Tag Archives: Signaling

‘Never Settle’ Is A Brag

By Robin Hanson · October 5, 2011 10:40 pm · Comments (78)

From a famous Steve Jobs Stanford graduation address:

Sometimes life hits you in the head with a brick. Don’t lose faith. I’m convinced that the only thing that kept me going was that I loved what I did. You’ve got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don’t settle. (more; HT Alex)

Now try to imagine a world where everyone actually tried to follow this advice. And notice that we have an awful lot of things that need doing that are unlikely to be anyone’s dream job. So a few folks would be really happy, but most everyone else wouldn’t stay long on any job, and most stuff would get done pretty badly. Not a pretty scenario.

OK, now imagine that only graduates from colleges like Stanford or better followed this advice. Since such folks have more fulfilling job options, a larger fraction of them would end up really happy. But we’d still have too much job turnover among our elites, with too much stuff done badly.

Now notice: doing what you love, and never settling until you find it, is a costly signal of your career prospects. Since following this advice tends to go better for really capable people, they pay a smaller price for following it. So endorsing this strategy in a way that makes you more likely to follow it is a way to signal your status.

It sure feels good to tell people that you think it is important to “do what you love”; and doing so signals your status. You are in effect bragging. Don’t you think there might be some relation between these two facts?

Added: Will Wilkinson, Arnold Kling and Megan McArdle weigh in.

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Forget 9/11

By Robin Hanson · September 11, 2011 9:10 am · Comments (95)

Opening my Sunday comics this morning I see half are not-funny 9/11 memorials. Half of media commentary also seems on 9/11, and is largely uninformative.

In the decade since 9/11 over half a billion people have died worldwide. A great many choices could have delayed such deaths, including personal choices to smoke less or exercise more, and collective choices like allowing more immigration. And cryonics might have saved most of them.

Yet, to show solidarity with these three thousand victims, we have pissed away three trillion dollars ($1 billion per victim), and trashed long-standing legal principles. And now we’ll waste a day remembering them, instead of thinking seriously about how to save billions of others. I would rather we just forgot 9/11.

Do I sound insensitive? If so, good — 9/11 deaths were less than one part in a hundred thousand of deaths since then, and don’t deserve to be sensed much more than that fraction. If your feelings say otherwise, that just shows how full fricking far your mind has gone.

Added: Similar views here.

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Pronoun Inflation

By Robin Hanson · September 8, 2011 10:00 am · Comments (23)

A striking example of how powerful signaling can be in forming language:

Not so long ago—just a few hundred years—thou and its cousins thee and thy were the words to use when addressing one person, while you and ye and your were reserved for more than one. … But later in the Middle Ages, … it became the custom, not only in English but in most European languages, to show respect by addressing someone as you, even if the person was singular. Perhaps it was the inverse of the royal we, used by a ruler in public utterances as if to speak on behalf of God or of all his or her subjects. The subjects would show respect by responding to the plural we with the plural you. … Because you was a sign of respect, thou by contrast became a sign of disrespect, at least in public. … Gradually politeness spread so widely among speakers of English that you entirely displaced thou. … Even with you usurping the whole of second-person pronouns, the impulse to distinguish between singular and plural remains. That’s why we have plural locutions that prompt purists to gnashing of teeth: you all, y’all, yous, you’ns, and of course that all-time favorite … you guys. (more; HT Virginia Postrel)

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How Many Levels?

By Robin Hanson · August 17, 2011 6:45 pm · Comments (12)

Some firms teach students how to apply to MBA schools:

Graham Richmond, founder of Clear Admit, helped one client get into Wharton by persuading her to scrap her essay about an energy deal she worked on and focus on something else: shooting guns. The Texas-based private-equity firm she worked at was a male-dominated environment where the senior executives liked to talk business at the shooting range. So the Asian American learned to fit in by joining them for target shooting.

“I was all about getting her to understand who’s reading the file,” Richmond said. “The people reading the file are more like your high school English teacher than the colleague sitting next to you at an investment bank,” he said; they’re more interested in getting a good sense of who you are than your business experience. (more)

This seems a vivid example of learning to signal. You may recall a month ago I said school need not be simple learning nor simple signaling; it could be learning how to signal:

People in business signal to each other all the time. In fact, most of the on-the-job business learning that employees do after college, such as how to dress well, how to give presentations, how to write memos, how to talk with clients, etc. might be skills that are mainly useful to signal innate features to bosses, co-workers, clients, etc. So employers might pay more for students with prestigious degrees because such degrees show an ability to learn how to later send good business signals. (more)

So we could have firms helping applicants learn to signal to MBA schools, schools that teach students how to signal well to businesses that such students will be good at learning on the job how to signal to bosses, co-workers, clients, etc. How many levels of signaling are there anyway?!

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Indulging In Indirection

By Robin Hanson · August 14, 2011 8:00 am · Comments (7)

Readers actually enjoy stories more when authors are less coy:

Subjects significantly preferred the spoiled versions of ironic-twist stories, where, for example, it was revealed before reading that a condemned man’s daring escape is all a fantasy before the noose snaps tight around his neck. Subjects read stories as-is and with introductory paragraphs that gave away the endings, or spoilers. In almost all cases, they preferred the “spoiled” stories. The same held true for mysteries. … Subjects liked the literary, evocative stories least overall, but still preferred the spoiled versions over the unspoiled ones. (more; study; HT Patrick Salsbury)

Students also learn from teachers who are more direct:

When Detterman began teaching…

I thought it was important to make things as hard as possible for students so they would discover the principles for themselves. … Now … I try to make it as easy for students as possible. Where before I was ambiguous about what a good paper was, I now provide examples of the best papers from past classes. Before, I expected students to infer the general conclusion from specific examples. Now I provide the general conclusion and support it with specific examples. (more; HT Bryan Caplan)

If readers enjoy stories without surprises better, and if students learn better from teachers who are similarly direct and unsurprising, why are authors and teachers so often indirect, and why do readers and students support them?

Two obvious complementary explanations stand out:

1) Readers and students prefer to signal their cleverness at figuring out what an author or teacher is saying. Overly direct authors or teachers insult us via visibly presuming our inability to follow subtleties.

2) Homo hypocritus is in the habit of speaking indirectly:

It is easier to use play talk to evade talk rules if groups develop a very local culture and language – particular words and associations that have particular meanings due to the local history. This makes it harder to clearly convince outsiders that something illicit was communicated. (more; see also)

I recently read Pride & Prejudice, and noticed how much the author flatters the reader, and how much the characters flatter each other, by speaking indirectly yet presuming that listeners understand the intended meanings. Only fools speak directly when indirection is possible, it seems.

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Subtle Signals

By Robin Hanson · August 5, 2011 10:35 am · Comments (12)

Here is a great example of signaling and screening:

The rock supergroup Van Halen had a clause in their concert contracts that stipulated that the band would “be provided with one large bowl of M&M candies, with all brown candies removed”. Once the “M&Ms” story leaked to the press, social commentators jumped all over it as an egregious example of the pampered and spoiled behavior that rock artists demanded. … [But] the band put the “no brown M&Ms” clause in their contracts for a very good reason. …

The band kept noticing errors (sometimes significant errors) in the stage setup in smaller cities. The band needed a way to know that their contract had been read fully. And this is where the “no brown M&Ms” came in. The band put a clause smack dab in the middle of the technical jargon of other riders: “Article 126: There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation”. That way, the band could simply enter the arena and look for a bowl of M&Ms in the backstage area. … A bowl of M&Ms with the brown candies? No bowl of M&Ms at all? Stop everyone and check every single thing, because someone didn’t bother to read the contract. (more; HT Phil Maymin)

This example also shows how hard it can be to collect solid evidence for signaling theories. If we didn’t have the evidence of band members explaining their reasons, how long would it take to guess this reason, and how much other evidence would one have to collect to convince skeptical observers? Because we are often trying to be subtle with our signals, it can be hard to convince skeptical observers that much signaling is actually going on.

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My Freak On Again

By Robin Hanson · July 10, 2011 11:00 pm · Comments (7)

A few weeks ago I posted on appearing at the end of a Freakonomics radio show on “The Folly Of Prediction.”  I now appear at the end of another Freakonomics radio show, this one on “Hey Baby, Is That a Prius You’re Driving?”, i.e., on signaling:

Managing our appearance is actually a lot of what we humans do. Trying to understand, business, trying to understand jobs, school, even medicine. If you don’t realize that people are trying to manage their image, you miss out on a lot of what’s going on.

I elaborate on how we economists signal:

Economists like to point out there’s almost no chance that your vote is going to determine an election. So one of the things an economists like to do to show off that they’re clever economists is to not vote and to say to everybody, hey I’m smarter than all the rest of you!  See, I understand that by voting, it’s not going to make any difference, anyway. And we do a little of that too often. Say, you might not tip at a restaurant because you say, you know I’m never come back to this restaurant again.  And so economists often think like that, they think through the strategy and they go out of their way of maybe being rude or a little thoughtless, in usual language, in order to show, hey I understand the strategy of this. I’ve got to admit, I do that sometimes. I tip at restaurants, I’ll tell you that, but still—

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Grace-Hanson Podcasts

By Robin Hanson · July 10, 2011 2:00 pm · Comments (9)

Katja Grace was in town recently, so she and I took the opportunity to start an occasional podcast series. Here are the first two episodes:

  1. Signaling
  2. Idealism

Alas we recorded the second one outside, with odd distracting noises, perhaps the wind.

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School Signal Investing

By Robin Hanson · July 9, 2011 8:20 pm · Comments (33)

Tyler Cowen and Bryan Caplan have been arguing about the signaling theory of education. Bryan’s latest is here, Tyler’s here. Tyler cites two recent empirical papers which estimate that “signaling accounts for one-third of the educational wage premium.” Such papers generally try to predict later income as a function of schooling years and quality, plus other covariates. Today I want point out two bits of “armchair econ” data that complicate such discussions.

Datum #1: Pretty much no one cared about the grades I got before tenth grade.

As long as my grades weren’t very low, I was consistently promoted to the next level. If I got into special classes for gifted students, that was based on IQ tests, not grades. Colleges later cared about my high school GPA, but not about any earlier GPAs. So since no one was watching my earlier grades, they couldn’t possibly be signals right?

Not so fast. Assume for the sake of argument that employers want high GPA grads of good colleges entirely for signaling reasons – students never learn anything useful for future jobs, but merely show innate abilities. But also assume that it takes years of training and effort for kids with high innate ability to learn to do well in school. Given these assumptions third grade schooling is entirely an investment in a signal to later show employers. GPAs then only help kids see how well they are learning school stuff, which will later help them send a good signal. So even though no signaling is happening in third grade, everything third grade students do might be an investment in later signals.

Datum #2: When I visit private firms, people there often mention the prestigious degrees they have.

Yes, they may do this more often for academic visitors, but the point remains. Firms want to impress customers, suppliers, investors, etc. with the quality of their employees, and hiring graduates from prestigious schools helps them signal such quality. Hiring such graduates can also help a manager to impress his bosses, potential employees, and sister divisions about the quality of his employees. Thus even once a boss has determined the “real” productivity of his or her employer, he or she should still be willing to pay extra for employees with prestigious degrees.

Furthermore, people in business signal to each other all the time. In fact, most of the on-the-job business learning that employees do after college, such as how to dress well, how to give presentations, how to write memos, how to talk with clients, etc. might be skills that are mainly useful to signal innate features to bosses, co-workers, clients, etc. So employers might pay more for students with prestigious degrees because such degrees show an ability to learn how to later send good business signals. And this extra pay for top degrees could be entirely an investment in signaling, even if after hiring someone no one ever knew of or mentioned their degrees, and even if schooling makes students better able to please employers.

Bottom line: If much of human interaction is signaling, then much of human investment is in ways to better signal. Businesses that signal are also willing to invest in better signals. The fact that attending school seem to cause changes in students that employers are willing to pay for does not show that school isn’t all about signaling.

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Why Non-Profits?

By Robin Hanson · July 6, 2011 11:50 am · Comments (39)

Arnold Kling questioned the value of non-profits:

A profit-seeking enterprise is more accountable, in that a profit-seeking business must satisfy consumers or else go out of business. Hence, it must provide something of value to its customers. On the other hand, if a non-profit fails to provide any benefit to its customers, it still might be able to obtain grants from the government or from donors.

Fabio Rojas responded:

Non-profits provide services that are not sustainable in a for-profit format. … The customers simply can’t pay for what might benefit them and “we” (the donors) have decided that these people need the service. The non-profit format is a way to handle donations to third parties in an organized and semi-public fashion. … Examples include services to poor children (e.g., Boys and Girls Clubs), women (e.g., battered women’s shelters) and immigrants (e.g., many religious groups donate time and services to poor immigrants). My intuition is that it would be hard for a profit oriented institution to help battered women or poor children. …

It’s signaling. Not only in the Hanson “I do this because I care” sense, but as a commitment to a specific issue. The people who run the local church organization for recent Mexican migrants have to show that they won’t bail in order to give shareholders a slightly higher return. Rather, by making their organization non-profit, they show an allegiance to a specific type of person, not their wallet.

Fabio suggests that the main function of non-profits is as intermediaries between those who want to donate and the deserving recipients they want to help. But the obvious question here is: why can’t non-profits give these deserving recipients vouchers for service at for-profit firms? Why do non-profits need to provide the services themselves? Remember that 51% of non-profit revenue goes to medical orgs like hospitals, and 14% to schools — vouchers are quite feasible for both of these kinds of services.

Admittedly, in some cases there are strong complementarities between the task of deciding who is a deserving recipient and actually providing services. This applies, for example, to service coordinators such as social workers, who evaluate aid candidates and suggest relevant services to them. But why must the services that coordinators coordinate be provided by non-profits?

Now there might be good reasons for customers to sometimes choose non-profit service providers. Such a choice might assure customers that advice being given is not overly influenced by profit motives. But this reason should apply to many sorts of customers all across the economy – there is no obvious reason to expect a correlation between people donors consider deserving of help and people who buy trustworthiness by buying from non-profits.

So why don’t the non-profits that donors use to distribute help usually give vouchers to recipients, vouchers valid at either non-profit or for-profit service providers? Once one has decided who needs what sort of help, why does it matter what kind or organizations provide that help?

I suspect that what is going on here is that non-profit donors and employees both dislike the idea of letting money to go for-profit firms, regardless of how much that might benefit aid recipients. They affiliate with non-profits in order to gain an image of “doing good” and substantial affiliations with for-profits in that process taints that image.

Added 5p: Several commenters pointed out that many prefer to volunteer time, and without money mediating between their time donation and the cause. That is, they don’t just want to work at whatever makes the most money and have that money used for the cause – they want to personally spend their time on the cause. This also seems to fit my basic theory – that the more money and profit are involved in the process, the more that taints the do-gooding image of their donation.

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