Tag Archives: Project

Lost Advanced Civilizations

Did life on Earth start on Earth, or did it start on Mars and move to Earth? If you frame such panspermia as an “extraordinary claim” for which you demand “extraordinary evidence”, you will of course conclude that this should be treated “skeptically” as unlikely and sloppy unscientific “speculation”. To be disdained and not treated as serious by respectable academics and science journalists. But that’s not really fair.

You see the early Mars environment is, a priori, about as likely a place for life to start as the Earth environment. So if the rate at which life is transferred between the planets were high enough, then equal chances of life starting first in both places would result in equal chances for Earth life to have started in either place. We should take the expected time difference between life starting in the two places, and ask how high is the chance that life would move from one planet to the next during that period. The more often rocks are thrown from one place to the other, and the more easily life could survive for the travel period within those rocks, then the more likely it is that Earth life started on Mars.

In addition, Mars, being further from the Sun, would have cooled first, and had a head start in its window for life. Making it more likely that life would start there and spread to Earth than vice versa. Of course life starting first on Mars would have implications for what we might see when we look at Mars. If we had expected Mars life to continue strong until today, then the fact that we see no life on Mars now would be a big strike against this hypothesis. But if we expected Mars life to have died out or at least gone dormant by now, then the issue is what we will see when we dig on Mars. With enough data on such digs, we may come to reject to Mars first hypothesis even given its initial plausibility.

A similar analysis applies to panspermia from other stars. You might think it obvious that the rate at which life-filled rocks from a star make it to seed other stars is very low, but most stars are born in large groups close together in stellar nurseries. So if life arose early enough within our star’s nursery, there might have been high rates of moving that life between stars in that nursery. In which case the chance that Earth life came from another star could also be high, and the best place to look for life outside our star would be the other stars from our stellar nursery.

Now consider the possibility of lost advanced civilizations. Not just civilizations at a similar level of development to those around them in space and time; that’s quite likely given that we keep finding new previously-unknown settlements and developed places. No, the more interesting claims are about substantial (but not crazy extreme) decreases in the peak or median level of civilizations across wide areas. Such as what happened late in the late Mediterranean Bronze Age, or at the fall of the Roman Empire. Could there have been “higher” civilizations before the “first” ones that we now know about in each region, such as the Sumerians, Egyptians, and Chinese Shang dynasty? (I’m talking human civs, not others.) Continue reading "Lost Advanced Civilizations" »

GD Star Rating
loading...
Tagged as: , , , ,

Toward A University Department of Generalists

The hard problem then is how to get specialists to credit you for advancing their field when they don’t see you as a high status one of them. (more)

Many of my most beloved colleagues, and also I, are intellectual polymaths. That is, we have published in many different areas, and usefully integrated results from diverse areas. Academia tends to neglect integration and generality, which hurts not only intellectual progress, but also myself and my colleagues. Which makes me especially interested in fixing this problem.

The key problem is that academics and their research are mostly evaluated by those who work on very similar topics and methods. To the extent that these are evaluated by folks at a larger distance, it is by those who control one of the limited number of standard “disciplines” (math, physics, literature, econ, etc.).

Thus we have a poor system for evaluating work and people that sit between disciplines, or that cover many disciplines. Making it harder to evaluate work that combines areas A and B, and maybe also C and D. You might be able to get an A person to evaluate the A parts, and then a B person for the B parts, but that is more work, and the person who knows how to pick a good A evaluator may not know how to pick a good B evaluator. Academics tend to think that interdisciplinary groups do worse work, held to lower standards, and this is a big part of why.

Furthermore, even when specialists can evaluate such things well enough, they have an incentive to say “Maybe that should be supported, but not with our resources.” That is, for people and work that combines A and B, the A folks say it should be supported by the B budget, and vice versa. Often to be accepted by people in A, you must do as much good work in A as someone who only ever works in A, regardless of how much good work you also do in B, C, etc.

Yet generality still gains substantial prestige among intellectuals, which gives me hope. For example, there are usually fights to write more general summaries, such as review articles and textbooks, fights usually won by the highest in status. And Nobel prize winners, upon winning, often famously wax philosophic and general, pontificating (usually badly) on a much wider range of topics than they did previously.

Academic disciplines and departments usually need to do two things: (1) evaluate people to say who can join and stay in them, and (2) train new candidates in a way that makes it likely that many will later be evaluated positively in part (1). I’m not sure there is a way to do part (2) well here, but I think I at least know of a way to do part (1).

I propose that one university (and eventually many) create a Department of Generalists. (Maybe there’s a better name for it.) To apply to join this department, you must first get tenure in some other department. You submit your publication record, and from that they can calculate a measure of the range of your publications. Weighted by quality of course. Folks with very high range are assumed to be shoo-ins, folks with low ranges are routinely rejected, and existing department members have discretion on borderline cases.

How could we calculate publication range? I’ve posted before on using citation data to construct maps of academia. From such maps it seems straightforward to create robust metrics describing the volume in that space encompassed by a person’s research. And something like citations could be used to weigh publications in this metric. No doubt there is room for disagreement on exact metrics, and I’m not pushing to get too mechanical here. My point is that it is feasible to evaluate generality, as we know how to mechanically get a decent first cut measure of a researcher’s range.

So what do people in Department of Generalists do exactly? Well of course they continue with their research, and can continue to serve the departments form which they came. But they are encouraged to do more general research than do folks in other departments. They can now more easily talk with other generalists, work together on more general projects, and invite outside generalist speakers.

Maybe they experiment with training or mentoring other professors at the university to be generalists, people who hope to later apply to join this generalist department. They might be preferred candidates to write those prestigious general summaries, such as review articles and textbooks, and to teach generalist courses, like big introductory courses. And especially to review more generalist work by others.

It would of course be hard work to get such a department going. And you’d need to start it at a university where there are already many generalists who could get along. But I have high hopes, again from the fact that academics so often fight to appear general, as in fighting to write summarizes and to pontificate on more general issues. Once there was a widespread perception that people in the Department of Generalists were in fact better at being generalists, as well as meeting the usual criteria of at least one regular department, they would naturally be seen as an elite. A group that others aspire to join, patrons aspire to fund, reporters aspire to interview, and students aspire to learn under.

And then academia would less neglect work on integration, synthesis, and generality, and work between existing disciplines. Oh academia would still neglect those things, don’t get me wrong, just less. And that seems a goal worth pursuing.

GD Star Rating
loading...
Tagged as: ,

Missing Model: Too Much Do-Gooding

Grim view of human nature … is mistaken, a persistent and counterproductive myth. … the evidence for mass selfishness is extremely thin. … The surprising truth is that people tend to be­have decently in a crisis. To the British, the all-too-familiar example is the cheerful demeanour of Londoners during the Blitz. … New Orleans after Hurricane Katrina … rumours ran wild about the murder and rape of children inside the Louisiana Superdome; but when the national guard showed up, … met instead by a nurse asking for medical supplies. (more)

Friday I asked the author of a pandemic novel what he thought went most wrong in his fictional world. He said selfishness: blaming others, and not sacrificing enough to protect others from infection. He also said he was surprised to see people acting less selfishly than he predicted in our real pandemic.

As the above quote indicates, that’s a common mistake. In this pandemic I estimate that the bigger problem is people pushing for too much “helping”, rather than too little. That’s a common problem in health and medicine, and this poll says 2-1 that it is the more common problem:

Of course my Twitter followers are probably unusual by this metric; I’d bet most think selfishness is the bigger problem. One reason is that it can look suspiciously selfish to say there’s too much do-gooding, as if you were trying to excuse your selfish behavior. Another reason is that the theory of selfishness is simpler. In economics, for example, we teach many quite simple game theory models of temptations to selfishness. In contrast, it seems harder to explain the core theory of why there might be too much do-gooding.

This seems to suggest a good and feasible project: generate or identify some good simple game theory models that predict too much do-gooding. Not just personal signaling acts that do too much, but acts that push collective norms and decisions toward too much do-gooding. I’d be happy to help with such a project. Of course it would make only a small contribution to the problem, but still I’d guess one worth the trouble.

GD Star Rating
loading...
Tagged as: , , ,

Social Network Games

I’m not very good at social networking, but by now I’m old enough to see the value in many skills that I don’t have. One problem is that you often need to invest in networks many years before you plan to draw on them. Another is that it isn’t at all clear to young nerds, as I was once, what sorts of connections and relations would end up being most valuable later. Especially if you have big doubts about where your career and interests may go.

What if we could create games to show and teach social networking skills? And perhaps even to encourage the creation of useful networks? As nerds like games, we might tempt nerdy kids to play them, and we might subsidize such games as a society, to induce stronger denser social networks. There are plausibly externalities by which we all benefit when we all have longer stronger networks.

The tricky part, of course, is figuring out what exactly should happen in these games. We don’t want them to encourage just any social networks; we want the networks that are actually socially helpful. So we don’t obviously just want to encourage people to have more LinkedIn connections or Facebook friends, or to join and rise within multilevel Ponzi-like marketing systems like Amway. At least we don’t while we remain uncertain about the marginal value of more connections in such systems.

Ideally, we want people to be usefully selective about who they include in their network, and to whom they make referrals. We want to give them incentives to evaluate potential network partners well for suitability in various networking roles. But holding constant such evaluation and selectivity, we also want people to put in the work to collect more network partners.

For example, imagine that we periodically announced prizes shared among everyone in the first network path to connect a person of type X to a person of type Y. Say, a someone with a particular foot problem to someone who knows well how to deal with that problem. From what space of X,Y pairs should we draw for tied prizes to induce the most socially valuable networks?

Being not good at social networking, I’m probably also not good at making such proposals. But I might be better at evaluating such proposals, or more generally at social network game proposals. So please, you of my associates who like inventing games or who understand social networking better, do make such suggestions for I and others to evaluate.

Btw, negative liability would seem to help encourage such networks.

GD Star Rating
loading...
Tagged as: ,

What Can Money Buy Directly?

Can money buy oranges? Well obviously, in an indirect sense. With money, you could travel to a place where you’ve heard oranges grow wild, search to find such a plant in the wild, dig it up and try to ship it home, see if it you can make it thrive there, and if it does, take some oranges as your reward. This might work, but success depends not just on the money you pay; it also depends much more on your effort, abilities, and other context. In principle, you might be able to execute this plan without any money, but typically more money will make such a plan a bit easier. So, yes, in this weak sense, you can “buy” oranges with money.

At an ordinary grocery store, however, you can buy oranges much more directly. You go to the produce section, look for the orange color, walk to the pile of oranges, take as many as you want, and pay the price per orange at the register. Or at a full service grocery, you might just say “six oranges please” and a grocer would go find and bag them for you. Online, you might just type in “orange”, enter “6” for quantity, and click “buy”.

These ways to buy oranges are usually pretty reliable even for an ordinary person who knows little about oranges. Using these methods, the number of oranges you get depends mainly on how much money you are willing to pay, and much less on other context. This is what I mean by buying something “directly.” And so regarding the oft-asked question “what can money buy?”, a more interesting version of this question is “What can money buy relatively directly.”

As more money makes most any plan a bit easier to achieve, the many long lists one can find of “things money can’t buy” are in one sense obviously wrong; money helps with most of them. And if they just mean that money can’t guarantee the max level of each thing, that’s obvious, but trivial, as pretty much nothing guarantees that. You can’t even guarantee you’ll get oranges if you order them from a grocery. And if that is the meaning, why pick on money, relative to anything else that might greatly but imperfectly help you get things?

Perhaps what people mean is that money isn’t the main factor that determines if you succeed with such things; money can be a distraction from more important issues. But if so, that seems to claim that you can’t buy such things directly. Which then raises the key question: for what kinds of things can the money you pay be a strong factor in determining how much of it you get? That is, what can money buy directly?

In my last post, I talked about how one can buy higher wages, via a job agent. I wasn’t saying that there are complex and subtle ways to spend money to help your career, ways that could work if only you were clever and skilled enough to understand and apply them. I was instead saying that there is a simple direct way to do this, one most anyone can understand: hire an agent (and anti-agent). That method doesn’t guarantee you any particular wage, but it does let you control how much you pay per wage increase.

In fact, I’ll go further now, and say that there seem to be ways to measure most anything, and as a result we can buy most any measured thing relatively simply and directly. That is, via a simple method that most anyone can come to understand, you can just point to what you want, put cash on the table, and then lose cash in proportion to how much you get of what you want. And the relation is substantially causal; paying more can cause you to get more, even when you have little relevant ability or understanding.

In the academic literature, this method is called an “incentive contract”. You find a way to measure the outcome you want, you offer to give someone access to levers by which they can plausibly influence this outcome, and you contract to pay them more cash the higher is this measure. You might also hold auctions or competitions to see who is best to put into this role.

We have a great many real examples today, and in history, of oft-used incentive contracts. Artists and athletes have agents paid a fraction of their earnings. Line workers are paid “piece rates” per how many items they assemble, or tomatoes they pick. Sales workers are paid commissions, per how many items they sell. Hedge fund managers are paid more if their fund makes higher returns. Lawyers on contingency fees are paid a fraction of court awarded damages. Firm managers are paid in stocks and options which rise in value when firm stock prices rise. Athletes are paid bonuses for individual and team success. Construction contractors are paid more if their work is completed by a deadline. Ships carrying convicts to Australia were paid on the number who arrived alive (which worked much better than the number who started out alive.)

Are the applications we’ve seen the only feasible ones, or could many more yet be developed? Consider beauty. Some say beauty can’t be measured, as it is “in the eye of the beholder”. But if you ask many people to rate someone’s beauty, their ratings are correlated. So imagine taking many standardized pictures and video of a client, across across their usual range of clothes and environments, and then paying many independent observers to rate their attractiveness. Do this at the start to get an initial value, and plan to do it again in, say, six months. A client might pay a beauty agent based on the change in this measure.

Potential beauty agents could bid by offering how much money they want to be paid per unit of increased beauty, how much they would pay up front to gain this role, and which particular beauty decisions they want to control, rather than merely advise, at least until the second measurement. There are probably clever ways to use auctions or decision markets to select from among these bids, but such details need not concern us now.

Yes, it would be a problem if a beauty agent could corrupt beauty measurements, or exploit their biases. But if such effects are modest, expert beauty agents can likely substantially increase a client’s beauty, relative to that client’s amateur efforts. Consider that movies don’t usually let actors pick their own clothes and hairstyle to look good in each movie; beauty experts instead make those choices. Yes, clients may care less about beauty as seen by average people, and more as seen by particular communities. But measuring such local versions of beauty should only cost a bit more.

Now consider happiness. If happiness were an entirely internal mental state that never influenced our external appearances, well then yes it would be hard to measure happiness. At least until we can better read brains. But most humans leak their feelings in many ways. So a 24/7 audio/video feed of a person, especially their facial expression and tone of voice, perhaps augmented by watch-based measures of heart rates, etc., seems plenty sufficient. Especially if processed via self and other reports, rather than artificially. Happiness could be measured pretty accurately from such things, especially for a client who wants it to be measurable, so that they can hire an agent to increase their happiness. (And especially as things like smiles and laughter probably evolved to signal happy internal states.)

A happiness agent is given control over some elements of a client’s life, and can advise on others. Especially on which other agents to hire for beauty, health, career, etc. Happiness agents pay some initial fee to gain this role, and then they are paid in proportion to the client’s measured happiness. Such agents might be big firms that combine many kinds of happiness expertise, and who can take big risks. If there are things that an expert can learn about how to be happy, things an ordinary amateur doesn’t know, then there is likely substantial scope for using agents to directly buy happiness. If so, money can buy happiness, directly.

Well this is enough for one blog post. The key conclusion: it looks feasible to much more directly buy many things we care greatly about, including beauty, happiness, health, career success, popularity, and status. Yes it would be work to set up systems to measure such things, work that could not be recouped for just from one client. But the prospect of many millions of clients should be quite sufficient.

One key question remains: why hasn’t there been more interest in such possibilities? Are these new innovations that could spread widely, or are they blocked by key fundamental permanent obstacles not yet considered in the above discussion?

Added 20Apr: Most seem to actually be comforted by the fact that it can be hard to buy things with money, and seem uninterested in finding ways to make it easier to buy things with money. I suspect they feel that better methods of this sort would give a relative advantage to people with more money, who they see as other people. While everyone could benefit from better ways to buy things with money, that matters little to those focused on relative status.

GD Star Rating
loading...
Tagged as: , ,

Variolation Test Design

Okay, what the variolation concept needs most now is a trial/test/experiment ASAP. So to help get the ball rolling, let me sketch a tentative plan. I’m NOT saying this plan is now good enough. I’m saying let’s talk together about how to make it better. (Not so interested here in those ever popular “this can never work” comments.)

As with most projects, the obvious first top issue is staffing, especially leaders. This needs leaders who not only have the ability and expertise to execute it, but who can also inspire confidence in its other staff, subjects, patrons, sponsors, and audiences. (The most I’ve ever led is an assistant, so alas I don’t seem a good candidate.) The main point here is to inspire audiences to action, and that won’t happen if audiences don’t believe the project’s purported results, nor if they find its people too odious to associate with.

So the main purpose of this post is to try to attract participants, especially leaders, to pick up this ball and run with it. I’ll run with you, but I can’t run it by myself. When someone makes a good suggestion, such as in the comments, I’m likely to edit this post to include it. You are warned. Continue reading "Variolation Test Design" »

GD Star Rating
loading...
Tagged as: ,

Designing Crime Bounties

I’ve been thinking about how to design a bounty system for enforcing criminal law. It is turning out to be a bit more complex than I’d anticipated, so I thought I’d try to open up this design process, by telling you of key design considerations, and inviting your suggestions.

The basic idea is to post bounties, paid to the first hunter to convince a court that a particular party is guilty of a particular crime. In general that bounty might be paid by many parties, including the government, though I have in mind a vouching system, wherein the criminal’s voucher pays a fine, and part of that goes to pay a bounty. 

Here are some key concerns:

  1. There needs to be a budget to pay bounties to hunters.
  2. We don’t want criminals to secretly pay hunters to not prosecute their crimes.
  3. We may not want the chance of catching each crime to depend lots on one hunter’s random ability. 
  4. We want incentives to adapt, i.e., use the most cost-effective hunter for each particular case. 
  5. We want incentives to innovate, i.e., develop more cost-effective ways to hunt over time. 
  6. First hunter allowed to see a crime scene, or do an autopsy, etc., may mess it up for other hunters. 
  7. We may want suspects to have a right against double jeopardy, so they can only be prosecuted once.
  8. Giving many hunters extra rights to penetrate privacy shields may greatly reduce effective privacy.
  9. It may be a waste of time and money for several hunters to simultaneously pursue the same crime. 
  10. Witnesses may chafe at having to be interviewed by several hunters re the same events.

In typical ancient legal systems, a case would start with a victim complaint. The victim, with help from associates, would then pick a hunter, and pay that hunter to find and convict the guilty. The ability to sell the convicted into slavery and to get payment from their families helped with 1, but we no longer allow these, making this system problematic. Which is part of why we’ve added our current system. Victims have incentives to address 2-4, though they might not have sufficient expertise to choose well. Good victim choices give hunters incentive to address 5. The fact that victims picked particular hunters helped with 6-10. 

The usual current solution is to have a centrally-run government organization. Cases start via citizen complaints and employee patrols. Detectives are then assigned mostly at random to particular local cases. If an investigation succeeds enough, the case is given to a random local prosecutor. Using government funds helps with 1, and selecting high quality personnel helps somewhat with 3. Assigning particular people to particular cases helps with 6-10.  Choosing people at random, heavy monitoring, and strong penalties for corruption can help with 2. This system doesn’t do so well on issues 4-5. 

The simplest way to create a bounty system is to just authorize a free-for-all, allowing many hunters to pursue each crime. The competition helps with 2-5, but having many possible hunters per crime hurts on issues 6-10. One way to address this is to make one hunter the primary hunter for each crime, the only one allowed any special access and the only one who can prosecute it. But there needs to be a competition for this role, if we are to deal well with 3-5.

One simple way to have a competition for the role of primary hunter of a crime is an initial auction; the hunter who pays the most gets it. At least this makes sense when a crime is reported by some other party. If a hunter is the one to notice a crime, it may make more sense for that hunter to get that primary role. The primary hunter might then sell that role to some other hunter, at which time they’d transfer the relevant evidence they’ve collected. (Harberger taxes might ease such transfers.)

Profit-driven hunters help deal with 3-5, but problem 2 is big if selling out to the criminal becomes the profit-maximizing strategy. That gets especially tempting when the fine that the criminal pays (or the equivalent punishment) is much more than the bounty that the hunter receives. One obvious solution is to make such payoffs a crime, and to reduce hunter privacy in order to allow other hunters to find and prosecute violations. But is that enough?

Another possible solution is to have the primary hunter role expire after a time limit, if that hunter has not formally prosecuted someone by then. The role could then be re-auctioned. This might need to be paired with penalties for making overly weak prosecutions, such as loser-pays on court costs. And the time delay might make the case much harder to pursue.

I worry enough about issue 2 that I’m still looking for other solutions. One quite different solution is to use decision markets to assign the role of primary hunter for a case. Using decision markets that estimate expected fines recovered would push hunters to accumulate track records showing high fine recovery rates. 

Being paid by criminals to ignore crimes would hurt such track records, and thus such corruption would be discouraged. This approach could rely less on making such payoffs illegal and on reduced hunter privacy. 

The initial hunter assignment could be made via decision markets, and at any later time that primary role might be transferred if a challenger could show a higher expected fine recovery rate, conditional on their becoming primary. It might make sense to require the old hunter to give this new primary hunter access to the evidence they’ve collected so far. 

This is as far as my thoughts have gone at the moment. The available approaches seem okay, and probably better than what we are doing now. But maybe there’s something even better that you can suggest, or that I will think of later. 

GD Star Rating
loading...
Tagged as: , , ,

Advice Wiki

People often give advice to others; less often, they request advice from others. And much of this advice is remarkably bad. For example, such as the advice to “never settle” in pursuing your career dreams.

When A takes advice from B, that is often seen as raising the status of B and lowering that of A. As a result, people often resist listening to advice, they ask for advice as a way to flatter and submit, and they give advice as a way to assert their status and goodness. For example, advisors often tell others to do what they did, as a way to affirm that they have good morals, and achieved good outcomes via good choices.

These hidden motives understandably detract from the average quality of advice as a guide to action. And the larger is this quality reduction, the more potential there is for creating value via alternative advice institutions. I’ve previously suggested using decision markets for advice in many contexts. In this post, I want to explore a simpler/cheaper approach: a wiki full of advice polls. (This is like something I proposed in 2013.)

Imagine a website where you could browse a space of decision contexts, connected to each other by the subset relation. For example under “picking a career plan after high school”, there’s “picking a college attendance plan” and under that there’s “picking a college” and “picking a major”. For each decision context, people can submit proposed decision advice, such as “go to the highest ranked college you can get into” for “pick a college”. You and anyone could then vote to say which advice they endorse in which contexts, and you see the current voter distribution over advice opinion.

Assume participants can be anonymous if they so choose, but can also be labelled with their credentials. Assume that they can change their votes at anytime, and that the record of each vote notes which options were available at the time. From such voting records, we might see not just the overall distribution of opinion regarding some kind of decision, but also how that distribution varies with quality indicators, such as how much success a person has achieved in related life areas. One might also see how advice varies with level of abstraction in the decision space; is specific advice different from general advice?

Of course such poll results aren’t plausibly as accurate as those resulting from decision markets, at least given the same level of participation. But they should also be much easier to produce, and so might attract far more participation. The worse are our usual sources of advice, the higher the chance that these polls could offer better advice. Compared to asking your friends and family, these distributions of advice less suffer from particular people pushing particular agenda, and anonymous advice may suffer less from efforts to show off. At least it might be worth a try.

Added 1Aug: Note that decision context can include features of the decision maker, and that decision advice can include decision functions, which map features of the decision context to particular decisions.

GD Star Rating
loading...
Tagged as: , ,

Conditional Harberger Tax Games

Baron Georges-Eugène Haussmann … transformed Paris with dazzling avenues, parks and other lasting renovations between 1853 and 1870. … Haussmann… resolved early on to pay generous compensation to [Paris] property owners, and he did. … [He] hoped to repay the larger loans he obtained from the private sector by capturing some of the increased value of properties lining along the roads he built. … [He] did confiscate properties on both sides of his new thoroughfares, and he had their edifices rebuilt. … Council of State … forced him to return these beautifully renovated properties to their original owners, who thus captured all of their increased value. (more)

In my last post I described abstractly how a system of conditional Harberger taxes (CHT) could help deal with zoning and other key city land use decisions. In this post, let me say a bit more about the behaviors I think we’d actually see in such a system. (I’m only considering here such taxes for land and property tied to land.)

First, while many property owners would personally manage their official declared property values, many others would have them set by an agent or an app. Agents and apps may often come packaged with insurance against various things that can go wrong, such as losing one’s property.

Second, yes, under CHT, sometimes people would (be paid well to) lose their property. This would almost always be because someone else credibly demonstrated that they expect to gain more value from it. Even if owners strategically or mistakenly declare values too low, the feature I suggested of being able to buy back a property by paying a 1% premium would ensure that pricing errors don’t cause property misallocations. The highest value uses of land can change, and one of the big positive features of this system is that it makes the usage changes that should then result easier to achieve. In my mind that’s a feature, not a bug. Yes, owners could buy insurance against the risk of losing a property, though that needn’t result in getting their property back.

In the ancient world, it was common for people to keep the same marriage, home, neighbors, job, family, and religion for their entire life. In the modern world, in contrast, we expect many big changes during our lifetimes. While we can mostly count on family and religion remaining constant, we must accept bigger chances of change to marriages, neighbors, and jobs. Even our software environments change in ways we can’t control when new versions are issued. Renters today accept big risks of home changes, and even home “owners” face big risks due to job and financial risks. All of which seems normal and reasonable. Yes, a few people seem quite obsessed with wanting absolute guarantees on preservation of old property usage, but I can’t sympathize much with such fetishes for inefficient stasis. Continue reading "Conditional Harberger Tax Games" »

GD Star Rating
loading...
Tagged as: , ,

Fine Grain Futarchy Zoning Via Harberger Taxes

Futarchy” is my proposed system of governance which approves a policy change when conditional prediction markets give a higher expected outcome, conditional on that change. In a city setting, one might be tempted to use a futarchy where the promoted outcome is the total property value of all land in and near that city. After all, if people don’t like being in this city, and are free to move elsewhere, city land won’t be worth much; the more attractive a city is as a place to be, the more its property will be worth.

Yes, we have problems measuring property values. Property is only traded infrequently, sale prices show a marginal not a total value, much land is never offered for sale, sales prices are often obscured by non-cash terms of trade, and regulations and taxes change sales and use. (E.g., rent control.) In addition, we expect at least some trading noise in the prices of any financial market. As a result, simple futarchy isn’t much help for decisions whose expected consequences for outcomes are smaller than its price noise level. And yes, there are other things one might care about beside property values. But given how badly city governance often actually goes, we could do a lot worse than to just consistently choose policies that maximize a reasonable estimate of city property value. The more precise such property estimates can be, the more effective such a futarchy could be.

Zoning (and other policy that limits land use) is an area of city policy that seems especially well suited to a futarchy based on total property value. After all, the main reason people say that we need zoning is because using some land in some ways decreases how much people are willing to pay to use other land. For example, people might not want to live next to a bar, liquor store, or sex toy store, are so are willing to pay less to buy (or rent) next to such a place. So choosing zoning rules to maximize total property value seems especially promising.

I’ve also written before favorably on Harberger taxes (which I once called “stability rents”). In this system, owners of land (and property tied to that land) must set and may continuously adjust a declared property “value”; they are taxed per unit time as a percentage of momentary value, and must always agree to sell their property at their currently declared value. This system has great advantages in inducing property to be held by those who can gain the most value from it, including via greatly lowering the transaction costs of putting together big property packages. With this system, there’s no more need for eminent domain.

I’ve just noticed a big synergy between futarchy for zoning and Harberger taxes. The reason is that such taxes allow the creation of prices which support a much finer grain accounting of the net value of specific zoning changes. Let me explain.

First, Harberger taxes create a continuous declared value on each property all the time, not just a few infrequent sales prices. This creates a lot more useful data. Second, these declared values better approximate the value that people place on property; the higher an actual value, the higher an owner will declare his or her taxable value to be, to avoid the risk of someone taking it away. Third, these declared values are all relative to a standard terms of trade, not the varying terms of actual sales today. Thus the sum total of all declared property values can be a decent estimate of total city property value. Fourth, it is possible to generalize the Harberger tax system to create zoning-conditional property ownership and prices.

That is, relative to current zoning rules, one can define a particular alternative zoning scenario, wherein the zoning (or other property use limit) policies have changed. Such as changing the zoning of a particular area from residential to commercial on a particular date. Given such a defined scenario, one can create conditional ownership; I own this property if (and when) this zoning change is made, but not otherwise. The usual ownership then becomes conditional on no zoning changes soon.

With conditional ownership, conditional owners can make conditional offers to sell. That is, you can buy my property under this condition if you pay this declared amount of conditional cash. For example, I might offer to make a conditional sale of my property for $100,000, and you might agree to that sale, but this sale only happens if a particular zoning change is approved.

The whole Harberger tax system can be generalized to support such conditional trading and prices. In the simple system, each property has a declared value set by its owner, and anyone can pay that amount at any time to become the new owner. In the generalized system, each property has a declared value for each (combination of) approved alternative zoning scenario. By default, alternative declared values are equal to the ordinary no-zoning-change declared value, but property owners can set them differently if they want, to be either higher or lower. Anyone can make a scenario-conditional purchase of a property from its current (conditional) owner at its scenario-conditional declared value. To buy a property for sure, buy it conditional on all scenarios.

(For concreteness, assume that only one zoning change proposal is allowed per day per city region, that a decision is made on that proposal in that day, and that the proposal for each day is chosen via open public auction a month before. The auction fee can subsidize markets in bets on if this proposal will be approved and markets in tax-revenue asset conditional differences (explained below). A week before the decision day of a proposal, each right in a property is split into two conditional rights, one conditional on this change and one on not-this-change. At that point, owner declared values conditional on this change (or not) become active sale prices. Taxes are paid in conditional cash. Physical control of a property only transfers to conditional owners if and when a zoning scenario is actually approved.)

Having declared values for all properties under all scenarios gives us even more data with which to estimate total city property value, and in particular helps with estimating the difference in total city property value due to a zoning change. To a first approximation, we can just add up all the zoning-change-conditional declared values, and compare that sum to the sum from the no-change declared values. If the former sum is consistently and clearly higher than the latter sum over the proposal’s decision day, that seems a good argument for adopting this zoning proposal. (It seems safer to choose the higher value option with a chance increasing in value difference, and this all works even when other factors influence a decision.) At least if the news that this zoning proposal seems likely be approved gets spread wide and fast enough for owners to express their conditional declared values. (The bet markets on which properties will be effected helps to notify owners.)

Actually, to calculate the net property value difference that a zoning change makes, we need only sum over the properties that actually have a conditional declared value different from its no-change declared value. For small local zoning changes, this might only be a small number of properties within a short distance of the main changes. As a result, this system seems capable of giving useful advice on very small and local zoning changes, in dramatic contrast to a futarchy based on prices estimating total city property values. For example, it might even be able to say if a particular liquor store should be allowed at a particular location, or if the number of required parking spots at a particular shopping mall can be reduced. As promised, this new system offers much finer grain accounting of the net value of specific zoning changes.

Note that in this system as described, losers are not compensated by winners for zoning rule changes, even though we can roughly identify winners and losers. I’ve thought a bit about ways to add a extra process by which winners compensate losers, but haven’t been able to make that work. So the best I can think of is to have the system look at the distribution of wins and losses, and reject proposed changes where there are too many big losers relative to winners. That would force a search for variations which spread out the pain more evenly.

We are close to a workable proposal, but not quite there yet. This is because we face the problem of owners temporarily inflating their declared values conditional on a zoning change that they seek to promote. This might tip the balance to get a change approved, and then after approval such owners could cut their declared values back down to something reasonable, and only pay a small extra tax for that small decision period. Harberger taxes impose a stronger penalty for declaring overly-low values than overly-high values.

A solution to this problem is to use, instead of declared values, prices for the purely financial assets that represent claims on all future tax revenue from the Harberger tax on a particular property. That is, each property will pay a tax over time, we could divert that revenue into a particular account, and an asset holder could own the right to spend a fraction of the funds in that account. Such tax-revenue assets could be bought and sold in financial markets, and could also be made conditional on particular zoning scenarios. As such assets are easy to create and duplicate, the usual speculation pressures should make it hard to manipulate these prices much in any direction.

A plan to temporarily inflate the declared value of a property shouldn’t do much to the market price for a claim to part of all future tax revenue from that property. So instead of summing over conditional differences in declared-values to see if a zoning change is good, it is probably better to sum over conditional differences in tax revenue assets. Subsidized continuous market makers can give exact if noisy prices for all such differences, and for most property-scenario pairs this difference will be exactly zero.

So that’s the plan for using futarchy and Harberger taxes to pick zoning (and other land use limit policy) changes. Instead of just one declared value per property, we allow owners to specify declared values conditional on each approved zoning change (or not) scenario, and allow conditional purchases as well. By default, conditional values equal no-change values. We should tend more to adopt zoning proposals when, during its decision day, when the sum of its (tax-revenue-asset) conditional differences clearly and consistently exceeds zero.

Thanks to Alex Tabarrok & Keller Scholl for their feedback.

Added 11pm: One complaint people have about a Harberger tax is that owners would feel stressed to know that their property could be taken at any time. Here’s a simple fix. When someone takes your property at your declared value, you can pay 1% of their new declared value to get it back, if you do so quickly. But then you’d better raise your declared value or someone else could do the same thing the next day or week. You pay 1% for a fair warning that your value is too low. Under this system, people only lose their property when someone else actually values it more highly, even after considering the transaction costs of switching property.

Added 2Feb: I edited this post a bit. Note that with severe enough property limits, negative declared property values can make sense. For example, if a property must be maintained so as to serve as a public park, the only people willing to become owners are those who get paid when they take the property, and then get paid per unit time for remanning owners. In this way, city services can be defined and provided via this same decision mechanism.

Added 11July: On reflection, there’s not much need for the special 1% grab-back rule I proposed above. While it might be good rhetoric to allay fears, it isn’t actually needed. In principle it could reduce your loss from setting too low a price, but in practice I don’t think it will be possible to underprice that much; speculators will buy underpriced assets intending to sell them back.

Assuming that there’s a standard delay in transferring property, the moment someone grabs your declared value price, they must declare a new value. So you are either willing to grab it back at that price, and then set a new higher value, or you accept that they have a higher value for the property and can keep it. If you grab it back and set a higher value, they can of course take it at that new value; you can in effect go back and forth in an auction to see who values it more. Each time they grab from you will regret not having set a higher value; so this won’t go many rounds and will be settled quickly.

GD Star Rating
loading...
Tagged as: , , ,