Tag Archives: Innovation

New Is Not Better

By Robin Hanson · June 26, 2011 9:20 am · Comments (28)

“As a non-American, I don’t completely understand it, but there is a phenomenon in the U.S., the latest and the greatest. … There was a patient demand to get these implants on the misconception that the latest was the best.” …“The vast majority of the ‘innovations’ on which we have spent money with respect to orthopedics over the past two decades have not resulted in improved patient outcomes.” (more; HT Tyler)

Assuming no side-effects, if users gain from innovations then innovators must gain less than the social value of their innovations, which risks their having insufficient incentives to innovate. This effect can be countered, however, by giving extra social status to the creators and users of innovative products, services, and behaviors.

United States culture gives such extra status to creators and users of innovations, and so probably deserves some credit for encouraging innovation. But alas much of this is wasted via merely rewarding things things that are new, rather than innovative. And if your reaction to reading that was “what is the difference?,” that just shows the depth of the problem.

Innovative things must be new, but new things need not be innovative. To be usefully innovative is to be better some how. Innovators try many new things, most of which are not better, but a few of which are. On average new things are w0rse, but those that are eventually retained are hopefully on average better. And with the right incentives, the retained better things are so much better that they pay for all the other new worse things.

If our culture waited until it was clear which new things were actually better, and gave more status to the creators and early adopters of those things, culture would promote innovation. But alas culture instead mainly showers status on those who merely create and use new things, regardless of whether they are better. While in small amounts even this status effect can promote innovation, in larger amounts it can hurt. After all, when there is too little added reward for creating or using something that is both new and better, relative to something that is just new, people will mainly focus on the new part.

The problem comes from an excess focus on current behavior, relative to past track records. In enforcing social status norms, it is relatively easy to just see that someone is today affiliated with with something that is new today, and give that person credit for their newness. It is much harder to remember that a person was once affiliated with something that was then new, and which later turned out to actually be better. A mechanism that made it easier to collect and view such track records could be of great social value, at least if combined with new matching social norms on who deserves social credit for being “innovative.”

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Blocked State Innovation

By Robin Hanson · May 30, 2011 1:00 pm · Comments (10)

I’ve complained that regulation usually slows innovation. For example, huge driverless cars gains seem needlessly delayed by excess regulation (Tyler agrees). The problem, however, is not government per se, but the citizens to whom government defers. Politics is not about policy; voters are far more interested in showing off symbolic stances than in giving citizens more of what they want.

But to be fair, citizens hinder not only private innovation, but also government innovation. Long ago when people were imagining a future of cheap computing and communication, they imagined dramatic gains from government databases and citizen monitoring. But then some warned of how such data and monitoring could support tyranny, and ever since most voters have been so eager to signal their disapproval of such Big Brother domination that they are unwilling to consider the most promising government innovations in data and monitoring.

For example, me a year ago:

Overall my students oppose change, moderately favoring whatever is the status quo. So I was quite surprised to see … 85% of my students said yes to: Should all medical practice data be published, aside from data identifying patients?

I assigned this paper topic again this year and, combining the two years, 76% of 76 students favored the change, which correlated 0.29 with student ability to identify relevant pro/con arguments. Again, I don’t grade students on their position, I don’t say what I support, and students usually oppose change. (For example, they overwhelmingly opposed stricter public-place policies on hand washing after sneezing or using restrooms.)

Last year, commenters’ main complaint was that it is impossible guarantee privacy. And this is true. In principle, any piece of info you publish about someone could be the last little clue someone else needs to uncover a great secret about them. It all depends on what other info people reveal, and to whom. The only safe policy is to never publish anything about anyone. And since info supposedly only visible to government employees are often leaked via bribes, the only really safe policy is to never collect any info.

But note that this same argument applies to every piece of info the government reveals about anyone, including date of birth, addresses, who/when they marry or divorce, professional licenses, lawsuits, bankruptcies, tax liens, criminal records, etc. The reason few complain about privacy leaks due to such revelations is that most folks have adapted their other info behavior to expecting this info to be made public.

Similarly, if we gave sufficient advanced warning on a new regime of revealing all med info (minus directly identifying info), most people could adapt their other info behavior to preserve the privacy they want. Don’t let friends drive you to the doc if you don’t want them to know who is your doc. Of course some would mistakenly reveal themselves, and illegal bribery would reveal more. But that can be a price worth paying if there is much to be gained.

Alas, while even my undergrads can see that revealing all med info could easily meet a cost benefit test, voter distaste for anything smacking of Big Brother will probably long block this innovation. This even though recent legal changes go a long way to actually enabling future dictators:

Our Presidents can now, on their own: order assassinations, including American citizens; operate secret military tribunals; engage in torture; enforce indefinite imprisonment without due process; order searches and seizures without proper warrants. (more)

Citizens don’t make a careful tradeoff between social value and preventing future dictators. Instead, thoughtless voters enable Big Brother while symbolically opposing him, and block useful government innovation in the process.

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Big Firms Block Gains

By Robin Hanson · May 7, 2011 1:45 am · Comments (17)

To run an airline, you need not only pilots, airplanes, and fuel, you also need landing rights at airports matching your planned routes and times. Today airlines must buy these rights one at a time via trades, and so risk ending up with mismatched slots that they cannot use.

Thirty years ago economists designed and tested package auctions to overcome this problem. In such auctions people can bid for the package of landing slots desired, and be assured of getting either all or none of the items in their desired package. Lab experiments have documented their efficiency advantages.

At a conference yesterday, someone said that the big airlines have consistently blocked attempts to field such auctions. The reason: because they buy more total slots, big airlines can more easily put together the packages they need. Big airlines oppose innovations that would make it easier for small airlines to compete with them.

This seems similar to how last year big movie studios got Congress to change laws to block the introduction of movie futures. Such futures would make it easier for small movie studios to get funding and to convince viewers that they had a product worth seeing.

Better economic institutions help people to better coordinate. But big firms suffer this problem less, because they can more easily coordinate in the absense of such institutions. Even in the US today, big firms (often with the assistance of law and government) block a great deal of institutional innovation, in order to retain this advantage.

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An Innovation Lesson

By Robin Hanson · March 10, 2011 11:00 pm · Comments (20)

After all these years of hybrids hogging ouf “car pool” lanes as well as huge subsidies, we learn:

The new Chevrolet Cruze Eco can reach eye-popping fuel economy levels of more than 50 miles per gallon on the highway, which even in this era of hybrid-electric cars stands among the best. But here’s the real trick: The Cruze Eco is neither a hybrid nor electric. It runs on that “old” technology, the conventional gasoline engine. … This year, General Motors, Ford and Hyundai began selling cars with conventional engines that achieve 40 mpg or more on the highway, exceeding the fuel efficiency of some hybrids. … The new fuel-efficient gasoline cars, critics say, raise doubts about government efforts that favor any one technology over another. If subsidies are to be made, they argue, they should go to efficient cars, no matter what their power source. (more)

Oh yes, yes, yes.

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Modular Innovation

By Robin Hanson · March 9, 2011 6:30 pm · Comments (27)

Seth Roberts says economists neglect innovation:

How to avoid or recover from stagnation … is the central question of economic life, with no clear answer. Yet it is roundly ignored. In the Berkeley Public Library a few years ago, I picked up an introductory economics textbook for junior colleges, 700 pages long. It had one page – fact-free, poorly-written – about where new goods and services come from. This is typical of the introductory economics textbooks I’ve seen. It reflects the profession as a whole: I estimate about 1% of mainstream economic research is about innovation. It should be half the field.

He’s right; innovation is neglected, at least using a standard of what has impact or relevance. But academics don’t study topics because they are important; they study topics to gain prestige, by being certified as mastering impressive techniques. Sure, all else equal it can help to write about an important topic.  (At least if you avoid taking on a topic too big for your status – big grand overviews and contrarian jabs tend to be reserved for senior folk.) But academics usually aren’t rewarded enough for the added effort to figure out what topics are actually important. So they might as well just do what others say is important. And since it is hard to use standard impressive tools to study how to promote innovation, that topic gets neglected.

Enough excuses; here’s a positive contribution. It seems to me that one of the major factors limiting innovation is this: would be innovators must now combine two risky decisions:

  1. What innovative ideas or projects are ripe and promising to purse now?
  2. Who is best placed or skilled to attempt the realization of each idea?

People who pitch project ideas to venture capitalists often focus on convincing them of #1, idea quality, not realizing that if you convince them of that but not #2, your team quality, they will just steal your idea and give it to another better team. Usually they hear from several teams pitching pretty similar concepts, so they are judging mainly on team quality.

Knowing this, sophisticated innovators tend to neglect idea quality, and focus on team quality. Naive innovators address both issues, but being naive they don’t know enough about what other folks think about the quality of their ideas. The net result is too little aggregation of info about idea quality. Could we do better?

Prediction markets, to the rescue! Imagine prediction markets on which innovative ideas will succeed soon, possibly conditional on approach or team style. Such prediction markets could offer a valuable modularity to aid innovation. Some people could focus on idea quality, and profit from their insights by trading in markets on which ideas will succeed when. Other folks could focus on team quality, by creating high quality teams which pursue the ideas that prediction markets have endorsed. Such teams could hedge some of their idea risk in prediction markets, and that hedging would add market liquidity, enabling idea specialists to better profit from their insights.

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Be A Charity Angel

By Robin Hanson · January 24, 2011 9:00 am · Comments (27)

I’ve overheard many folks lately discussing what sort of charity most deserves their money. They consider the plans of various charities, and try to analyze the chances that such plans will lead to good outcomes. Most folks I’ve heard have been favoring various intellectual charities, where the money goes mostly to pay intellectuals to develop and communicate ideas. And most of these folks also seem to spend lots of time consuming intellectual ideas. They read a lot, and have many opinions about what previous ideas were interesting and useful.

Such folks would do well to review the advantages of prizes over grants, and consider becoming charity angels. Let me explain.

Consider a donor who seeks to encourage or induce some sort of result in the world. With a grant, such a donor must decide ahead of time who seems to have a promising ability and approach. But with a prize, a donor need only decide after the fact who seems to have achieved a lot. Once potential awardees see a pattern of achievements being rewarded by prizes after the fact, they will gain an added incentive to achieve, an incentive roughly proportional to the prize amounts being offered. And the prize process avoids much of the added waste of grant proposals, review, search, etc. (Promising potential winners who are strapped for cash might obtain resources by selling their future prize rights in capital markets.)

Since it is much easier to evaluate what has worked than what will work, folks who read a lot of intellectual work and who are inclined to support future intellectual work via charity should consider making a habit of just giving money to those who have already accomplished something noteworthy. Most intellectuals have some resources at their disposal and look for promising future directions on which to spend such resources. Your awards for previous achievements should increase the incentive to all intellectuals to achieve similarly praiseworthy results in the future. This will better target your goals because you can better judge what past work has promoted your goals than which future people and approaches might do so.

Of course you may have other goals for your charity than encouraging a result in the world.  You may, for example, want to signal your personality and allegiance by donating to a familiar brand name that others will recognize.  You may want to affiliate with a high status organization and with high status others who donate to the same cause.  You may want to more directly affiliate with the doers who are the recipients of your donations, and to put yourself in a dominance role of control over them, and to take credit later for having believed in them when others did not. You may also prefer to affiliate with new and upcoming doers rather than old and past their prime doers. And you may want to signal your confidence in your judgements about promising people and approaches. For all of these other purposes, grants are probably your better bet today.  Which is of course why there are so few prizes.

But if you think yourself one of the rare exceptions, whose primary purpose is to actually encourage changes in the world, consider just finding a person who you think has already made a substantial contribution to your cause, and just writing them a check. (And maybe encourage him or her to periodically post summaries of donations received.) No further complication is required. (Should you think I deserve such an honor, a donate button is now available on this page. :) )

Added 11a: If you think risk-aversion creates diminishing returns in donations, i.e., that there’s less to gain by giving more to someone who’s already got a lot, then focus on neglected prior doers – those who have received too little attention and reward for their good accomplishments.

Added 12a: If you think some promising intellectuals lack resources, then buy shares in their future prize winnings.  If you think there are insufficient prizes in some area, then by all means create such prizes.  Just don’t confuse rewarding past intellectual accomplishments with investing to gain future financial returns.

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Bah Complex Regulation

By Robin Hanson · November 20, 2010 8:00 pm · Comments (20)

There are many good arguments for and against regulation. But the strongest general economic argument against complex regulation is innovation:

A disease … is slowly killing the American economy. We are creating so much regulation – over tax policy, health care, financial activity – that smart people have figured out that they can get rich faster and more easily by manipulating rules on behalf of existing corporations than by creating net new activity and wealth. … It is always hard to start a business. It is especially hard to start an innovative business, one that will foster a new technology or business method. … The two largest pieces of legislation enacted in the past two years – health care and financial reform – are very vague. …

This is highly dangerous to innovation, which depends on clear and transparent rules. The more complexity, the more incumbents are favored. They have the capital to participate in complicated regulatory proceedings. They can hire high-priced lobbyists to present facts in a light most favorable to them. … The World Bank ranks the United States 62nd in the world in terms of how easy it is to pay taxes – and with a 16,000-page tax code, this is no surprise. .. So, what is to be done? … It is time for Congress to do the hard job of saying what lawmakers mean in clear and easy-to-understand language. … We should reject bills that are thousands of pages or that delegate vast authority to unelected regulators. (more)

Growth is continuing even with heavy and complex regulation, so its not quite fair to say that is “killing” the economy.  But to those who try to develop products and services that stand a chance of substantially changing existing practices, it is pretty obvious that complex regulations are their main preventable obstacle. And these are the innovations that have the best chance of producing a large social surplus relative to private profit. Most new products and services, in contrast, are far more likely to benefit some firms at the expense of others, giving a low and perhaps negative net social gain.

If our hope is that Congress will volunteer to do a hard job, well we can just give up now. Since this innovation-hindering effect of complex regulation has been long known, you might think opponents of regulation would emphasize it loud and often. After all, even a small increase in growth rates due to more innovation offers enormous gains to our grandchildren and further descendants. But regulatory opponents hardly mention such gains; they realize that this argument has little emotional punch. Why?  An obvious answer: people hardly care about future generations.

But people do find it engaging to invoke future generations when they argue that carbon taxes will save future generations, or that redistribution today will hurt future generations. What is the difference? My theory: non-ideological stuff we don’t fundamentally care about is mainly interesting when it connects to ideological stuff, i.e., standard left-right positions we commonly argue. Key implications of such positions, or arguments for or against them, are interesting to us. But since both future generations and regulation complexity are mostly non-ideological, the connection between them is just not of interest. Politics is not about policy.

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Real Creativity

By Robin Hanson · November 13, 2010 2:00 pm · Comments (12)

Munira Mirza’s ’08 review of Creativity: Unconventional Wisdom from 20 Accomplished Minds:

The editors’ corporate conceptualisation of ‘creativity’ makes this collection about as exciting as a the spring show from Marks and Spencers. … What is creativity? … the respondents give a rather similar (and by the end of the book, dull) answer – it’s thinking out of the box, it’s breaking the rules, it’s challenging convention. …

In fact, creative people don’t think of themselves as ‘creatives’ with a particular mentality to boot (unless, of course, they run a creative consultancy, in which case it’s necessary for promotional purposes). They think of themselves as novelists, engineers, software designers, journalists, artists, and so on. … They make things and are preoccupied with the things they make, unbothered with developing a ‘creative’ mentality. … It is their engagement with their chosen activity that drives them, rather than some kind of personal predisposition or character type. …

We live in a society obsessed with cultivating the creative mind: on this view, the mental attitude is all that matters, regardless of what end product it actually makes. This shift has taken place most profoundly in arts education. … And now, we have a deluge of state sponsored initiatives to encourage creativity in people (creative industries, Creative Partnerships, creative quarters, etc) but a dearth of the skills that allow people to create. …

There are many examples in the book when creativity is shown to be a team effort, rather than the spark of an individual genius …. Creativity is also something that requires hard work and intellectual energy, rather than spontaneity. … Karl Marx pointed out that when people engage in creative labour they are required to pay close attention both to the concrete practice of creating, and the conceptualisation of the end product. (more; HT Rachel Armstrong)

Yup.  I’ll admit it; Murina’s more (academic-style) articulate than I on the subject.

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Thresholds Hurt Oddballs

By Robin Hanson · October 14, 2010 11:15 pm · Comments (22)

To estimate the quality of something using a bunch of noisy clues, people often set minimum “deal-breaker” thresholds for each clue, and then reject candidates who fall below any threshold. For example, in dating:

My 20-year-old daughter informed me that she recently dumped a guy because when she asked him the meaning of a word, he said, “Are you serious?”  “That was it. It’s like a huge test for me. … It told me he felt intellectually superior to me,” explained Jenna. … Whoa, give the guy a break, I thought. …

[In] “Love and the Litmus Test,” an article that appeared here 28 years ago [I] essentially justified the kind of subjective, quick and seemingly irrational judgment that Jenna had made. … An “insignificant gesture, an offhand comment” or a plaid sports coat can alter destiny. … For my daughters, ineptitude in the kitchen is almost a deal-breaker. … “The check shouldn’t even hit the table if you’re out to dinner — he should grab it out of the waitress’s hand. … If a guy ever picks up a phone during a meal, I would never talk to him again. …  Irrelevant [facebook] wall posts tells me the guy has too much time on his hands. (more)

Now consider the following two dimensional space, where clues are linear correlates of a linear quality.

thresholdbiasRed lines A,B,C show three different clue cutoffs, and the blue region shows the points that satisfy all three cutoffs. If we consider directions perpendicular to the better vs. worse quality axis, we can see that even though being “odd“, i.e., away from the central quality axis, does not hurt quality, the deal-breaker approach to selecting candidates is biased against odd candidates. Plain, i.e., not odd, candidates are acceptable even when relatively low in quality.

In general, instead of letting each noisy clue be a potential deal-breaker, it is usually better to weigh your clues together (e.g., via a weighted average).

So why do some women claim that they combine clues via deal-breaker thresholds instead of via weighing clues? My guess: such women are bragging about their selectivity in a way that is relatively verifiable. It would be harder to verify a claim that they set a high threshold on a complex weighing of many factors.

The same bias applies to regulations, which typically consist of a set of minimal requirements along many different dimensions. Such regulations are easier to express, monitor, and prosecute, but as with dating they are also biased against odd people and ventures. Count this as another way to see that regulation discourages innovation.

Thanks to Alex for talking this through with me.

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Do We Rule Our Fate?

By Robin Hanson · October 9, 2010 9:30 pm · Comments (20)

Tyler Cowen:

How recognizable will humans be in five hundred years?

Alex reports:

Tyler and I argued recently about whether or not humans will be recognizably human in 500 years.

Let us assume that scientific progress continues.  My view is that parents don’t so much like “difference,” unless it is very directly in their favor.  Using technology, parents will select for children who are taller, smarter in the way that parents value, better looking, and perhaps also more loyal to their families.  The people in the wealthy parts of the world will look more like models and movie stars, but they will be quite recognizable. … People will in various ways be cyborgs, but more or less invisibly from the outside at least.

Dogs look different than they did five thousand years ago, but that is because humans controlled their breeding and opted for some extremes.  How would they look today if the dogs themselves had been in charge of the process?

At current rates of change, 500 years is a loooong time. For example, if familiar ~4%/yr economic growth rates continued for 500 years, the economy should get 300 million times bigger! When we look at the long-run evolution so far of creatures with preferences, e.g., primates or human organizations, we see that conscious preferences of initial versions have not historically been a huge influence on final results. Yet Tyler assumes that kid preferences of today’s parents are the main thing determining our descendants’ features in 500 years; today’s parents will get what they want then. But why would our wishes be so much more influential than our ancestors’ wishes?

Tyler is far from alone – many assume humans have wrested control of their future from traditional evolutionary influences, so that our distant future will be whatever we choose it to be today. But while such control might eventually be possible given sufficient coordination and foresight, it surely is not true in any general sense today. It might be trivially true if there were very little selection or drift of preferences over 500 years, but this seems pretty unlikely. And it is almost certainly not true in my em (whole brain emulation) scenario.

Yes with new techs change no longer need follow DNA mutation and crossover, and yes this allows for more rapid change.  But variation and selection should continue, no matter where designs are stored.

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