Though yesterday I complained: [Robert] Frank offers no evidence whatsoever that the activities he dislikes and wants to tax in fact cause more inefficient status-seeking than the activities he likes and wants to subsidize.
The primary argument against spending on positional status goods seems to be that, due to the inherently zero-sum nature, it induces wasteful spending, displacing other things, correct?
However, as has been mentioned, some positional goods (education, beauty, &c.) potentially have positive externalities. If the magnitude of these externalities is great enough, wouldn't it actually make sense to, if anything, encourage positional spending on them, since this will lead to people voluntarily spending additional resources creating said positive externalities? A society of well-educated, beautiful people seems strictly better than a society of less-educated, less-beautiful people with the same relative status positions.
Dagon: if all I care about is having a better barbecue than you, and I have $5000 to spend while you have $2000, then I don't care if high-end barbecues are heavily taxed, because even if my $5000 only buys $2000 worth of barbecue, it will still be better than yours. So the Government can enrich itself while minimizing the harm it does its citizens. That's the theory; it's not to do with discouraging it, but with extracting money in a way that causes less pain.
Even if we can agree on some activities to tax, we still have to consider what happens when we make one or several status signals more expensive. Instead of decreasing overall status-seeking, individuals may simply shift to less efficient and informative status signals, perhaps increasing the total cost and quantity of signaling. I do not see how Frank can answer this short of a tax and subsidy schedule for all conceivable activities.
Tomasz, we spent lots on hairdressing and beauty-enhancing clothes. The main positional costs of sports are time and effort, and these are not taxed at all.
I think taxing status signaling spending is one of the best policies a government can implement. Just like taxing anything else with major negative externalities, and subsidizing things with major positive externalities.
However, makeup is really cheap, and it's a fuzzy category (makeup vs hygiene), so taxation would be hard to implement. One of the most expensive categories - surgery - is indirectly taxed already - because normal surgery is subsidized cost of surgeon services on the market are higher than they would otherwise be. So it's not really terribly great idea to tax it.
The same applies to other kinds of small categories of status products - its too expensive to organize a proper tax for them.
Sports competition performance is already treated like an extrernality, not by taxes but by outright ban on many performance enhancements (positional good) with serious negative health consequences (non-positional bad).
It's not obvious that education has negative externalities, most people believe its externalities are very strongly positive.
Robin, do you know if Frank counts competition between producers to attract consumers (e.g. athletes attracting fans) as positionality? The examples that I've heard (and the quote in yesterday's post) all focus on consumption - consumers competing to do well relative to other consumers. Competition between producers isn't a problem if it leads them to produce a better product (though it depends, I suppose, on whether consumers find the product to be better in an absolute sense or only in a positional sense).
But what about personal beauty, which our evidence suggests is one of our most positional goods? Yes, exercise also improves health, but it is very hard to see any large compensating side effects justifying makeup, hairdressing, and nice clothes.
Suppose the interviewees interpreted the beauty question as
a. You score 8 on a scale of 1 to 10; others of your gender score 10b. You score 6 on the same scale of 1 to 10; others of your gender score 4
In this case, there is a large compensating side effect: the appreciation of members of the other gender.
Your examples are problematic because there are externalities as well as signaling effects involved. Beauty has a positive externality as long as you aren't competing against the people, and obviously useful education does as well.
What we could start taxing however, and which Mr. Frank might be instinctively averse to doing, are indie films and indie bands, and books on the NYT bestseller list.
Isn't politics itself much more positional than not? Politicians who spend more or hold more power in general seem to have status advantages over those who do not. I'm not sure how this affects the use of politics to reduce positional consumption, but I think its something to think about.
I like looking at beautiful women, regardless of how many other beautiful women might exist. I don't think beauty aids are nearly as positional as, say, expensive sports cars. Even among those few of us who appreciate expensive sports cars mostly for their performance, racing said cars is often done under governance which drastically reduces expenditures on positional upgrades.
James, widespread religious beliefs do in fact weigh in my mind in favor of those beliefs. My claim is no that one should never disagree with anyone; that is impossible when others disagree among themselves.
Unnamed, yes, we would want international treaties to reduce national spending. It is not obviously in my interest for you to engage in an activity that makes you more productive. People in different sports compete to be impressive and gain fans.
James, believers demonstrably reject rationality. You certainly should give some weight to other people's idea but that by itself doesn't imply convergence or agreement.
Government spending (on things like national defense or space exploration) is positional between countries, which means that reductions based on positionality don't make sense unless we get other countries to agree to the reductions.
Similar, sports are most obviously positional between teams within a single league (where a win for one team is a loss for another team). For an individual fan, sports consumption (e.g. the amount of games that you watch) doesn't seem especially positional. Agreements between teams within a league could make some sense (and sports leagues do have agreements to promote the interests of the league as a whole), but it's not clear to me what role Robin is seeing for government-imposed taxes or subsidies.
Education is not an ordinary consumption good because education makes people more productive. A more educated workforce is a more productive workforce, so the country has an interest in subsidizing education (even if the person being educated sees it largely as a positional game). (Similar arguments apply to some of the other goods, like government spending on health care research or foreign aid, which produce benefits to people other than those who are providing the funding.) There are also concerns about fairness or equality of opportunity - much of the subsidy for college education is there to give poorer people a chance to compete.
Finally, I think that it's misleading to describe this in terms of "envy," since I don't see any evidence that this emotion plays a major role in positionality. Much of the benefit of being beautiful, such as being treated well by others and being a desirable romantic partner, arises from being relatively beautiful compared to other people rather than from your absolute level of beauty. That's all it takes for beauty to be a positional good, and it doesn't require anyone to feel envy.
Matthew - True most do accept science, but enough don't so that the "disagreement is disrespect" theory says you should give some weight to the possibility that they are right.
Arthur, most believers don't believe they reject rationality. Also, shouldn't a rational person give some weight to the views that other smart people have even if these views "seem" crazy. Therefore by definition a RATIONAL atheist can't completely dismiss the religious views of theists.
James, believers reject rationality. The agreement theorem concerns for rational people. The clue to your paradox is simply that rational atheist indeed disrespect theists. Nothing wrong with that.
In my experience, very smart Christians and Muslims are much more inclined to accept the scientific evidence for the age of the earth and for evolutionary history than their less intelligent co-religionists. They also do not (typically) view the Bible and Quran as scientific textbooks, but rather as expressing cultural and psychological truths and guidance for humanity.
See my added to the post.
The primary argument against spending on positional status goods seems to be that, due to the inherently zero-sum nature, it induces wasteful spending, displacing other things, correct?
However, as has been mentioned, some positional goods (education, beauty, &c.) potentially have positive externalities. If the magnitude of these externalities is great enough, wouldn't it actually make sense to, if anything, encourage positional spending on them, since this will lead to people voluntarily spending additional resources creating said positive externalities? A society of well-educated, beautiful people seems strictly better than a society of less-educated, less-beautiful people with the same relative status positions.
Dagon: if all I care about is having a better barbecue than you, and I have $5000 to spend while you have $2000, then I don't care if high-end barbecues are heavily taxed, because even if my $5000 only buys $2000 worth of barbecue, it will still be better than yours. So the Government can enrich itself while minimizing the harm it does its citizens. That's the theory; it's not to do with discouraging it, but with extracting money in a way that causes less pain.
Even if we can agree on some activities to tax, we still have to consider what happens when we make one or several status signals more expensive. Instead of decreasing overall status-seeking, individuals may simply shift to less efficient and informative status signals, perhaps increasing the total cost and quantity of signaling. I do not see how Frank can answer this short of a tax and subsidy schedule for all conceivable activities.
Tomasz, we spent lots on hairdressing and beauty-enhancing clothes. The main positional costs of sports are time and effort, and these are not taxed at all.
I think taxing status signaling spending is one of the best policies a government can implement. Just like taxing anything else with major negative externalities, and subsidizing things with major positive externalities.
However, makeup is really cheap, and it's a fuzzy category (makeup vs hygiene), so taxation would be hard to implement. One of the most expensive categories - surgery - is indirectly taxed already - because normal surgery is subsidized cost of surgeon services on the market are higher than they would otherwise be. So it's not really terribly great idea to tax it.
The same applies to other kinds of small categories of status products - its too expensive to organize a proper tax for them.
Sports competition performance is already treated like an extrernality, not by taxes but by outright ban on many performance enhancements (positional good) with serious negative health consequences (non-positional bad).
It's not obvious that education has negative externalities, most people believe its externalities are very strongly positive.
Robin, do you know if Frank counts competition between producers to attract consumers (e.g. athletes attracting fans) as positionality? The examples that I've heard (and the quote in yesterday's post) all focus on consumption - consumers competing to do well relative to other consumers. Competition between producers isn't a problem if it leads them to produce a better product (though it depends, I suppose, on whether consumers find the product to be better in an absolute sense or only in a positional sense).
But what about personal beauty, which our evidence suggests is one of our most positional goods? Yes, exercise also improves health, but it is very hard to see any large compensating side effects justifying makeup, hairdressing, and nice clothes.
Suppose the interviewees interpreted the beauty question as
a. You score 8 on a scale of 1 to 10; others of your gender score 10b. You score 6 on the same scale of 1 to 10; others of your gender score 4
In this case, there is a large compensating side effect: the appreciation of members of the other gender.
Your examples are problematic because there are externalities as well as signaling effects involved. Beauty has a positive externality as long as you aren't competing against the people, and obviously useful education does as well.
What we could start taxing however, and which Mr. Frank might be instinctively averse to doing, are indie films and indie bands, and books on the NYT bestseller list.
Isn't politics itself much more positional than not? Politicians who spend more or hold more power in general seem to have status advantages over those who do not. I'm not sure how this affects the use of politics to reduce positional consumption, but I think its something to think about.
I like looking at beautiful women, regardless of how many other beautiful women might exist. I don't think beauty aids are nearly as positional as, say, expensive sports cars. Even among those few of us who appreciate expensive sports cars mostly for their performance, racing said cars is often done under governance which drastically reduces expenditures on positional upgrades.
James, widespread religious beliefs do in fact weigh in my mind in favor of those beliefs. My claim is no that one should never disagree with anyone; that is impossible when others disagree among themselves.
Unnamed, yes, we would want international treaties to reduce national spending. It is not obviously in my interest for you to engage in an activity that makes you more productive. People in different sports compete to be impressive and gain fans.
James, believers demonstrably reject rationality. You certainly should give some weight to other people's idea but that by itself doesn't imply convergence or agreement.
Government spending (on things like national defense or space exploration) is positional between countries, which means that reductions based on positionality don't make sense unless we get other countries to agree to the reductions.
Similar, sports are most obviously positional between teams within a single league (where a win for one team is a loss for another team). For an individual fan, sports consumption (e.g. the amount of games that you watch) doesn't seem especially positional. Agreements between teams within a league could make some sense (and sports leagues do have agreements to promote the interests of the league as a whole), but it's not clear to me what role Robin is seeing for government-imposed taxes or subsidies.
Education is not an ordinary consumption good because education makes people more productive. A more educated workforce is a more productive workforce, so the country has an interest in subsidizing education (even if the person being educated sees it largely as a positional game). (Similar arguments apply to some of the other goods, like government spending on health care research or foreign aid, which produce benefits to people other than those who are providing the funding.) There are also concerns about fairness or equality of opportunity - much of the subsidy for college education is there to give poorer people a chance to compete.
Finally, I think that it's misleading to describe this in terms of "envy," since I don't see any evidence that this emotion plays a major role in positionality. Much of the benefit of being beautiful, such as being treated well by others and being a desirable romantic partner, arises from being relatively beautiful compared to other people rather than from your absolute level of beauty. That's all it takes for beauty to be a positional good, and it doesn't require anyone to feel envy.
Matthew - True most do accept science, but enough don't so that the "disagreement is disrespect" theory says you should give some weight to the possibility that they are right.
Arthur, most believers don't believe they reject rationality. Also, shouldn't a rational person give some weight to the views that other smart people have even if these views "seem" crazy. Therefore by definition a RATIONAL atheist can't completely dismiss the religious views of theists.
James, believers reject rationality. The agreement theorem concerns for rational people. The clue to your paradox is simply that rational atheist indeed disrespect theists. Nothing wrong with that.
James,
In my experience, very smart Christians and Muslims are much more inclined to accept the scientific evidence for the age of the earth and for evolutionary history than their less intelligent co-religionists. They also do not (typically) view the Bible and Quran as scientific textbooks, but rather as expressing cultural and psychological truths and guidance for humanity.