Who Likes Simple Rules?

By Robin Hanson · May 13, 2019 9:50 pm · Comments (2)

Some puzzles:

  • People are often okay with having either policy A or policy B adopted as the standard policy for all cases. But then they object greatly to a policy of randomly picking A or B in particular cases in order to find out which one works better, and then adopt it for everyone.
  • People don’t like speed and red-light cameras; they prefer human cops who will use discretion. On average people don’t think that speeding enforcement discretion will be used to benefit society, but 3 out of 4 expect that it will benefit them personally. More generally people seem to like a crime law system where at least a dozen different people are authorized to in effect pardon any given person accused of any given crime; most people expect to benefit personally from such discretion.
  • In many European nations citizens send their tax info into the government who then tells them how much tax they owe. But in the US and many other nations, too many people oppose this policy. The most vocal opponents think they benefit personally from being able to pay less than what the government would say they owe.
  • The British National Health Service gets a lot of criticism from choosing treatments by estimating their cost per quality-adjusted-life-year. US folks wouldn’t tolerate such a policy. Critics lobbying to get exceptional treatment say things like “one cannot assume that someone who is wheel-chair bound cannot live as or more happily. … [set] both false limits on healthcare and reducing freedom of choice. … reflects an overly utilitarian approach”
  • There’s long been opposition to using an official value of life parameter in deciding government policies. Juries have also severely punished firms for using such parameters to make firm decisions.
  • In academic departments like mine, we tell new professors that to get tenure they need to publish enough papers in good journals. But we refuse to say how many is enough or which journals count as how good. We’d keep the flexibility to make whatever decision we want at the last minute.
  • People who hire lawyers rarely know their track record and winning vs. losing court cases. The info is public, but so few are interested that it is rarely collected or consulted. People who hire do know the prestige of their schools and employers, and decide based on that.
  • When government leases its land to private parties, sometimes it uses centralized, formal mechanisms, like auctions, and sometimes it uses decentralized and informal mechanisms. People seem to intuitively prefer the latter sort of mechanism, even though the former seems to works better. In one study “auctioned leases generate 67% larger up-front payments … [and were] 44% more productive”.
  • People consistently invest in managed investment funds, which after the management fee consistently return less than index funds, which follow a simple clear rule. Investors seem to enjoy bragging about personal connections to people running prestigious investment funds.
  • When firms go public via an IPO, they typically pay a bank 7% of their value to manage the process, which is supposedly spent on lobbying others to buy. Google famously used an auction to cut that fee, but banks have succeed in squashing that rebellion. When firms try to sell themselves to other firms to acquire, they typically pay 10% if they are priced at less than $1M, 6-8% if priced $10-30M, and 2-4% if priced over $100M.
  • Most elite colleges decide who to admit via opaque and frequently changing criteria, criteria which allow much discretion by admissions personnel, and criteria about which some communities learn much more than others. Many elites learn to game such systems to give their kids big advantages. While some complain, the system seems stable.
  • In a Twitter poll, the main complaints about my fire-the-CEO decisions markets proposal are that they don’t want a simple clear mechanical process to fire CEOs, and they don’t want to explicitly say that the firm makes such choices in order to maximize profits. They instead want some people to have discretion on CEO firing, and they want firm goals to be implicit and ambiguous.

The common pattern here seems to me to be a dislike of clear formal overt rules, mechanisms, and criteria, relative to informal decisions and negotiations. Especially disliked are rules based on explicit metrics that might reject or disapprove people. To the extent that there are rules, there seems to be a preference for authorizing some people to have discretion to make arbitrary choices, regarding which they are not held strongly to account.

To someone concerned about bribes, corruption, and self-perpetuating cabals of insiders, a simple clear mechanism like an auction might seem an elegant way to prevent all of that. And most people give lip service to being concerned about such things. Also, yes explicit rules don’t always capture all subtleties, and allowing some discretion can better accommodate unusual details of particular situations.

However, my best guess is that most people mainly favor discretion as a way to promote an informal favoritism from which they expect to benefit. They believe that they are unusually smart, attractive, charismatic, well-connected, and well-liked, just the sort of people who tend to be favored by informal discretion.

Furthermore, they want to project to associates an image of being the sort of person who is confidently supports the elites who have discretion, and who expects in general to benefit from their discretion. (This incentive tends to induce overconfidence.)

That is, the sort of people who are eager to have a fair neutral objective decision-making process tend to be losers who don’t expect to be able to work the informal system of favors well, and who have accepted this fact about themselves. And that’s just not the sort of image that most people want to project.

This whole equilibrium is of course a serious problem for we economists, computer scientists, and other mechanism and institution designers. We can’t just propose explicit rules that would work if adopted, if people prefer to reject such rules to signal their social confidence.

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The Persistence of Poverty

By Robin Hanson · May 9, 2019 2:30 pm · Comments (0)

On Bryan Caplan’s recommendation, I just read The Persistence of Poverty, by Charles Karelis (2007). Karelis seeks to explain these patterns:

Five patterns that have been common among the poor in many times and places, then, and that played a role in keeping them poor or making them poorer, are: 1. not working much for pay; 2. not getting much education; 3. not saving for a rainy day; 4. abusing alcohol; and 5. taking risks with the law. … [And] having children early and out of wedlock … is doubtless a big factor in poverty in the United States today.

His explanation is that often we experience diminishing returns for “relievers” that reduce our pain. Which actually gives us increasing, not diminishing returns for getting “more” in that area. For example:

Consider housing. Suppose we take the perspective of a couple whose house has a bedroom for them and each of their six children, plus adequate room for entertaining and other functions besides. Clearly they are consuming or using housing in the more-than-sufficient range. Their house is a source of positive experience. As each child leaves for college (let us say), the amount of space available for the use of the couple goes up by roughly equal amounts, but probably their enjoyment of the house goes up by smaller and smaller amounts. …

Now imagine a couple whose dwelling is a one-bedroom house that is barely adequate for themselves. If a child arrives, then given the crowded conditions, the couple’s privacy is much reduced, their peace and quiet is disturbed, and they may have to start sleeping in shifts. Whatever the compensating joys of parenthood may be, these are impressive deteriorations in their physical comfort. By the time child number six arrives, the couple may hardly notice the further deterioration in their situation that occurs as a result. One more voice outside the bedroom door when you cannot sleep anyway on account of the five that are already audible probably will not make much difference.

That is, you don’t notice as much of a difference between very and mildly crowded, as you do between mildly and not at all crowded. Karelis further claims (though without sufficient support in my opinion) that this sort of things happens much more often for people who are poor relative to their culture:

Whether something is functioning as a reliever for a given consumer is relative. It is only partly a question of objective economic circumstances, because it depends too upon how the consumer sees those circumstances. … A more anthropological view responds that the difference lies in neither discipline nor opportunity but in the values of the various sub-cultures. … No one doubts that different cultural groups within the United States have different histories, and that these different histories create different economic norms and expectations. For instance, having come from much poorer countries, Asian immigrants to the United States often have relatively low norms and expectations. By contrast, African-Americans, who are closely acquainted with the lifestyles of middle-class whites, and who have long been exposed to “the American dream” and all it implies, often have relatively high norms, if not exactly expectations. … this … predicts that the felt relief of the marginal dollar will be greater for poor Asian immigrants than the felt relief of the marginal dollar for similarly poor African-Americans.

Karelis first published this idea in 1986, and he notes that similar ideas were published by van Praag in 1968 and Friedman & Savage in 1948. I find the idea coherent and mildly plausible, but just based on Karelis’ arguments, I wouldn’t put it much above other common poverty explanations, such as stupidity, sickness, impatience, impulsiveness, and lack of self-control.

However, I gave more weight to this account after I realized that it is implied by my usual favorite account of income status: utility linear in income rank. As income is usually distributed lognormally, the function relating rank to log income must be convex below and concave above median income. This implies diminishing returns in income above median income, and a range below median income with increasing returns to income. When you have increasing returns to income, you value each unit of income more when you have more of it, rather than the usual diminishing returns case, where you value each unit of income less, the more income you have.

Karelis suggests some policy implications:

Seeing that the income effect and the substitution effect of strategies to make work pay will be mutually reinforcing, making work pay [via increased wages] is a double-barreled anti-poverty approach. By contrast, no-strings assistance is a single-barreled approach, since it lacks a positive substitution effect. …

Thirty-five years ago the speeches and writings of American civil rights leaders often framed or interpreted the circumstances of their audiences by “comparing them up”—measuring them against the circumstances of the middle-classes and the upper-middle classes, or even against the images of the good life found within the American Dream. This was openly done for the sake of energizing audiences with discontent. The goal was reasonable enough, but according to our theory, the strategy was probably counterproductive. …

Increasing the differential between the income from crime and the income from honest work—by raising the odds of punishment, lengthening sentences, or making (honest) work pay better—is likelier to be effective than strategies built on the assumption that criminals are dysfunctional and hence unresponsive to sticks and carrots of this kind; and it is likelier to be effective than strategies built on the assumption of atypical preferences. …

Our utility function could [correctly] be used to justify putting the least poor people ahead of the very poorest people in distributing assistance.

Though Karelis didn’t mention it, the same logic says to allow and even promote more gambling among the poor; within the convex region gambles look like a net gain. For the same reason, it would be good to promote inequality among the poor.

However, all these policy recommendations are based on assuming that the preferences of other poor people don’t change when you help one poor person move up their utility function. But if the transition from convex to concave utility, and other aspects of the utility of money, result from the actual distribution of income in one’s reference culture, then helping one person changes the distribution against which others compare themselves.

For example, if utility is linear in rank, the help you give one person is exactly cancelled by the hurt you thereby inflict on the others who this one person has jumped over in rank. Yes, with some other functional form, the help might outweigh the hurt, but with other forms the hurt might outweigh the help. This effect of changing the reference distribution is not small, and shouldn’t be ignored as Karelis does.

Finally, Karelis focuses entirely on immediate choices, rather than on long-term strategies. Young poor people who care about the long run should focus on trying to dig their way out of poverty, and so much less display the six patterns of poverty that Karelis tries to explain. So to predict typical poor behaviors, we need to add a substantial degree of impatience or lack of self-control to Karelis’ account.

Added 4p: Karelis responded to my email, and asked me to post this comment:

Thank you for blogging so thoughtfully about my book. One comment. The hypothesis of the book can fairly easily be extended to the putative fact that impulsiveness, impatience, and lack of self-control are commoner among the poor by introducing the idea that overcoming these weaknesses is a kind of work. The idea would be that this “will-work” will have less appeal when the material gain produced yields a smaller rather than larger addition to utility, as (the hypothesis contends) is the case in the lower income ranges. As I recall, Andrew Sullivan, Ezra Klein, and Ta-nehisi Coates all noted this extrapolation of my theory around the time the book appeared. The amendment was made possible, really, by research into the nature of willpower subsequent to the publication of my book.

This story can work re efforts to make small gains while poor, but doesn’t work re making big gambles or long-term efforts to dig oneself out of poverty. Those should be seen as large gains, even for someone who can’t find sufficient motivation to work for small gains. So to explain a poor person uninterested in either of those, we need to add something else to our story.

Added 6p: Karelis further responds:

Yes, we need to add something else to our story, but maybe not too much. My hypothesis says that medium-sized  additions to the consumption of someone at the low end of the income scale (additions that leave them shy of sufficiency) will raise and not lower their marginal utility for the good in question, and thereby increase their motivation to secure more of that good. You are right to see that these medium additions need not come from an external source. Self-help can be as effective as exogenous help in raising marginal utility in this way. For instance, if you have ten unwashed dishes in the sink, and someone washes eight of them, the psychological benefit you will get from washing the last two will be more than you would have gotten from washing the first two, and it doesn’t matter whether that “someone” is you or a friend.

So why don’t poor people perform this kind of self-help more often? They may have internalized the law of diminishing marginal utility, just like the policy folks who resist helping the poor for fear of undermining their motivation for self-help. More likely, none of us, rich or poor, is very good at self-gaming, i.e. figuring out and acting upon the likely impact of possible actions on what will seem rational to us when we have completed those actions.
One might plausibly argue that no one ever really makes long term plans. People who seem to be doing so, such as students going to college, are really just executing standard cultural plans, doing “what you are supposed to do”. Then the “extra” we’d need to add, to explain why the poor don’t seem to have long term plans to dig them out of poverty, is to say that the cultures of poor people often don’t have standard cultural plans that induce them to so dig.
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Why Crime Discretion?

By Robin Hanson · May 7, 2019 12:00 pm · Comments (2)

Our criminal law system gives discretion to many actors, in effect, pardon criminals, vary their punishment. Police officers and their bosses can choose not to arrest, or to charge with a lower crime, prosecutors and their bosses can choose not to prosecute, to prosecute for a lower crime, or to settle on a lower crime, judges and juries can choose not to convict and to make mild or severe sentences, and governors and presidents can pardon them, and prisons can parole them.

If you were the victim of a crime, you might be disturbed to see that so many people can in effect pardon the criminal who hurt you. Also, as these parties are paid far less to deal with that criminal than how much that criminal could suffer, you could reasonably be worried about bribes and other forms of bias and corruption. Even if you think there should be some discretion in the system, you might think that should be limited more, such as to only the judge. Why do we have so much discretion in our system?

To find out, I did this Twitter poll:

I also did two other polls, the same except “speeding” was replaced by “trespassing” and “in general”. In all three polls, by a roughly 3-1 ratio respondents thought that discretion would favor them personally. And in all cases, there is a substantial correlation between thinking that correlation benefits you and that it benefits society. However, for speeding, which is the case where they should have the most personal knowledge on the consequences of discretion, they were split evenly, about 1-1, on if discretion helps cut net social harm. And in the other two cases, where they personally know much less, they guessed about 3-2 that discretion cut net social harm.

To me, the obvious interpretation here is this: the main reason most people favor crime law discretion is that they expect to personally benefit from it. They are willing to presume that it benefits society in areas they don’t know much about, but they admit that it doesn’t in the areas they know best. This seems analogous to people estimating much higher accuracy for media reports in areas they don’t know about, compared to areas in which they’ve seen how media coverage compares to personal knowledge.

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Freedom Isn’t Free

By Robin Hanson · May 5, 2019 11:45 am · Comments (0)

The concept of a right to health has been enumerated in international agreements which include the Universal Declaration of Human Rights, International Covenant on Economic, Social and Cultural Rights, and the Convention on the Rights of Persons with Disabilities. … equitable dissemination of medical knowledge and its benefits; and government-provided social measures to ensure adequate health. …

Everyone has the right to … food, clothing, housing and medical care and necessary social services. … “responsibility [that] extends beyond the provision of essential health services to tackling the determinants of health such as, provision of adequate education, housing, food, and favourable working conditions” … right of everyone to the enjoyment of the highest attainable standard of physical and mental health … each individual holds an inherent right to the best feasible standard of health. (more)

We might want to say that people have a right to food. And in a place like the Soviet Union, where food was centrality produced and distributed, a right to food might be defined in terms of fixed numbers of particular items. So many loaves of bread, kilos of meat, and bottles of milk per week, for example. Such “rights” would be complex, vary by time and place, and result mostly from complex and changing tradeoffs, as well as politics.

While basic ethical principles might influence such rights, that influence may be hard to discern among so many other influences. If a right to food were enshrined in the text of a constitution, it would be hard for courts to have that text and a few abstract principles strongly determine if any given action is taken to violate that right or not. They might accumulate case law on how to make such decisions, but that would mostly be the court defining the right, not the constitution or abstract principles. The court might delegate many details to government agencies, in which case it would be those agencies deciding most details, not the constitution or abstract principles.

In contrast, in a market economy like ours, where individuals can more easily choose the particular foods that they want, it makes less sense to talk having about having rights to particular baskets of bread, meat, milk, etc. One could instead talk about a right to so many calories or grams of protein, but that might be hard to enforce. It could make more sense to talk about a right to a minimum food budget, and to having foods available to purchase at their real costs. (Such a budget might be set by market prices to get min calories, etc.) And it might be work even better to just focus on general redistribution systems expressed in terms of money, allowing each person to choose their own food priorities.

In a market-based economy where rights are implemented via food budgets or overall redistribution policies, outcomes would be influenced more by the constitution text and abstract principles, and by many individual choices, and less by the courts or government agencies.

Similarly, in a centrally-administered medical system, one could make a long list of the particular medical treatments to which each patient is entitled, if they were diagnosed with particular conditions. This long list of medical rights would be context-dependent and change frequently, and it wouldn’t have any clear relation to basic ethical principles or a constitutional text about a right to medicine. Such a list would mostly reflect many practical tradeoffs as well as politics. It seems quite hard to formally define and enforce any simple general “right to medicine” given all this complex variation and context dependence.

When medicine is allocated more by a competitive market, it can make more sense to try to ensure that people are free to buy medicine, medical insurance, and info on medical quality, all at prices that reflect the real costs of such things. One might try to define medical rights in terms of a minimum budget that each person has to buy medicine or medical insurance or info. Or one might focus on a more general system of redistribution expressed in terms of money, and let each person choose their medical priorities. In either of these last two scenarios, abstract principles and a constitutional text, together with individual choices, could have more influence on outcomes, relative to decisions by courts and government agencies.

In this last scenario, if you saw a case where you felt bad that someone who knew about a particular medical treatment didn’t buy that treatment, you might consider pushing to increase the priority of similar people in your more general system of redistribution. So that they could have more money to buy such treatments. If you gave such people more money, but they chose instead to spend that money on other things, you might accept that they have differing medical priorities from you, or you might try to push them to share your priorities. Either way, that dispute doesn’t really seem to be about a right to medicine.

If you are with me so far regarding food and medicine, then in the rest of this post I want to convince you to think similarly about many formal civil rights and liberties. At least regarding rights and liberties whose limits are set mainly by criminal law enforcement considerations. Today our constitutions and courts try to specify many complex related rights and liberties. I will argue that this complexity is to a large degree due to having a centralized government-run system of criminal law enforcement. This is analogous to the complexity we would have if the government ran the food system or the medical system, wherein rights to food or medicine would consist of long lists of the food you could get each week, or the medical treatments to which you were entitled.

I will suggest that we could instead switch to a much more private, open, and competitive system of criminal law enforcement. In such a system, individuals could buy the particular civil rights and liberties that they wanted. We could then work to ensure that people are free to buy these rights and liberties at prices that reflect their real costs, and that people have a minimum budget to purchase such things. Or we might just focus on a more general system of redistribution expressed in terms of money, and let each person use money to express their priorities for rights and liberties re criminal law enforcement. Let me explain.

Today, we have explicitly declared a great many rather specific rights and liberties on how we are to be treated by our systems of law enforcement. Of course your actual rights and liberties vary according to your exact legal jurisdiction, the legal text there, court interpretations in that jurisdiction, and how local law enforcement agencies actually implement court rulings in their actual policies.

You may have have rights to be silent, and to not talk to police, and exceptions to those rights, such as when you must identify yourself. You may have rights and obligations regarding when you may be detained or arrested, and who must give testimony regarding which kinds things about which kinds of associates, including themself. There are rules on when one must be allowed to consult a lawyer, and rules that require lawyers to be available free of charge. You may have have rights to keep some things private, to be safe from unreasonable searches and seizures, and there may be exceptions to these based on warrants and on which things are in “plain view” or result from “hot pursuit”. Other exceptions are based on extra powers given to police in certain situations.

You may have rights to assemble with others of your choice, and to travel freely, but these rights may have exceptions limiting where you can go where when, such as curfews and orders to stay away from some places or to stay close enough to other places. You may have a right to speedy trials. Regarding punishment, you may have rights to avoid disproportionate punishment, and cruel and unusual punishments. In prison, you may have rights to minimum qualities of food and medicine, to a lack of racial segregation, to accommodation of your disabilities, to a lack of crowding, and to some kinds of speech, contact with outsiders, and religious activities.

For all of these rights and liberties, you may have complex rights regarding who must monitor to check that they are actually being upheld, and who may sue whom claiming that they are not, and what they would win if they won. Many have claimed that in fact many important groups in our societies don’t actually have many of the rights and liberties that they are supposedly granted on paper. I’m inclined to believe many such claims, which is a big part of why I seek other approaches.

Much of this complexity results from the fact that, in order to enforce criminal law, officials sometimes need to detain, punish, and watch people, and they sometimes need to limit their travel, assemblies, and other activities. Officials sometimes need to collect info about some people from their things and from other people. These many complex rules about rights and liberties are often claimed to be designed to give everyone as many rights and liberties as feasible, while still allowing criminal law officials to do what needs doing to enforce criminal law in a reasonably cost-effective manner. Because the world is complex, these rules must be complex.

But imagine that we replaced our centralized government run system of criminal law enforcement with this:

Consider a fine-insured-bounty (FIB) crime law system. … All (but one) crime is punished officially by fines, everyone is fully insured to pay large fines, and bounty hunters detect and prosecute each crime. In a FIB system, we collectively decide the fine and bounty level for each crime, and manage a judicial system which decides individual cases.

If we set the fine level for each crime to be our best estimate of the social harm produced by one more crime event of that type (divided by the chance that it will be caught, plus enforcement costs), then the insurer-client pair would internalize that social harm, in which case we could leave that pair free to choose punishment types, costs, and levels, as well as (many aspects of) police and prosecutor monitoring and investigative powers. (more)

Within a FIB system, insurer-client pairs choose most details of punishment, including type, size, duration, etc. So within such a system, there’s little need to give people rights to avoid disproportionate, cruel, or unusual punishment. Anyone can choose to avoid any type of punishment, if they are willing to pay associated insurance premiums.

Similarly for monitoring to prevent crime. Insurers will want to promote and enable such monitoring, to avoid having to pay on behalf of clients. So insurers will offer lower premiums to clients who allow more monitoring. No need to guarantee any minimum or maximum monitoring; such levels are chosen by contract. For rights re how one interacts with police, it is possible to not give bounty hunters any more rights than ordinary people have. In which case we’d need no extra rights relative to police interactions.

Now it does seem plausible that the more rights that bounty hunters have to collect evidence, such as by searching places and compelling testimony, the higher the chance that any given crime could be caught, with the criminal’s insurer forced to pay a fine. But what if lowering this chance were the main external cost that resulted from letting a potential criminal choose to make it harder to collect evidence about them? In this case we could correct for this effect via fine amounts. The fine for each crime should depend on an estimate of the chance that crime would have been detected and successfully prosecuted. With decent (and perhaps conservative) estimates of how the chance of catching a crime depends on how open a criminal is to evidence collection, we could adjust fines for this effect, and thus allow insurer-client pairs to choose how open to be to bounty hunters seeking evidence. In which case we don’t need a right against “unreasonable” police searches.

So far I’ve argued that, in a FIB system, we don’t need formal rights and liberties regarding issues where we can just let insurer-client pairs choose, because they internalize the social harm of such choices. I’m not claiming that all civil rights and liberties are of this type, but many are. Creating a more private, open, competitive criminal law system could allow us to greatly simplify civil rights and liberties, and have the results depend a long more on constitutional text and general principles, and on individual choices, and depend less on courts and government agencies. Just as when we have private, open, competitive systems for food or medicine.

What if you felt bad when you saw someone choose fewer civil rights and liberties than you thought right or wise? You might try to persuade them to change their priorities, or you might try to increase the priority that you give to such people in your redistribution system that ensures minimum budgets to buy rights and liberties, or within your more general redistribution system. So that they could more easily afford to buy more rights and liberties if they wanted them. I think this would work better than trying to centrally legislate who exactly should have which particular rights and liberties, as that wouldn’t well take into account individual tastes, costs, and context.

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Bounty Hunter Blackmail

By Robin Hanson · May 3, 2019 2:35 pm · Comments (2)

Consider a fine-insured-bounty (FIB) crime law system such as I outlined here. All (but one) crime is punished officially by fines, everyone is fully insured to pay large fines, and bounty hunters detect and prosecute each crime. In a FIB system, we collectively decide the fine and bounty level for each crime, and manage a judicial system which decides individual cases.

If we set the fine level for each crime at our best estimate of the social harm produced by one more crime event of that type (divided by the chance that it will be caught, plus enforcement costs), then the insurer-client pair would internalize that social harm, in which case we could leave that pair free to choose punishment types, costs, and levels, as well as (many aspects of) police and prosecutor monitoring and investigative powers.

We could also let bounty hunters choose (many aspects of) police and prosecutor costs, methods, and priorities. Instead of agonizing over centralized one-size-fits-all crime policy decisions as we do now. We could also break the blue wall of silence to ensure that all laws are actually enforced, even on police, leaving only judge-based discretion on particular cases. Via redistribution, we could help those who face high insurance premiums, but know more precisely who we are helping how much.

The total social harm from each type of crime includes not just the harm caused directly by committing that crime, but also the costs incurred by bounty hunters in pursuit, and by insurers to prevent and estimate risks. Since in a competitive market with free entry the average bounty hunter costs should be close to the bounty level, this suggests that with competitive bounty hunters the fine is larger than the bounty.

This difference between the fine and bounty should also be large compared to the fine. After all, if this difference were small, then bounty costs would cause most of the social harm of this crime. In that case we’d be tempted to decriminalize this activity, to drastically lower its social cost. Unless the rate at which this activity happens varies strongly enough with the fine level, the harm of inducing more of these kind of events via decriminalization would be more than outweighed by less harm per event.

The fine and bounty levels should change if the criminal (or insurer) turns themselves in quickly. In that case, no one gets paid a bounty, there’s a high probability that such crimes will be caught, and both of these imply that the fine level should be lowered.

Having fines larger than bounties can create a dangerous incentive if the part of the system that sets fine and bounty levels also gets to spend a substantial part of the resulting net revenue. However, in modern governments it seems be quite feasible to greatly separate these groups, making this less of a concern.

Another problem created by big fine-bounty differences is private deals between insurers and bounty hunters. If a case regarding a particular claimed crime event goes to court, and the bounty hunter wins, then that hunter wins much less than the insurer loses. These two parties would rather settle out of court via “blackmail” deals where the hunter gets paid and keeps quite about their evidence. Here they could split the fine-bounty difference, so that the insurer loses less and the hunter gains more.

Now there are some big obstacles to such trades, in addition to the usual transaction costs, such secrets, strategic delays, and to find the other party. The insurer can’t be sure that other hunters won’t acquire the same info, perhaps sold to them by this hunter, perhaps via overhearing this negotiation. The blackmailer might be bluffing about having info, and instead be recording their interaction to create evidence of criminal guilt. And payments must be spread out across time, as the blackmailer can continue to demand payments no matter what’s already been paid. These obstacles mean that in such deals the hunter will on average get much less than the fine amount.

But if we want to support large differences between fine and bounty amounts (e.g., F >3B), we’d have to prohibit such deals, and prohibit most insurer-hunter contact as well to make it hard to arrange such deals. Such prohibitions are easier to enforce on bounty hunters not protected by a blue wall of silence, but perhaps still not easy to enforce.

Keeping insurers and hunters apart has the disadvantage of making it harder for a hunter to help with crime prevention. If a hunter came across a person who seemed to be about to commit a crime, they might selfishly just wait for the crime to be committed, and then jump in to grab its bounty. We’d rather that they instead helped to prevent the crime. Such as by contacting the potential criminal’s insurer, and asking if they’d like to buy some info to help them avoid paying a fine. But if we allow such contact, hunters might contact insurers pretending to help with prevention, while in fact negotiating blackmail deals regarding crimes that have already happened.

When large fine-bounty differences are needed, I suspect that the best answer here is to just give up on having hunters help with prevention, and thus to limit insurer-hunter interactions. (This somewhat reverses my prior stance on blackmail.) Insurers are likely to take a lot of initiative to monitor and advise their clients. As a result insurers may usually be the first to guess that a crime may soon happen.

While most bounty hunters would be professionals, some would be amateurs who came across incriminating info via their usual interactions. Such amateurs would then face the choice to sell their info to professional hunters, or to contact the criminal (or insurer) in order to blackmail them. These these amateurs could more easily evade rules prohibiting hunter-insurer deals. But since they are not part of a competitive industry of hunters, compared to professional hunters their efforts are likely to be much more cost-effective, and far smaller. Thus amateur blackmail is much less likely to create a situation where most of the harm of a crime is due to hunter efforts. As a result, we may not actually mind this kind of hunter-insurer deal, and may not want to prohibit it.

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Liability Insurance For All

By Robin Hanson · May 2, 2019 6:00 pm · Comments (0)

The world’s first modern limited liability law was enacted by the state of New York in 1811. In England … investors in such companies carried unlimited liability until the Limited Liability Act of 1855. There was a degree of public and legislative distaste for a limitation of liability, with fears that it would cause a drop in standards of probity. … Limited liability has been justified as promoting investment and capital formation by reassuring risk averse investors. … Others argue that while some limited liability is beneficial, the privilege ought not to extend to liability in tort for environmental disasters or personal injury. (more)

General Liability Insurance: Every business, even if home-based, needs to have liability insurance. The policy provides both defense and damages if you, your employees or your products or services cause or are alleged to have caused Bodily Injury or Property Damage to a third party. (more)

If a court finds you guilty and demands that you pay, you are on the hook to pay everything you’ve got. Same for most small businesses. But investors in big firms instead get to play “heads I win, tails we flip again”. If the firm does well they can win cash, but if the firm behaves badly, the court can only take what they’ve put into the firm. That is, the court can extract money that is in the firm, but can’t push further to get more from investors. This usually doesn’t sit well those inclined toward suspicion of big firms; why subsidize big for-profit firms relative to other forms of social organization?

The usual argument for limited liability is that without it investors would be reluctant to invest. Which makes sense and plausibly explains the initial introduction of limited liability. But that happened before the rise of the modern insurance industry. Now that insurance is easy, the obvious solution is liability insurance. Then in case of a court demanding a large payment, the insurance company pays, and the investors are insulated. Small businesses today typically buy such insurance as a matter of good practice, and many contracts with other businesses require them to have it.

Today we require auto accident liability insurance for car drivers. And recently some have proposed requiring gun owners to have liability insurance regarding their gun use. Insurers would then discourage risky people from owning guns, and help others reduce their risk. But many gun owners see this as a back hand way to tax guns; why should guns be singled out relative to lots of other risky products?

Yes, if we require liability insurance for some products and organizations but not others, we are implicitly subsidizing and taxing some relative to others. The obvious simple solution is to require everyone to get liability insurance for everything. The insurance could stand ready to pay the 99th percentile amount demanded of that sort of person or organization. Then we aren’t favoring any particular activity or organization type. And then some new interesting reforms become possible.

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Populists Like Late Bloomers 

By Robin Hanson · May 1, 2019 7:10 am · Comments (0)

Late bloomers … possess qualities that can only be acquired through time and experience. They tend to be more curious, compassionate, resilient and wise than younger people of equal talent. (more)

We don’t treat people as equals in our society; some are seen as more valuable than others. And a key question is: how fast do we learn who is more valuable? The faster that we learn, the faster we can successfully sort people into the more versus less valuable, and the more strongly success and respect will correlate with merit. But the longer it takes to learn who is more valuable, the less we can infer about who is good from who has succeeded so far. 

A populist culture will pander more to the typical person, who wants to believe that he or she is really more valuable than their success so far suggests. An elitist culture, in contrast, will pander more to the typical elite, who wants to believe that his or her current high success level is a strong indicator of their higher merit. So is our culture populist or elitist? 

One big clue comes from our attitudes toward late bloomers. The harder it is to tell quality early in life, the more often that people who seemed low quality early in life will be revealed as high quality later in life. That is, in the world that populists want to believe in, there are more late bloomers. So a populist culture should more expect and celebrate late bloomers. An elitist culture, in contrast, should expect few late bloomers, as quality is quickly revealed early in life. Both should expect that at older ages a higher fraction of elites are late bloomers.

The tech industry famously prefers young workers, and rejects older workers, and so takes a more elitist stance. The high status of that industry suggests that our larger culture is also more elitist. Finance, management consulting, and athletics are also high status areas that prefer younger workers who are quickly sorted into high versus low value. Management and politics, in contrast, usually prefer older workers. Overall I’d say our culture leans elitist, though I admit this is hard to tell.

Note that the degree to which people want to believe more in late bloomers depends both on their status and on their age; the strongest difference is that mid-aged unsuccessful people want to believe in late blooming, while mid-aged successful people don’t want to believe in that. Early in life, the indicators are weak, and so everyone can believe that they will eventually succeed. And late in life, people have mostly been sorted, and there’s relatively little chance left for reversals of fortune. It is in the middle of life that the successful most want to believe the game is over, while others most want to believe the game has hardly begun. 

Within traditional gender roles, it takes longer to evaluate men than women. Women are traditionally evaluated more on beauty, fertility, and nurturing, which are revealed earlier. Men are evaluated more on fame, wealth, and career success, which are revealed later. Thus traditionally, men were more the late bloomers. This implies that the populist stance made more sense regarding men, and the elitist stance made more sense regarding women. 

This implied that when men and women paired up with others of the same age, men could more reliably see what they were getting in female partners, while women were taking more of a chance on male partners. So women who prefer older men would tend to believe more in late blooming for men, and thus take a more populist attitude. Similarly, men who prefer younger women would believe less in late blooming for women.  

I was personally a late bloomer; I started my Phd at the age of 34, with two kids age 0 and 2 at the time. I also chose to marry a woman who was four years older than me. So I guess that leans me toward populism regarding how fast value is revealed. Though now that I’m getting relatively old, I guess I’m less vested in such opinions. 

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Huemer On Disagreement

By Robin Hanson · April 30, 2019 10:00 pm · Comments (0)

Mike Huemer on disagreement:

I participated in a panel discussion on “Peer Disagreement”. … the other person is about equally well positioned for forming an opinion about that issue — e.g., about as well informed, intelligent, and diligent as you. … discussion fails to produce agreement … Should you just stick with your own intuitions/judgments? Should you compromise by moving your credences toward the other person’s credences? …

about the problem specifically of philosophical disagreement among experts (that is, professional philosophers): it seems initially that there is something weird going on, … look how much disagreement there is, … I think it’s not so hard to understand a lot of philosophical disagreement. … we often suck as truth-seekers: Bad motives: We feel that we have to defend a view, because it’s what we’ve said in print in the past. … We lack knowledge (esp. empirical evidence) relevant to our beliefs, when that knowledge is outside the narrow confines of our academic discipline. … We often just ignore major objections to our view, even though those objections have been published long ago. … Differing intuitions. Sometimes, there are just two or more ways to “see” something. …

You might think: “But I’m a philosopher too [if you are], so does that mean I should discount my own judgments too?” Answer: it depends on whether you’re doing the things I just described. If you’re doing most of those things, it’s not that hard to tell.

Philosophy isn’t really that different from most other topic areas; disagreement is endemic most everywhere. The main ways that it is avoided is via extreme restrictions on topic, or strong authorities who can force others to adopt their views.

Huemer is reasonable here right up until his last five words. Sure we can find lots of weak indicators of who might be more informed and careful in general, and also on particular topics. Especially important are clues on if a person listens well to others, and updates on the likely info value of others’ opinions.

But most everyone already knows this, and so typically tries to justify their disagreement by pointing to positive indicators about themselves, and negative indicators about those who disagree with them. If we could agree on the relative weight of these indicators, and act on them, then we wouldn’t actually disagree much. (Formally we wouldn’t foresee to disagree.)

But clearly we are severely biased in our estimates of these relative indicator weight, to favor ourselves. These estimates come to us quite intuitively, without needing much thought, and are typically quite confident, making us not very anxious about their errors. And we mostly seem to be quite sincere; we aren’t usually much aware that we might be favoring ourselves. Or if we are somewhat aware, we tend to feel especially confident that those others with whom we disagree are at least as biased as we. I see no easy introspective fix here.

The main way I know to deal with this problem is to give yourself much stronger incentives to be right: bet on it. As soon as you start to think about how much you’d be willing to bet, and at what odds, you’ll find yourself suddenly much more aware of the many ways you might be wrong. Yes, people who bet still disagree more than is accuracy-rational, but they are much closer to the ideal. And they get even closer as they start to lose bets and update their estimates re how good they are on what topics.

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Taboo Gradations

By Robin Hanson · April 29, 2019 4:00 pm · Comments (1)

Saturday I visited Monticello, and was struck by hearing this story:

Thomas Jefferson (TJ) brought slaves Sally & James Hemings with him to Paris. After 5 yrs, at ages 16 & 24, they could have stayed free in Paris, but they instead agreed to return to US as slaves. TJ agreed to free Sally’s future kids, and that James would be free in US after training replacements. The rest of their family had remained in US, she was pregnant w/ TJ child, James knew French & had a trade, and the French revolution had started.

Overall my opinion of Jefferson declined, and I tweeted:

Visiting Monticello, I’m not inclined to see Jefferson as more sincere then the typical politician. Articulate, charismatic, well connected, but not especially sincere.

As the Hemmings were famous slaves, they seem an interesting example of people who apparently voluntary chose to become slaves. I’ve long thought this was an interesting category, which includes the historically more common category of debt bondage. Even if one disapproves of enticing someone into voluntarily agreeing to slavery, that still seems less blameworthy than enslaving people via direct physical force. So I tweeted:

There should be a word for slaves who agreed to be salves, w/o extortion or other illegitimate pressures. E.g. Sally Hemings & brother made deals w/ Jefferson. Different word could highlight its lower moral culpability.

I soon added a link to a summary of this history, and the clarification:

Note: I’m not claiming that it is obvious that these two people were not subject to illegitimate pressures, only that it seems plausible that they were not. Allowing them to serve as an example of the concept I ask about.

Let me also now clarify, if it isn’t obvious, that a lower moral culpability can still be a very high level of culpability.

I have so far been subject to a storm of disapproving, and often quite rude, responses (1K comments so far). Most do not make any argument or intellectual point, but there are exceptions. One big set disapproves of making moral distinctions between different cases of slavery; many have said so quite explicitly. Apparently saying that some cases of slavery are worse than others is seen as excusing the less worse cases. They similarly see the claim that not all Nazis were equally bad as a pro-Nazi stance. They apparently see this as a signaling game wherein speaking this truth is taboo, and where violations have bad motives.

In response to a comment (explained below), I said:

Slave owners did many bad things, but each owner didn’t do every single one.

This received a similar storm of disapproval, as did this question:

Do you think all Nazis were equally bad?

Again, hard to see my statement or question as incorrect, but many see pointing to moral variations among slave owners or Nazis as praising them.

To see how many agreed with my claim on moral culpability differences, I did two Twitter polls. By a 2 to 1 margin out of 660 votes, they said that there exist plausible history, options, & preferences to make a scenario where someone got someone else to agree to be a slave less morally culpable than if they had enslaved them via direct physical force. By a 5 to 2 margin out of 486 votes, they said that Jefferson specifically would have been more culpable if he had instead physically forced the Hemmings to return to the US. So they clearly agree with me that we can distinguish different degrees of culpability here.

Another big set of responses to my original tweet that mentioned the Hemmings claimed that their deals did in fact involve “extortion or other illegitimate pressures”. I did a poll here and found folks agreeing with this claim, 2 to 1 out of 409 votes. A followup poll finds that out of four options I gave, most see the illegitimate pressures as due to their having been slaves before, and having family remaining in the US.

I teach law & economics, and so am familiar with the usual legal reasons given for not enforcing contracts, because the deals are not seen as legitimate. For example, when a contract itself has bad effects, as with contracts for assassinations or for price collusion. Or when the context of a contract suggests that it is a mistake, such as with ignorance, mental defects, or fraud. Or when one party induces a contract by threatening to cause harms in illegal ways, such as with a gun. Or when one party has an unusual degree of market power, inducing outcomes far from supply & demand, such as may happen when rescuing someone in the desert.

These are the sort of things I had in mind re “extortion or other illegitimate pressures”. It is fine to dislike the Hemmings’ deal because you just dislike slavery, full stop. But that’s saying the contract itself is bad, not that it was induced in a bad way. To show that it was induced badly, you need to show something like that threats of force were made, or that excess market power was used.

The fact that they were both slaves before shows that they understood what they were agreeing to, and so makes it less likely that this contract was due to a mistake or fraud. And our world is full of people who live far from their family, and full of others who might help them see their family. Surely we don’t want to reject deals just because one party is motivated by wanting to see their family.

Should we reject an airline ticket purchase because the traveler is going to see family? Should we reject a rental agreement because the tenant wants to live near neighbors they like? Should we say that most people are enslaved by their nation because they are reluctant to leave due to wanting to live near family? Should we forbid a church from offering a deal to avoid excommunication, as that act could cut one off from family? I doubt most people in history would agree to be a slave just to live near family, especially when they are young adults already apart for five years, so I’m skeptical this was the main reason the Hemmings agreed to this deal. In this poll of 10K, 90+% say they & most people in history wouldn’t do that.

A number of people argued that we should presume that Jefferson had threatened, if the Hemmings didn’t agree to his terms, to kill their family in the US, and to pay people to hunt them down and kill them. Because some slave owners had in fact threatened such things at times. (That’s the context in which I tweeted “Slave owners did …”) But until we find more specific evidence to suggest that, that seems a crazy extreme assumption to me to make about Jefferson in Paris, where the local law would treat such acts as murder. And I expect the rate at which owners killed the families of escaped slaves in retaliation to be quite low.

Added 1May: Many have argued that slaves are conditioned to obey and avoid risk, and this invalidates the Hemmings’ agreement. That would make more sense if they had just returned to the US without complaint. But (according to our best evidence) they actually explicitly threatened to stay, and negotiated directly with Jefferson on terms; they acted willing to disobey. And if they thought slavery was as terrible as people say, returning to slavery seems the larger risk. I get that harsh circumstances can change you, but I don’t yet see that as a reason to question the choices of such people.

Also, many have said they can’t see any point to making moral distinctions between behaviors if there aren’t people in front of us today that we might punish differently. But I’m an intellectual who specializes in conceptual theory, and who explores radical alternatives to existing institutions. The military draft, prison as a punishment for crime, and debt bondage are all conceptually related to slavery, as are many similar institutions that we might consider.

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Who Complains How About Whom

By Robin Hanson · April 23, 2019 1:00 pm · Comments (1)

We humans like to complain. And while we might pretend that the main purpose of our complaints is to help others adjust their behavior, more likely we like to collect successful complaints as a resource. Collect enough complaints, and maybe you can trade them for some compensation, or at least sympathy. 

One way to collect complaints is to find others who are violating social norms. But complaints are much more socially valuable to us when we can frame them as something done to us personally. Which is why we prefer to complain about people who are associated with us in some concrete way. 

Our associates vary both in how strong is our interaction with them, and also in how much responsibility we have for them, and they for us. Consider the difference between a consultant and an employee, or between a lover and a spouse. The former types of associates can have just as strong an influence on us, but we are seen socially as more responsible for what happens to the latter types, who I will call “allies”.  

Since our associates do things that influence us, we can in principle complain whenever their impact could be framed as negative to observers. But we have to be careful complaining about allies. We often have norms that complaints between allies should be kept private. Also, as we are in part responsible for what our allies do, and thus in part responsible for what they do to hurt us. So we feel more free to complain when less-ally associates do things that impact us negatively.

While we are less able to complain publicly about specific effects of our allies, we are more able to complain about their loyalty as allies. If they are responsible for us, we can complain that they have not done enough to help us, especially when we are in unusual need. We can also complain that by their actions they are taking unjustified risks. Their actions can risk their running into problems that would lead to needing help from us, and can also lead to complaints by others, which would then reflect badly on us because of our ally relation.

Notice that this analysis predicts some general patterns in our relations to allies and to non-ally associates (this is of course really a spectrum). We do more to help allies, but we more limit their behavior. We feel less free to break off our relation with an ally, or even to visibly shop around for substitutes. Non-ally associates, in contrast, can take more risks, and thereby gain both more upsides and downsides. We demand that allies more conform to social norms, and more avoid what we consider risky behavior. It is more okay to have non-ally associates who are greedy, arrogant, or braggarts, even assholes. 

Another important way in which our associates vary is in their dominance “size”.  We humans still feel the pull of egalitarian forager norms, norms which disapprove of some agents having, and seeming willing to use, more “power”, whether physical or monetary. We often have associations where one party is seen as larger in this sense. These include relations between parents and children, firms and individual customers or employees, bosses and subordinates, rich and poor friends or family, and between men and women.  

In an association between a “big” and a “small” agent, observers tend to hold the larger agent to a higher “ally” standard. The larger agent is supposed to do more to help the smaller agent when they are in need, and to do less that might risk the safety of that smaller agent. The larger agent is also seen as more entitled to regulate the behavior of the smaller agent. In contrast, the smaller agent is less obligated to help the larger agent in need, and if they are less allied they are less entitled to regulate the behavior of the larger agent.  

Of course it is possible for a large and a small agent to have a strong ally relation, in which case the small agent will then be expected do a lot to help the large one when that agent is in need. It is just less acceptable for the larger agent to not treat the smaller one more like an ally. When the small agent is not held to an ally standard, the large agent is seen as more free to take risks, as the smaller agent will less be held responsible for them.  

Note that a smaller agent who is to be treated by a larger associate as an ally, but who need not treat that associate as an ally, has maximal opportunities to complain. They are less restrained from complaining about particular negative effects, and they can also complain if their associate isn’t sufficiently loyal or fair in ally terms.

This whole analysis seems to be particularly useful for understanding relations between men and women, and between firms and their customers and employees. Women tend to complain more about men, compared to vice versa, women tend more to initiate breakups, and they tend more to be protected from downside risks (e.g. via welfare). More conformity is demanded of women, while men are allowed to take more risks, from which they can gain larger upsides but suffer larger downsides. It is more okay for men to act harshly, even as assholes, such as in management.

Similarly, individuals tend to complain more about big business, and it is more okay for an individual to quit a firm than for a firm to quit an individual. We protect individuals much more from downsides, and also regulate their behaviors more. We mainly regulate firms to limit the harm they might cause to individuals, and to ensure they treat individuals “fairly” as an ally should, e.g., avoiding unfair discrimination.

Note that I’m not claiming that these patterns are genetic, or that they can’t be changed. (I’m not claiming the opposite either.) These patterns have a logic, but there may be other important logics at play. These may also be only patterns in social perceptions in our society, which need not exist in all societies and which need not correspond to reality in our society.

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