Tag Archives: Inequality

Em Redistribution

I’m in the last few weeks of finishing my book The Age of Em: Work, Love, and Life When Robots Rule The Earth, about social outcomes in a world dominated by brain emulations. As a teaser, let me share some hopefully non-obvious results about redistribution in the em world.

There are many kinds of inequality. Inequality exists between different species, between generations born at different times, and between nations of the world at a time. Within a nation at a time, there is inequality both between families and within families. There is also inequality across the moments of the life of each person. In all of these cases, there is not only financial inequality, but also inequality in status, prestige, pleasure, lifespan, happiness, and more. There is also inequality between the size of families, firms, cities, or nations, even when individuals within those groupings are equal.

Today, we have relatively little intentional redistribution between generations or between nations. Redistribution within the moments of a person’s life happens, but that is mostly left to that person to choose and to fund. Similarly, redistribution between siblings is mostly achieved via differential treatment by parents. Instead, most concern today about inequality, and most debate about redistribution to address inequality, focuses on one very particular “standard” kind of inequality.

This standard inequality looks at differences in average individual financial incomes between the families of a nation, all at a given time. This type of inequality is actually one of the smallest. For example, in the U.S. today financial inequality between families is only one third the size of that inequality between siblings within families, and even that is much less than the inequality between individuals from different nations. We may focus our redistribution feelings on this standard inequality because it seems to us the most analogous to the inequality that forager sharing norms addressed. Alternatively, perhaps it is the most profitable type of redistribution for opportunistic rent-seekers.

This history suggests that the em world will have little redistribution between em generations or city states, and also that each clan is mostly in charge of deciding how to address inequality within that clan. After all, em clan members are more similar and closer to each other than are human siblings, even if they may sometimes be more distant from each other than are typical human life moments. Also, clan members have rather complex relations with each other, making it hard pick a natural sub-clan unit to be the standard basis for counting inequality. So that leaves ems with comparing inequality between clans.

A set of em clans can be unequal in two different ways. One way focuses on individual incomes, or perhaps individual happiness or respect, and says that a clan is better off if its individuals are on average better off. The other way focuses on the overall size and success of a clan. Here a clan is better off if it has more members, resources, or respect. Historically, most redistribution efforts have focused on average individual outcomes. For example, we have seen very little efforts to redistribute between human family clans based on family size. That is, we almost never take from families with many descendants in order to give to families that have few descendants. Nor do we take much from big nations, cities, or firms to give to smaller ones.

Because most em wages are near subsistence levels, unregulated wages have less inequality than do wages today. So em clans naturally have less inequality of the standard sort that is the focus of today’s redistribution. In contrast, em clans have enormous inequality in clan size, resources, and respect. However, history gives little reason to expect much redistribution to address this inequality. It is not very analogous to forager sharing, nor does it lend itself to profitable rent-seeking.

Thus the main kind of redistribution that we have reason to expect in the em era is between the clans of a city, based on differences of average within-clan individual income. But we expect less inequality of this sort in the em world, and so expect less redistribution on this basis.

Income taxes are today one of our main mechanisms for reducing the standard inequality that compares individual incomes between families within a nation. Over the last two centuries, big increases in the top marginal tax rates have mostly followed wars where over two percent of the population served in the military. For example, in the U.S. the top marginal tax rate jumped from 15% to 67% in 1917, during World War I. Controlling for this effect, top tax increases have not been correlated with wealth, democracy, or the political ideology of the party running the government. This weakly suggests that the local degree of individual income redistribution between the clans of an em city may depend on the local frequency of large expensive em wars.

If ordinary humans are included straightforwardly in the redistribution systems of the em world, then the simple result to expect is transfers, not only away from richer humans, but also from humans to ems overall. After all, in purely financial terms typical ems are poorer than the poorest humans. Redistribution systems may perhaps correct for the fact that em subsistence levels are much lower than are human subsistence levels. But if so such systems may also encourage or even require recipients of aid to switch from being a human to being an em, in order to lower costs.

During the em era, humans typically have industrial era incomes, which are much higher than subsistence level incomes. While many and perhaps most humans may pay to create a few ems, they tend to endow them with much higher than subsistence incomes. In contrast, a small number of successful humans manage to give rise to large em clans, and within these clans most members have near subsistence incomes. Thus transfers based on individual income inequality take from the descendants of less successful humans and give to descendants of more successful humans.

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Advice Shows Status

When we give and seek advice, we think and talk as if we mainly just want to exchange useful information on the topic at hand. But seeking someone’s advice shows them respect, especially if that advice is followed. And in fact, a lot of our advice giving and taking behavior can be better understand in such status terms:

When making decisions together, we tend to give everyone an equal chance to voice their opinion. To make the best decisions, however, each opinion must be scaled according to its reliability. Using behavioral experiments and computational modelling, we tested (in Denmark, Iran, and China) the extent to which people follow this latter, normative strategy. We found that people show a strong equality bias: they weight each other’s opinion equally regardless of differences in their reliability, even when this strategy was at odds with explicit feedback or monetary incentives. (more)

Individuals in powerful positions are the worst offenders. According to one experimental study, they feel competitive when they receive advice from experts, which inflates their confidence and leads them to dismiss what the experts are telling them. High-power participants in the study ignored almost two-thirds of the advice they received. Other participants (the control and low-power groups) ignored advice about half as often. … Research shows that they value advice more if it comes from a confident source, even though confidence doesn’t signal validity. Conversely, seekers tend to assume that advice is off-base when it veers from the norm or comes from people with whom they’ve had frequent discord. (Experimental studies show that neither indicates poor quality.) Seekers also don’t embrace advice when advisers disagree among themselves. And they fail to compensate sufficiently for distorted advice that stems from conflicts of interest, even when their advisers have acknowledged the conflicts and the potential for self-serving motives. … Though many people give unsolicited advice, it’s usually considered intrusive and seldom followed. Another way advisers overstep is to chime in when they’re not qualified to do so. … many advisers take offense when their guidance isn’t accepted wholesale, curtailing further discussion. (more)

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Relishing Inequality

As we’ve become richer, we have moved from farmer toward forager values. This has made us more egalitarian – we are more averse to inequality and domination, and more uncomfortable when people brag, give orders, or act overtly as if some people are much better than others.

On the surface, our stories tend to affirm our social norms. Villains are often greedy disagreeable unstable illicit dominators, while the heroes who oppose them are often modest, agreeable, and capable, but not assertive or aggressive.

However, not all is as it seems on the surface. For example, we are far more interested in seeing drama or action shows centering on theses kinds of jobs: police, soldiers, doctors, lawyers, scientists, chefs, actors, athletes, and musicians. These are jobs where extreme outcomes are more possible, either because big harms can be avoided, or because great status or honor might be gained.

In jobs with more extreme possible outcomes, we are more comfortable with overt inequality and domination. We are more ok with the capable doc getting explicit deference, and berating the incompetent doc. Or with junior chefs saluting “yes chef” like soldiers. Or with the super musicians not giving much consideration to the grips and groupies who serve them.

We are not only more ok with such overt inequality and domination for these jobs in real life, we are also more ok with it in fiction. In fact, you might well say we relish it. Just as little girls fantasize about being a princess, or little boys fantasize about being action heroes, we all like to imagine we are the more able workers shown in these stories. We like to imagine getting the status and deference that these fictional characters are shown to be justified in getting.

Of course we prefer to paper this over with a villain who is far worse, making our heroes look great by contrast. So we can pretend that what we really want is to bring down the arrogant. This is somewhat like how we like stories that titillate with sexual or other indulgence, but then pretend to endorse a morality tale where such behavior is punished in the end. In both cases we can enjoy a fantasy of vicariously experiencing pleasures, while officially pretending to disapprove of them.

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The Rosy View Bias

How much does merit contribute to success? A rosy view is that success is mostly due to merit, while a dark view is that success is mostly not due to merit, but instead due to what we see as illicit factors, such as luck, looks, wit, wealth, race, gender, politics, etc.

Over a lifetime people gain data on the relation between success and merit. And one data point stands out most in their minds: the relation between their own success and merit. Since most people see themselves as being pretty meritorious, the sign of this data point depends mostly on their personal success. Successful people see a rosy view, that success and merit are strongly related. Unsuccessful people see a dark view, that success and merit are only weakly related.

In addition, successful people tend to know other successful people, and people tend to think their associates are also meritorious. So the other data points around people tend to confirm their own data point. The net result is that older people tend to have more data on the relation between merit and success, with successful people seeing a rosy view, and unsuccessful people seeing a darker view.

Since the distribution of success is quite skewed, most older people see a darker view. However, that dark majority doesn’t get heard much. Most of the people who are heard, such as reporters, authors, artists, professors, managers, etc., see rosy views, as they tend to be both older and successful.

Also, most people prefer to look successful, and so they prefer to look like they’ve seen a rosy view. Even if they haven’t, at least not yet. And a good way to look like you believe something is to actually believe it, even if your evidence doesn’t support it so much.

In sum, we expect the people we hear to be biased toward saying and believing a rosy view of the relation between success and merit. Of course that might be good for the world, if a realistic view would lead to too much envy and conflict. But it would still be a biased view.

Added 11p: Of course if they can find a way to rationalize it, we expect everyone to be inclined to favor a view where merit is a big cause of people reaching up to the success level where they are, but non-merit is a relatively bigger cause of people reaching the higher levels above them. When there are many success ladders we expect people to see merit as a big cause of success on their ladder (up to their point), but as less a cause of success on other ladders.

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Pretty Smart Healthy Privilege

In our social world, people who are prettier (or hotter) can wear a wider range of clothing and still be seen as socially acceptable. For example, when less pretty people wear especially form-fitting or revealing clothes, they are likely to face social disapproval. They can’t “pull it off.”

Similarly, people who are smarter (or wittier) can talk in conversation about a wider range of topics. If you are not clever or witty, and you bring up a sensitive topic, you are likely to seem awkward and inappropriate, and induce social disapproval. But if you are clever or witty, you can often bring up such subjects in a way that makes people around you laugh and approve.

People who are healthier also have a wider range of socially acceptable activities. People who try to join a group hike or club dance, but who don’t have the energy or coordination to keep up with others, are often frowned upon.

These are three examples of privilege based on familiar kinds of inequality. Not only are these sorts of privilege quite widely accepted, rarely causing much embarrassment or guilt, but we often go out of our way to celebrate and revel in them. In fashion runways, lecture halls, and sporting events we select the most pretty smart healthy people we have, and give them extra attention and approval, thereby increasing social inequality resulting from differences in these features.

An even more dramatic example is inequality based on species. Humans today are gaining huge advantages relative to other species. And most people seem quite okay with celebrating and encouraging these advantages.

When you hear concerns expressed about privilege or inequality, you don’t usually hear these features mentioned. Instead the focus is more often on inequalities tied to income, parental wealth, dominant vs. marginal cultures and ethnicities, rich vs. poor nations, or dominant vs. marginal gender or sexual preferences and styles. Many people seem to find it quite easy to get worked up over privilege and inequality tied to those features.

Now while I can sorta empathize with such resentment and indignation, they don’t feel much more compelling to me that related feelings about the privileges of pretty, smart, or healthy people. Or even humans relative to other species. So while I could sort get behind efforts to mildly reduce the worst extremes caused by all forms of privilege and inequality (or by total inequality, weighing all things), I can’t get behind efforts to focus much more on some forms relative to others.

I have tried to make sense of why people treat these things differently. For example, people seem more concerned about the kinds of inequality that concerned their distant forager ancestors. People seem more eager to express indignation about kinds if inequality would more support more easy grabbing. And people seem more suspicious of inequality resulting from more opaque larger-scale social processes (like labor markets), rather than from more transparent biological and smaller-scale social processes.

But none of these explanations seem to me good reasons to actually worry much more about these kinds of privilege and inequality. Yes disapproved processes like wars, slavery, and theft have contributed substantially to some cultures or sexual styles becoming dominant in our world. But disapproved processes also contribute substantially to some people becoming prettier, smarter, or healthier in our world. And in neither case am I willing to conclude that disapproved processes are the overwhelming cause of such inequality.

As things are counted in today’s political calculus, this apparently makes me a “conservative,” in that I’m less concerned about the sorts of inequalities that greatly concern “liberals.” But I see this less as taking a political position than as remaining uncertain – until I see a good reason to care differently about different kinds of inequality, I’m going to consider them as similar. I see this as like being agnostic about religion. Some people consider a religious agonistic as taking a strong position against religion, and as being almost the same as an atheist. But I think it is worth distinguishing people who take a position against a common view, from people who are uncertain about that view.

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How Important Is Inequality?

My post last August on “Inequality Talk is About Grabbing” got 215 comments, which may be a record. In that post I tried to explain why most inequality talk focuses on the small part of inequality that is financial inequality at a given time between the families of a nation. I suggested that the reason is that we think we could grab lots of money from the rich without much pain to the rest of us.

Recently Piketty’s book has induced lots of folks to express deep concern about the same sort of inequality. Piketty says rising inequality is due to owners of capital getting higher returns than the economic growth rate, and recommends taxing capital. Yes that would greatly reduce the total amount of capital in the long run, and therefore also cut future wages and wealth, but gosh darn it inequality is harmful enough to be worth paying such a huge price to reduce it. This is a crisis and something must be done! So say Piketty’s loud chorus of fans.

But consider what a more expert source says is the real reason of rising (between-family within-nation at-a-time) inequality:

In summary, the authors attribute the growth of household inequality to three interacting forces. The first is rising returns to education. Earnings across educational classes have become more polarized. The second factor is increased positive assortative mating. People with similar socioeconomic backgrounds tend increasingly to marry each other, exacerbating income inequality. Third, the increase in married female labor force participation has heightened inequality, and has also made women’s earnings an increasingly important determinant of household income inequality. (more)

Do you think those who thought rising inequality was a crisis justifying our destroying lots of long run capital also think it important enough to justify reducing education, assortative mating, and female work, if those are the causes? Yeah, me neither. And that’s what you’d expect if grabbing is more the motive here than cutting inequality.

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Rah Manic Monopolists?

The vast majority of economic growth is caused by innovation. So when it comes to long term policy, innovation is almost the entire game – whatever policy causes substantially more innovation is probably better, even if has many other big downsides.

One simple robust solution to the innovation problem would seem to be manic monopolists: one aggressively-profit-maximizing firm per industry. Such a firm would internalize the entire innovation problem within that industry, all the way from designers to suppliers to producers to customers – it would have full incentives to encourage all of those parties to put nearly the right amount and type of efforts into innovation.

Yes, even monopolists don’t have exactly the right incentives. They will tend to focus on what marginal customers want, at the expense of both lower-value customers pushed out by inflated monopolist prices, and higher-value infra-marginal customers. And when innovations can cross industry boundaries, industry monopolists may also fail to coordinate with monopolists from other industries. But still, this approach seems to get a lot closer to optimal that anything other simple policy. And if two industries had enough innovation interaction, one might just have a single firm cover both industries.

Ideally these monopolies would be global, but if not national ones might still be a big win over the status quo.

Admittedly, common intuitions don’t agree with this. For one thing we tend to think of monopolists as too lazy to innovate – it takes competition to push them out of their comfort zone. And I agree that this is a common situation for regulated utilities and government agencies. Often the employees of a monopolist tend to have enough political power to entrench themselves and resist change, at the expense of investors and customers. This is why I specified manic monopolists – we need investors to have enough power to impose their will, and we need to have  enough competition to fill these investor roles.

Yes, we also tend to be uncomfortable with the inequality and power concentration that manic monopolists would embody and require. It isn’t at all what foragers are prone to praise. But still, if innovation is important enough, shouldn’t we be willing to tolerate a lot more inequality to get it?

Added 8a 11Apr: In general, industries that are more concentrated, i.e., more in the direction of having a monopolist, have more patents, all else equal. This seems to be because they invest more in R&D. Data here, here.

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World Inequality Is Down

From the Nov. ’13 Review of Income and Wealth:

This paper provides a full decomposition of world [individual purchasing-power-parity income] inequality, as measured by the Gini coefficient, in the period 1970–2009. (more; ungated)


The top two lines show total world inequality over time as estimated by this paper and by another previous paper. Both agree that worldwide income inequality has been falling consistently over four decades, especially in the last decade.

Of course this ignores non-financial inequality and inequality across time.

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The ‘What If Failure?’ Taboo

Last night I heard a  group of smart pundits and wonks discuss Tyler Cowen’s new book Average Is Over. This book is a sequel to his last, The Great Stagnation, where he argued that wage inequality has greatly increased in rich nations over the last forty years, and especially in the last fifteen years. In this new book, Tyler says this trend will continue for the next twenty years, and offers practical advice on how to personally navigate this new world.

Now while I’ve criticized Tyler for overemphasizing automation as a cause of this increased wage inequality, I agree that most of the trends he discusses are real, and most of his practical advice is sound. But I can also see reasonable grounds to dispute this, and I expected the pundits/wonks to join me in debating that. So I was surprised to see the discussion focus overwhelmingly on if this increased inequality was acceptable. Didn’t Tyler understand that losers might be unhappy, and push the political system toward redistribution and instability?

Tyler quite reasonably said yes this change might not be good overall, and yes there might well be more redistribution, but it wouldn’t change the overall inequality much. He pointed out that most losers might be pretty happy with new ways to enjoy more free time, that our last peak of instability was in the 60’s when inequality was at a minimum, that since we have mostly accepted increased inequality for forty years it is reasonable to expect that to continue for another twenty, and that over history inequality has had only a weak correlation with redistribution and instability.

None of which seemed to dent the pundit/wonk mood. They seemed to hold fast to a simple moral principle: when a future change is framed as a problem which we might hope our political system to solve, then the only acceptable reason to talk about the consequences of failing to solve that problem is to scare folks into trying harder to solve it. If you instead assume that politics will fail to solve the problem, and analyze the consequences of that in more detail, not to scare people but to work out how to live in that scenario, you are seen as expressing disloyalty to the system and hostility toward those who will suffer from that failure.

I think we see something similar with other trends framed as negatives, like global warming, bigger orgs, or increased regulation. Once such a trend is framed as an official bad thing which public policy might conceivably reduce, it becomes (mildly) taboo to seem to just accept the change and analyze how to deal with its consequences.

All of which seems bad news for my book, which mostly just accepts the “robots take over, humans lose wages and get sidelined” scenario and analyzes its consequences. No matter how good my reasons for thinking politics will fail to prevent this, many will react as did Nikola Danaylov, with outrage at my hostility toward the poor suffering losers.

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Inequality Talk Is About Grabbing

The US today has about 425 billionaires, over 1/3 of the world’s total. Many folks say these billionaires are unfairly unequal, and so we should tax them lots more.

People usually become billionaires via having “super-powers,” i.e., very unusual abilities, at least within some context. But what if most billionaires had super-powers of the traditional comic book sort, like x-ray vision or an ability to fly, etc.? That is, what if people with physical super-powers earned billions in the labor market by selling the use of these powers? Would folks be just as eager to tax them to reduce unfair inequality?

My guess is no, most would be less eager to tax billionaires with physical super-powers. And I offer this prediction as a test of my favored theory of expressed inequality concerns: that inequality talk is usually a covert way of coordinating who to maybe grab stuff from. Let me explain.

As I’ve discussed before, while people usually justify their inequality concerns by noting that inequality can make lower folks feel bad, that justification can apply equally to a great many sorts of inequality. Yet concern is actually only voiced about a very particular sort: financial inequality at a given time between the families of a nation. The puzzle in need of explaining is: why is so little concern expressed about all the other sorts of inequality?

My favored theory is an application of homo hypocritus: our forager ancestors developed the ability to express and enforce social norms, and then developed rich and subtle abilities to coordinate to evade those norms. One of those norms was that foragers weren’t supposed to grab stuff from each other just because they wanted the stuff, or just because that stuff was easy to grab. But they did have norms favoring sharing and equal treatment, and so it was ok to talk about who might be violating such norms, and what punishments to apply to violators.

But they all knew, at least subconsciously, that some groups would be quite effective at retaliating against such suggestions. The accused might physically resist the attempted punishment, or might retaliate with contrary accusations. So foragers needed ways not only to overtly accuse folks of violating norms, and to officially propose to take stuff away as punishment, but also to covertly discuss who might have especially nice stuff to take, and who they could most easily get away with grabbing from.

I suggest that most talk about the problems of inequality actually invokes this ancient hypocritical ability to covertly discuss where to find lots of nice easy-to-grab stuff. We don’t discuss inequalities across time, because it is hard to grab much more than we do from the past or the future. We don’t much discuss the inequality of rich foreigners, because it is much harder to grab their stuff. We don’t much discuss inequality of those with unusual artistic abilities or sexual attractiveness, because we can’t directly grab their advantages and while we might try to grab their material goods to compensate, they don’t have that much, and the grabbing would be hard. (Also, such folks have more social status to resist with. For foragers, status counted lots more than material goods for influence.)

A few people within our nation who each have lots and lots of material goods, however, seem to make a great target for grabbing. So people discover they have a deep moral concern about that particular inequality, and ponder what oh what could we possibly do to rectify this situation? Anyone have an idea? Anyone?

But if those few very rich folks had real physical super-powers, we would be a lot more afraid of their simple physical retaliation. They might be very effective at physically resisting our attempts to take their stuff. So somehow, conveniently, we just wouldn’t find that their unequal wealth evoked as much deeply felt important-social-issue-in-need-of-discussing moral concern in us. Because, I hypothesize, in reality those feelings only arise as a cover to excuse our grabbing, when such grabs seem worth the bother.

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