Toward Better Signals

While we tend to say and think otherwise, in fact much of what we do is oriented toward helping us to show off. (Our new book argues for this at length.) Assuming this is true, what does a better world look like?

In simple signaling models, people tend to do too much of the activities they use to signal. This suggests that a better world is one that taxes or limits such activities. Say by taxing or limiting school, hospitals, or sporting contests. However, this is hard to arrange because signaling via political systems tends to create the opposite: subsidies and minimum required levels of such widely admired activities. (Though socializing such activities under limited government budgets is often effective.) Also, if we put most all of our life energy into signaling, then limits or taxes on just signaling activities will mainly result in us diverting our efforts to other signals.

If some signaling activities have larger positive externalities, then it seems an obvious win to use taxes, subsidies, etc. to divert our efforts into those activities. This is plausibly why we try to praise people more for showing off via charity, innovation, or whistleblowing. Similarly, we tend to criticize activities like war and other violence with large negative externalities. We should continue to do these things, and also look for other such activities worthy of extra praise or criticism.

However, on reflection I think the biggest problem with signals today is the quality of our audience. When the audience that we want to impress knows little about how our visible actions connect to larger consequences, then we also need not attend much to such connections. For example, to show an audience that we care enough about someone via helping them to get medicine, we need only push the sort of medicine that our audience thinks is effective. Similarly for using charity to convince an audience we care about the poor, politics to convince an audience we care about our nation, or using creative activities to convince an audience we promote innovation.

What if our audiences knew more about which medicines helped health, which charities helped the poor, which national policies help the nation, or which creative activities promoted innovation? That would push us to also know more, and lead us to choose more effective medicines, charities, policies, and innovations. All to the world’s benefit. So what could make the audiences that we seek to impress know more about how our activities connect to these larger consequences?

One approach is make our audiences more elite. Today our efforts to gain more likes on social media have us pandering to a pretty broad and ignorant audience. In contrast, in many old-world rags-to-riches stories, a low person rose in rank via a series of encounters with higher persons, each of whom was suitably impressed. The more that we expect to gain via impressing better-informed elites, the better informed will our show-off actions be.

But this isn’t just about who we seek to impress. It is also about whether we impress them via many small encounters, or via a few big ones. In larger encounters, our audience can take more time to judge how much we really understand about what we are doing. Yes risk and randomness could dominate if the main encounters that mattered to us were too small in number. But we seem pretty far away from that limit at the moment. For now, we’d have a better world of signals if we tried more to impress via a smaller number of more intense encounters with better informed elites.

Of course to fill this role of a better informed audience, it isn’t enough for “elites” to merely be richer, prettier, or more popular. They need to actually know more about how signaling actions connect to larger consequences. So there can be outsized gains from better educating elites on such things, and from selecting our elites more from those who are better educated on them. And anything that distracts elites from performing well in this this crucial role can have outsized costs.

Of course there’s a lot more to figure out here; I’ve just scratched the surface. But still, I thought I should plant a flag now, and show that it is possible to think more carefully about how to make a better world, when that world is chock full of signaling.