback.

Suppose you have a network of people communicating one-on-one with one another. There are two possible mutually exclusive states of the world – A and B – which individuals occasionally get some info about directly. They can tell each other about info they got directly, and also about info they heard from others. Suppose that everyone likes for they and others to believe the truth, but they also like to say that A is true (or to suggest that it is more likely). However making pro-A claims is a bit costly for some reason, so it’s not worthwhile if A is false. Then everyone is honest, and can trust what one another says.

Now suppose that the costs people experience from making claims about A vary among the population. In the lowest reaches of the distribution, it’s worth lying about A. So there is a small amount of noise from people falsely claiming A. Also suppose that nobody knows anyone else’s costs specifically, just the distribution that costs are drawn from.

Now when someone gives you a pro-A message, there’s a small chance that it’s false. This slightly reduces the benefits to you of passing on such pro-A messages, since the value from bringing others closer to the truth is diminished. Yet you still bear the same cost. If the costs of sending pro-A messages were near the threshold of being too high for you, you will now stop sending pro-A messages.

From the perspective of other people, this decreases the probability that a given message of A is truthful, because some of the honest A messages have been removed. This makes passing on messages of A even less valuable, so more people further down the spectrum of costs find it not worthwhile. And so on.

At the same time as the value of passing on A-claims declines due to their likely falsehood, it also declines due to others anticipating their falsehood and thus not listening to them. So even if you directly observe evidence of A in nature, the value of passing on such claims declines (though it is still higher than for passing on an indirect claim).

I haven’t properly modeled this, but I guess for lots of distributions of costs this soon reaches an equilibrium where everyone who still claims A honestly finds it worthwhile. But it seems that for some, eventually nobody ever claims A honestly (though sometimes they would have said A either way, and in fact A happened to be true).

In this model the source of noise was liars at the bottom of the distribution of costs. These should also change during the above process. As the value of passing on A-claims declines, the cost threshold below which it is worth lying about such claims lowers. This would offset the new liars at the top of the spectrum, so lead to equilibrium faster. If the threshold becomes lower than the entire population, lying ceases. If others knew that this had happened, they could trust A-claims again. This wouldn’t help them with dishonest B-claims, which could potentially be rife, depending on the model. However they should soon lose interest in sending false B-claims, so this would be fixed in time. However by that time it will be worth lying about A again. This is less complicated if the initial noise is exogenous.

GD Star Rating
loading...
Tagged as: , ,

Could risk aversion be from friend thresholds?

If you are going for a job that almost nobody is going to get, it’s worth trying to be unusual. Better that one in a hundred employers loves you and the rest hate you than all of them think you’re mediocre.

On the other hand, if you are going for a job that almost everybody who applies is going to get, best to be as close to normal as possible.

In general, if you expect to fall on the bad side of some important threshold, it’s good to increase your variance and maybe make it over. If you expect to fall on the good side, it’s good to decrease your variance and stay there. This is assuming you can change your variance without changing your mean too much.

This suggests people should be risk seeking sometimes, and risk averse other times, depending on where the closest or most important thresholds are for them.

Prospect theory and its collected evidence says that people are generally risk averse for gains, and risk seeking for losses. That is, if you offer them fifty dollars for sure or half a chance of a hundred, they’ll take the sure fifty. If you offer them minus fifty dollars for sure, or half a chance of minus one hundred, they’ll take the gamble. The proposed value function looks something like this:

The zero point is a ‘reference point’, usually thought to be something like expectations or the status quo. This means people feel differently about gaining fifty dollars vs. a fifty percent of one hundred, and being given one hundred then later offered minus fifty or a fifty percent chance of minus one hundred, even though these things are equivalent in payoffs.

Risk aversion in gains and risk seeking in losses is what you would expect if people were usually sitting right near an important threshold, regardless of how much they had gained or lost in the past. What important threshold might people always be sitting on top of, regardless of their movement?

One that occurs to me is their friends’ and acquaintances’ willingness to associate with them. Which I will explain in a minute.

Robin has suggested that people should have high variance when they are getting to know someone, to make it over the friend threshold. Then they should tone it down if they make it over, so they don’t fall back under again.

This was in terms of how much information a person should reveal. But suppose people take into account how successful your life is in deciding whether they want to associate with you. For a given friend’s admiration, you don’t have that much to gain by getting a promotion say, because you are already good enough to be their friend. You have more to lose by being downgraded in your career, because there is some chance they will lose interest in associating with you.

Depending on how good the friend is, the threshold will be some distance below you. But never above you, because I specified friends, not potential friends. This is relevant, because it is predominantly friends, not potential friends, who learn about details of your life. Because of this selection effect, most of the small chances you take run the risk of sending bad news to existing friends more than sending good news to potential friends.

If you think something is going to turn out well, you should be risk averse because there isn’t much to gain sending better news to existing friends, but there is a lot to lose from maybe sending bad news. If you think something is going to go a tiny bit badly, you still want to be risk averse, as long as you are a bit above the thresholds of all your acquaintances. But if you think it’s going to go more badly, a small chance of it not going badly at all might be more valuable than avoiding it going more badly.

This is less clear when things go badly, because the thresholds for each of your friends can be spread out in the space below you, so there might be quite a distance where losing twice as much loses you twice as many friends. But it is less clear that people are generally risk seeking in losses. They do buy insurance for instance. It’s also plausible that most of the thresholds are not far below you, if people try to associate with the best people who will have them.

Another feature of the prospect theory value function is that the loss region is steeper than the gain region. That also fits with the present theory, where mostly you just have things to lose.

In sum, people’s broad patterns of risk aversion according to prospect theory seem explicable in terms of  thresholds of association with a selection effect.

Can you think of a good way to test that?

GD Star Rating
loading...
Tagged as: , , ,

The value of time as a student

When I was at college, many of my associates had part time jobs, or worked during school breaks. They were often unpleasant, uninspiring, and poorly paid jobs, such as food preparation. Some were better, such as bureaucracy. But they were generally much worse than any of us would expect to be after graduating. I think this is normal.

It was occasionally suggested that I too should become employed. This seemed false to me, for the following reasons. There are other activities I want to spend a lot of time on in my life, such as thinking about things. I expect the nth hour of thinking about things to be similarly valuable regardless of when it happens. I think for a hundred extra hours this year, or a hundred extra hours in five years, I still expect to have about the same amount of understanding at the end, and for hours in ten years to be about as valuable either way.

Depending on what one is thinking about, moving hours of thinking earlier might make them more valuable. Understanding things early on probably adds value to other activities, and youth is purportedly helpful for thinking. Also a better understanding early on probably makes later observations (which automatically happen with passing time) more useful.

This goes for many things. Learning an instrument, reading about a topic, writing. Some things are even more valuable early on in life, such as making friends, gaining respect and figuring out efficient lifestyle logistics.

Across many periods of time, work is roughly like this. It is the total amount of work you do that matters. But between before and after graduating, this is not so!

If activity A is a lot more valuable in the future, and activity B is about as valuable now or in the future, all things equal I should trade them and do B now.

Yes, work before graduating might get you a better wage after graduating, but so will the same amount of work after graduating, and it will be paid more at the time. Yes, you will be a year behind say, but you will have done something else for a year that you no longer need to do in the future.

On the other hand, working seems a great option if you have pressing needs for money now, or a strong aversion to indebtedness. My guess is that the latter played a large part in others’ choices. In Australia, most youth whose families aren’t wealthy can get enough money to live on from the government, and anyone can defer paying tuition indefinitely.

It seems that college students generally treat their time as low value. Not only do they work for low wages, but they go to efforts to get free food, and are happy to spend an hour of three people’s time to acquire discarded furniture they wouldn’t spend a hundred dollars on. This seems to mean they don’t think these activities they could do at any time in their life are valuable. If you are willing to trade an hour you could be reading for $10 worth of value, you don’t value reading much. When these people are paid a lot more, will they give up activities like reading all together? If not, it seems they must think reading is also more valuable in the future than now, and the relative values are jumping roughly in line with the value of working at these times. Or do they just make an error? Or am I just making some error?

GD Star Rating
loading...
Tagged as: , , ,

Paternalism can be kind, just not to present-you

You may want to file this under ‘incredibly obvious’, but I haven’t seen it noted elsewhere.

Liberals and libertarians have an instinctive aversion to paternalism. Their key objection is: how can anyone else be expected to know what is good for you, better than you do?

This is usually true, but it neglects a coherent justification for many paternalistic policies that doesn’t require that anyone know more than you. The paternalist could be fine with their policy being bad for ‘present-you’ if it benefits ‘future-you’ even more. But don’t you care about your future self’s welfare too? Sure, but maybe not as much as they do, relative to your current welfare!

Confusion about the intent of the paternalistic policy is generated by the fact that it is natural to say “this policy exists to help you”, without noting which instance of ‘you’ it is meant to help – you now, you tomorrow, you in ten years’ time, and so on.

While this justification would make sense especially often where people engaged in ‘hyperbolic discounting’ and as a result were ‘time inconsistent’, it does not rely on that. All it requires is that,

  • there are things you could do now that would benefit your future self, at the expense of your present self, and;
  • the paternalists’ ‘altruistic’ discount rate for the target’s welfare is lower than the discount rate the target has for their own welfare.

The first is certainly true, while the latter is often true in my experience.

In the near-far construal theory often used on this blog, us-now and immediate gratification are both ‘near’, while ourselves in the future, other people, and other people in the future are all ‘far’. In far mode we will want to encourage other folks to act toward their future selves in ways our far view thinks they ought to – usually patiently.

More intuitively: it’s easier to stick to a commitment to help a friend stay on their diet, than it is to stay to our diet ourselves. We don’t enjoy seeing our friends go without ice cream, but we like to see them reach their and our idealised goals even more. As La Rochefoucauld observed, “We all have strength enough to bear the misfortunes of others.” You could add that we all have strength enough to bear the delayed gratification of others.

If a paternalist really does have a lower discount rate in this way, they could justify all kinds of interventions that benefit someone’s future self: preventing suicide, reducing smoking, encouraging exercise, requiring people to save for emergencies and retirement, and so on. I often find these policies distasteful, but as I support a moral discount rate of zero (on valuable experiences), and almost all people are impatient in their own lives, I can’t justify a blanket opposition. We don’t give people an unrestricted freedom to harm their children, or strangers, just because they don’t care much about them. Why then should we give a young woman unrestricted freedom to hurt her far-off 60 year old self, just because they happen to pass through the same body at different points in time? I care about the 60 year old too, perhaps even more than that young woman does, relative to herself.

GD Star Rating
loading...
Tagged as: , , , ,

Covert virtue – the signal that doesn’t bark?

An attitude I often come across is that if you do a virtuous thing, it is impolite to blow your own trumpet about it. ‘Give privately!’ is the catchcry. Even those who are open about their good deeds are likely to hold a special admiration for anyone they discover has been secretly helping others for years, and never even mentioned it.

I asked around and apparently this norm exists because when you go on about your altruism, it calls into question  your motivation. Perhaps you made that donation just to be able to show off your virtue and wealth to everyone else, rather than being motivated by ‘pure’ compassion. Someone who only cared about helping others would apparently keep their hands busy, and their mouth shut.

I think the reality is the complete reverse. A culture of ‘private altruism’ has some seriously perverse effects, and anyone who really cares about doing good in the world should be working to undermine it.

Firstly, it means we are less inclined to talk about and share the information we have about which causes are most valuable and effective. Given that donations to charity and other approaches to making the world a better place vary in cost effectiveness across many orders of magnitude, this is a huge loss.

Secondly, if people can’t gain social acceptance from altruistic acts, those acts will tend to be crowded out by alternatives that are unavoidably conspicuous – impressive cars, holidays, degrees and so forth – that will do a better job of signalling how rich, noble and interesting they are. On top of this, people will become biased towards conspicuous but ineffective ways of helping others. It’s easy to keep a (very valuable!) bank transfer secret, and pretty gauche to post the receipt on social media sites. But flying to Africa to help build a school, or signing up to a Facebook group? Everyone will find out about that! Sadly, signalling ‘arms races’ over conspicuous consumption and slacktivism, rather than ‘effective altruism’, are exactly what I observe around me.

In light of this, private giving, far from being consistent with a pure and virtuous motivation, is actually deeply suspicious. Someone who really cared about helping others as much as possible, and was making substantial sacrifices to do so, would want to bring up the fact whenever they could get away with it, in order to draw attention to the merits of their cause and prompt others to join in. Those who ‘give privately’, must care more about blindly following harmful social norms – or more likely, getting extra admiration for their deeds when people ‘accidentally’ discover what they have secretly been up to. This could be a ‘signal that doesn’t bark.’

So next time you do something good, find a way to shout it from the rooftops, especially if the act is particularly big, valuable or easy to do discreetly. If anyone tries to call you out for ‘showing off’, politely explain why the pure of heart have no choice.

Update: Here’s an amusing video on the topic. (HT David Barry)

GD Star Rating
loading...
Tagged as: , ,