Tag Archives: Signaling

Against Irony

Papua New Guinea. There are nearly 850 languages spoken in the country, making it the most linguistically diverse place on earth. … Mountains, jungles and swamps keep villagers isolated, preserving their languages. A rural population helps too: only about 13% of Papuans live in towns. …. Fierce tribal divisions—Papua New Guinea is often shaken by communal violence—also encourages people to be proud of their own languages. The passing of time is another important factor. It takes about a thousand years for a single language to split in two, says William Foley, a linguist. With 40,000 years to evolve, Papuan languages have had plenty of time to change naturally. (more)

British printer who used a mirrored question mark to distinguish rhetorical questions in 1575, and John Wilkins, a British scientist who proposed an inverted exclamation mark to indicate irony in 1668. … The problem with adopting new irony punctuation is that if the people reading you don’t understand it, you’re no better off. … The ironic punctuation mark that the social internet can claim as its own is the sarcasm tilde, as in, “That’s so ~on brand~” … But tildes can feel a bit obvious. For a wryer mood, a drier wit, one might try a more subdued form of ironic punctuation—writing in all lowercase. …

Irony is a linguistic trust fall. When I write or speak with a double meaning, I’m hoping that you’ll be there to catch me by understanding my tone. The risks are high—misdirected irony can gravely injure the conversation—but the rewards are high, too: the sublime joy of feeling purely understood, the comfort of knowing someone’s on your side. No wonder people through the ages kept trying so hard to write it. (more)

Just as the urge to signal loyalty to people nearby has kept New Guinea folks from understanding people over the next mountain, our similar urge pushes us to write in ways that make it hard for those outside our immediate social circles to understand us. Using irony, we sacrifice ease of wide understanding to show loyalty to a closer community. 

Language is like religion, art, and many other customs in this way, helping to bond locals via barriers to wider interaction and understanding. If you think of yourself instead as a world cosmopolitan, preferring to promote world peace and integration via a global culture that avoids hostile isolationist ties to local ethnicities and cultures, then not only should you like world-wide travel, music, literature, emigration, and intermarriage, you should also dislike irony. Irony is the creation of arbitrary language barriers with the sole purpose of preventing wider cultural integration. 

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Who Likes Simple Rules?

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 at 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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Downfall

On Bryan Caplan’s recommendation, I just watched the movie Downfall. To me, it depicts an extremely repulsive and reprehensible group of people, certainly compared to any real people I’ve ever met. So much so that I wonder about its realism, though the sources I’ve found all seem to praise its realism. Thus I was quite surprised to hear that critics complained the movie didn’t portray its subjects as evil enough!:

Downfall was the subject of dispute … with many concerned of Hitler’s role in the film as a human being with emotions in spite of his actions and ideologies. … The German tabloid Bild asked, “Are we allowed to show the monster as a human being?” in their newspaper. … Cristina Nord from Die Tageszeitung criticized the portrayal, and said that though it was important to make films about perpetrators, “seeing Hitler cry” had not informed her on the last days of the Third Reich. Some … felt the time was right to “paint a realistic portrait” of Hitler. Eichinger replied to the response from the film by stating that the “terrifying thing” about Hitler was that he was human and “not an elephant or a monster from Mars”. Ganz said that he was proud of the film; though he said people had accused him of “humanizing” Hitler. (more)

For example, the New Yorker:

But I have doubts about the way [the makers’] virtuosity has been put to use. By emphasizing the painfulness of Hitler’s defeat Ganz has certainly carried out the stated ambition … he has made the dictator into a plausible human being. Considered as biography, the achievement (if that’s the right word) of “Downfall” is to insist that the monster was not invariably monstrous—that he was kind to his cook and his young female secretaries, loved his German shepherd, Blondi, and was surrounded by loyal subordinates. We get the point: Hitler was not a supernatural being; he was common clay raised to power by the desire of his followers. But is this observation a sufficient response to what Hitler actually did? (more)

The conclusion I have to draw here is that no remotely realistic depiction of real bad people would satisfy these critics. Most people insist on having cartoonish mental images of their exemplars of evil, images that would be contradicted by any remotely realistic depiction of the details their actual lives. I’d guess this is also a problem on the opposite end of the spectrum; any remotely realistic depiction of the details of the life of someone that people consider saintly, like Jesus Christ or Martin Luther King, would be seen by many as a disrespectful takedown.

This is probably the result of a signaling game wherein people strive to show how moral they are by thinking even more highly of standard exemplars of good and even more lowly of standard exemplars of bad, compared to ordinary people. This helps me to understand self-righteous internet mobs a bit better; once a target has been labeled evil, most mob members probably don’t want to look too close at that target’s details, for fear that such details would make him or her seem more realistic, and thus less evil. Once we get on our self-righteous high horse, we prefer to look up to our ideals in the sky, and not down at the complex details on the ground.

Added 11p: This attitude of course isn’t optimal for detecting and responding to real evil in the world. But we care more about showing off just how outraged we are at evil than we care about effective response to it.

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The Puzzle of Human Sacrifice

Harvey Whitehouse in New Scientist:

Today’s small-scale societies tend to favour infrequent but traumatic rituals that promote intense social cohesion – the kind that is necessary if people are to risk life and limb hunting dangerous animals together. An example would be the agonising initiation rites still carried out in the Sepik region of Papua New Guinea, involving extensive scarification of the body to resemble the skin of a crocodile, a locally revered species. …

With the advent of farming, … [and their] larger populations, … new kinds of rituals seem to have provided that shared identity. These were generally painless practices like prayer and meeting in holy places that could be performed frequently and collectively, allowing them to be duplicated across entire states or empires. …

A puzzle, however, is that many of these early civilisations also practised the brutal ritual of human sacrifice. This reached its zenith in the so-called archaic states that existed between about 3000 BC and 1000 BC, and were among the cruellest and most unequal societies ever. In some parts of the globe, human sacrifice persisted until relatively recently. The Inca religion, for example, had much in common with today’s world religions: people paid homage to their gods with frequent and, for the most part, painless ceremonies. But their rulers had divine status, their gods weren’t moralising and their rituals included human sacrifice right up until they were conquered by the Spanish in the 16th century. …

Instead of helping foster cooperation as societies expanded, Big Gods appeared only after a society had passed a threshold in complexity corresponding to a population of around a million people. … something other than Big Gods allowed societies to grow. … that something was the shift in the nature of rituals from traumatic and rare to painless and repetitive. … human sacrifice was used as a form of social control. The elites – chiefs and shamans – did the sacrificing, and the lower orders paid the price, so it maintained social stability by keeping the masses terrorised and subservient. … the practice started to decline when populations exceeded about 100,000. … 

Piecing all this together, here is what we think happened. As societies grew by means of agricultural innovation, the infrequent, traumatic rituals that had kept people together as small foraging bands gave way to frequent, painless ones. These early doctrinal religions helped unite larger, heterogeneous populations just enough to overcome the free-riding problem and ensure compliance with new forms of governance. However, in doing so they rendered them vulnerable to a new problem: power-hungry rulers. These were the despotic god-kings who presided over archaic states. Granted the divine right to command vast populations, they exploited it to raise militias and priesthoods, shoring up their power through practices we nowadays regard as cruel, such as human sacrifice and slavery. But archaic states rarely grew beyond 100,000 people because they, in turn, became internally unstable and therefore less defensible against invasion.

The societies that expanded to a million or more were those that found a new way to build cooperation – Big Gods. They demoted their rulers to the status of mortals, laid the seeds of democracy and the rule of law, and fostered a more egalitarian distribution of rights and obligations. (more)

It makes sense that complex intense rituals can only work for small societies, while larger societies need simpler rituals that everyone can see or do. It also makes sense that moralizing gods help promote cooperation. But I’m not convinced that we understand any of the rest of these patterns. The human sacrifice part seems to me especially puzzling. I can sort of see how it could serve a function, but I don’t see why that function would be especially effective in societies of population 10-100K.

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Champions Show War Ability

Sports make sense as a way for individuals to develop and show off certain packages of physical and mental abilities. Team sports make sense as a way to show off such abilities in contexts of team production, which have long been especially relevant to human success. Of course we need not be consciously aware of this function; genetic and cultural evolution needed only make us inclined to do sports when that might make us get and look good.

When two teams play each other, the final score is a good summary about the relative abilities of the two teams. Of course there’s more info to be gleaned from game details, but not that much more. And if you can’t study those game details well yourself, but must instead rely on the judgments of others, a final score is admirably resistant to bias and lobbying.

Many sports have a regular season of games, following by a championship round designed to select a tree of “champions”, a tree whose root is the uber-champion of all. Often a “world champion”. This is somewhat puzzling, as individual championship games are not that much more diagnostic about team abilities than are regular season games, and there are far fewer championship games. Why count these games so much more than others?

One could use an elo-rating type system to estimate the abilities of each team based on their pairwise scores. Or one could use even fancier statistical systems to estimate distributions over team abilities, using scores and other data. Within such systems, championship games would be just a few more games, and not be given extra weight. If we just want to know about team abilities, why put so much weight on championships?

Arguably, through most of ancient history the main abilities that observers were interested in inferring and developing via sporting contests were war abilities. This is plausibly why most sports have long been team sports focused on war-like contests, relative to more common social contests. And in war, one mainly cares about abilities displayed in contexts where stakes are very high: hard battles where a large fraction of combatants die, as opposed to practice battles where at most a few are injured.

So championships plausibly exist as a way to focus sporting displays on high stakes contexts. The closer a team gets to the root of the championship tree, the more is at stake in each game, and the better that game’s score becomes as a measure of player abilities in high stakes contexts.

Yes, outside of sports the stakes do vary over contexts, and observers should want to see how individuals perform across a range of stake sizes. But as war is rare today, in our world success mostly comes from consistent quality over many low stakes contests, not from a few super-battles. Designing sporting contests to instead maximize an emphasis on the highest stakes possible seems better explained as a heritage of war. As are many other features of modern human attitudes and behaviors.

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Avoiding Blame By Preventing Life

If morality is basically a package of norms, and if norms are systems for making people behave, then each individual’s main moral priority becomes: to avoid blame. While the norm system may be designed to on average produce good outcomes, when that system breaks then each individual has only weak incentives to fix it. They mainly seek to avoid blame according to the current broken system. In this post I’ll discuss an especially disturbing example, via a series of four hypothetical scenarios.

1. First, imagine we had a tech that could turn ordinary humans into productive zombies. Such zombies can still do most jobs effectively, but they no longer have feelings or an inner life, and from the outside they also seem dead inside, lacking passion, humor, and liveliness. Imagine that someone proposed to use this tech on a substantial fraction of the human population. That is, they propose to zombify those who do jobs that others see as boring, routine, and low status, like collecting garbage, cleaning bedpans, or sweeping floors. As in this scenario living people would be turned into dead zombies, this proposal would probably be widely seen as genocide, and soundly rejected.

2. Second, imagine someone else proposes the following variation: when a new child of a parent seems likely enough to grow up to take such a low status job, this zombie tech is applied very early to the fetus. So no non-zombie humans are killed, they are just prevented from existing. Zombie kids are able to learn and eventually learn to do those low status. Thus technically this is not genocide, though it could be seen as the extermination of a class. And many parents would suffer from losing their chance to raise lively humans. Whoever proposed all this is probably considered evil, and their proposal rejected.

3. Third, imagine combining this proposal with another tech that can reliably induce identical twins. This will allow the creation of extra zombie kids. That is, each birth to low status parents is now of identical twins, one of which is an ordinary kid, and the other is a zombie kid. If parent’s don’t want to raise zombie kids, some other organization will take over that task. So now the parents get to have all their usual lively kids, and the world gains a bunch of extra zombie kids who grow up to do low status jobs. Some may support this proposal, but surely many others will find it creepy. I expect that it would be pretty hard to create a political consensus to support this proposal.

While in the first scenario people were killed, and in the second scenario parents were deprived, this third scenario is designed to take away these problems. But this third proposal still has two remaining problems. First, if we have a choice between creating an empty zombie and a living feeling person who finds their life worth living, this second option seems to result in a better world. Which argues against zombies. Second, if zombies seem like monsters, supporters of this proposal might might be blamed for creating monsters. And as the zombies look a lot like humans, many will see you as a bad person if you seem inclined to or capable of treating them badly. It looks bad to be willing to create a lower class, and to treat them like a disrespected lower class, if that lower class looks a lot like humans. So by supporting this third proposal, you risk being blamed.

4. My fourth and last scenario is designed to split apart these two problems with the third scenario, to make you choose which problem you care more about. Imagine that robots are going to take over most all human jobs, but that we have a choice about which kind of robot they are. We could choose human-like robots, who act lively with passion and humor, and who inside have feelings and an inner life. Or we could choose machine-like robots, who are empty inside and also look empty on the outside, without passion, humor, etc.

If you are focused on creating a better world, you’ll probably prefer the human-like robots, as that which choice results in more creatures who find their lives worth living. But if you are focused on avoiding blame, you’ll probably prefer the machine-like robots, as few will blame you for for that choice. In that choice the creatures you create look so little like humans that few will blame you for creating such creatures, or for treating them badly.

I recently ran a 24 hour poll on Twitter about this choice, a poll to which 700 people responded. Of those who make a choice, 77% picked the machine-like robots:

Maybe my Twitter followers are unusual, but I doubt that a majority of a more representative poll would pick the human-like option. Instead, I think most people prefer the option that avoids personal blame, even if it makes for a worse world.

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Economists Rarely Say “Nothing But”

Imagine someone said:

Those physicists go too far. They say conservation of momentum applies exactly at all times to absolutely everything in the universe. And yet they can’t predict whether I will raise my right or left hand next. Clearly there is more going on than their theories can explain. They should talk less and read more literature. Maybe then they’d stop saying immoral things like Earth’s energy is finite.

Sounds silly, right? But many literary types really don’t like economics (in part due to politics), and they often try to justify their dislike via a similar critique. They say that we economists claim that complex human behavior is “nothing but” simple economic patterns. For example, in the latest New Yorker magazine, journalist and novelist John Lanchester tries to make such a case in an article titled:

Can Economists and Humanists Ever Be Friends? One discipline reduces behavior to elegantly simple rules; the other wallows in our full, complex particularity. What can they learn from each other?

He starts by focusing on our book Elephant in the Brain. He says we make reasonable points, but then go too far:

The issue here is one of overreach: taking an argument that has worthwhile applications and extending it further than it usefully goes. Our motives are often not what they seem: true. This explains everything: not true. … Erving Goffman’s “The Presentation of Self in Everyday Life,” or … Pierre Bourdieu’s masterpiece “Distinction” … are rich and complicated texts, which show how rich and complicated human difference can be. The focus on signalling and unconscious motives in “The Elephant in the Brain,” however, goes the other way: it reduces complex, diverse behavior to simple rules.

This intellectual overextension is often found in economics, as Gary Saul Morson and Morton Schapiro explain in their wonderful book “Cents and Sensibility: What Economics Can Learn from the Humanities” (Princeton). … Economists tend to be hedgehogs, forever on the search for a single, unifying explanation of complex phenomena. They love to look at a huge, complicated mass of human behavior and reduce it to an equation: the supply-and-demand curves; the Phillips curve … or mb=mc. … These are powerful tools, which can be taken too far.

You might think that Lanchester would support his claim that we overreach by pointing to particular large claims and then offering evidence that they are false in particular ways. Oddly, you’d be wrong. (Our book mentions no math nor rules of any sort.) He actually seems to accept most specific claims we make, even pretty big ones:

Many of the details of Hanson and Simler’s thesis are persuasive, and the idea of an “introspective taboo” that prevents us from telling the truth to ourselves about our motives is worth contemplating. … The writers argue that the purpose of medicine is as often to signal concern as it is to cure disease. They propose that the purpose of religion is as often to enhance feelings of community as it is to enact transcendental beliefs. … Some of their most provocative ideas are in the area of education, which they believe is a form of domestication. … Having watched one son go all the way through secondary school, and with another who still has three years to go, I found that account painfully close to the reality of what modern schooling is like.

While Lanchester does argue against some specific claims, these are not claims that we actually made. For example:

“The Elephant in the Brain”… has moments of laughable wrongness. We’re told, “Maya Angelou … managed not to woo Bill Clinton with her poetry but rather to impress him—so much so that he invited her to perform at his presidential inauguration in 1993.” The idea that Maya Angelou’s career amounts to nothing more than a writer shaking her tail feathers to attract the attention of a dominant male is not just misleading; it’s actively embarrassing.

But we said nothing like “Angelou’s career amounts to nothing more than.” Saying that she impressed Clinton with her poetry is not remotely to imply there was “nothing more” to her career. Also:

More generally, Hanson and Simler’s emphasis on signalling and unconscious motives suggests that the most important part of our actions is the motives themselves, rather than the things we achieve. … The last sentence of the book makes the point that “we may be competitive social animals, self-interested and self-deceived, but we cooperated our way to the god-damned moon.” With that one observation, acknowledging that the consequences of our actions are more important than our motives, the argument of the book implodes.

We emphasize “signalling and unconscious motives” because is the topic of our book. We don’t ever say motives are the most important part of our actions, and as he notes, in our conclusion we suggest the opposite. Just as a book on auto repair doesn’t automatically claim auto repair to be the most important thing in the world, a book on hidden motives needn’t claim motives are the most important aspect of our lives. And we don’t.

In attributing “overreach” to us, Lanchester seems to rely most heavily on a quick answer I gave in an interview, where Tyler Cowen asked me to respond “in as crude or blunt terms as possible”:

Wait, though—surely signalling doesn’t account for everything? Hanson … was asked to give a “short, quick and dirty” answer to the question of how much human behavior “ultimately can be traced back to some kind of signalling.” His answer: “In a rich society like ours, well over ninety per cent.” … That made me laugh, and also shake my head. … There is something thrilling about the intellectual audacity of thinking that you can explain ninety per cent of behavior in a society with one mental tool.

That quote is not from our book, and is from a context where you shouldn’t expect it to be easy to see exactly what was meant. And saying that a signaling motive is on average one of the strongest (if often unconscious) motives in an area of life is to say that this motive importantly shapes some key patterns of behavior in this area of life; it is not remotely to claim that this fact explains most of details of human behavior in this area! So shaping key patterns in 90% of areas explains far less than 90% of all behavior details. Saying that signaling is an important motive doesn’t at all say that human behavior is “nothing more” than signaling. Other motives contribute, we vary in how honest and conscious we are of each motive, there are usually a great many ways to signal any given thing in any given context, and many different cultural equilibria can coordinate individual behavior. There remains plenty of room for complexity, as people like Goffman and Bourdieu illustrate.

Saying that an abstraction is important doesn’t say that the things to which it applies are “nothing but” that abstraction. For example, conservation of momentum applies to all physical behavior, yet it explains only a tiny fraction of the variance in behavior of physical objects. Natural selection applies to all species, yet most species details must be explained in other ways. If most roads try to help people get from points A to B, that simple fact is far from sufficient to predict where all the roads are. The fact that a piece of computer code is designed help people navigate roads explains only a tiny fraction of which characters are where in the code. Financial accounting applies to nearly 100% of firms, yet it explains only a small fraction of firm behavior. All people need air and food to survive, and will have a finite lifespan, and yet these facts explain only a tiny fraction of their behavior.

Look, averaging over many people and contexts there must be some strongest motive overall. Economists might be wrong about what that is, and our book might be wrong. But it isn’t overreach or oversimplification to make a tentative guess about it, and knowing that strongest motive won’t let you explain most details of human behavior. As an analogy, consider that every nation has a largest export commodity. Knowing this commodity will help you understand something about this nation, but it isn’t remotely reasonable to say that a nation is “nothing more” than its largest export commodity, nor to think this fact will explain most details of behavior in this nation.

There are many reasonable complaints one can make about economics. I’ve made many myself. But this complaint that we “overreach” by “reducing complexity to simple rules” seems to me mostly rhetorical flourish without substance. For example, most models we fit to data have error terms to accommodate everything else that we’ve left out of that particular model. We economists are surely wrong about many things, but to argue that we are wrong about a particular thing you’ll actually need to talk about details related to that thing, instead of waving your hands in the general direction of “complexity.”

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Signaling Gains From Transparency

I said back in February:

For millennia, we humans have shown off our intelligence via complicated arguments and large vocabularies, health via sport achievement, heavy drink, and long hours, and wealth via expensive clothes, houses, trips, etc. Today we appear to have the more efficient signaling substitutes, such as IQ tests, medical health tests, and bank statements. Yet we continue to show off in the old ways, and rarely substitute such new ways. Why?

One explanation is inertia. Signaling equilibria require complex coordination, and those who try to change it via deviations can seem non-conformist and socially clueless. Another explanation is hypocrisy. As we discuss in our new book, The Elephant in the Brain, ancient and continuing norms against bragging push us to find plausible deniability for our brags. We can pretend that big vocabularies help us convey info, that sports are just fun, and that expensive clothes, etc. are prettier or more comfortable. It is much harder to find excuses to waive around your IQ test or bank statement for others to see.

It recently occurred to me that a sufficient lack of privacy would be an obvious fix for this problem. Imagine that it were easy to use face recognition to find someone’s official records, and from there to find out their net worth, IQ scores, and health test scores. In that case, observers could more cheaply acquire the same info that we are now try to show off in deniable ways.

Yes, we say to want to keep such info private, but the big efforts most of us go through to show off our smarts, health, and wealth suggests that we doth protest too much there. And as usual, it is less that we don’t know what policies would make us better off, and more than we don’t much care about that when we choose our political efforts.

Added 7a: Of course there may also be big disadvantages to losing privacy, and our evolved preferences may be tied more to particular surface behaviors and cues than to their general underlying signaling functions.

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Bad-News Boxes

Many firms fail to pass bad news up the management chain, and suffer as a result, even though simple fixes have long been known:

Wall Street Journal placed the blame for the “rot at GE” on former CEO Jeffrey Immelt’s “success theater,” pointing to what analysts and insiders said was a history of selectively positive projections, a culture of overconfidence and a disinterest in hearing or delivering bad news. …The article puts GE well out of its usual role as management exemplar. And it shines a light on a problem endemic to corporate America, leadership experts say. People naturally avoid conflict and fear delivering bad news. But in professional workplaces where a can-do attitude is valued above all else, and fears about job security remain common, getting unvarnished feedback and speaking candidly can be especially hard. …

So how can leaders avoid a culture of “success theater?” … They have to model the behavior, being realistic about goals and forecasts and candid when things go wrong. They should host town halls where employees can speak up with criticism, structuring them so bad news can flow to the top. For instance, he recommends getting respected mid-level managers to first interview lower-level employees about what’s not working to make sure tough subjects are aired. …

Doing that is harder than it sounds, making it critical for leaders to create systemic ways to offer feedback, rather than just talking about it. She tells the story of a former eBay manager who would leave a locked orange box near the office bathrooms where people could leave critical questions. He would later read them aloud in meetings — with someone else unlocking the box to prove he hadn’t edited its contents — hostile questions and all. “People never trusted anything was really anonymous except paper,” she said. “He did it week in and week out.”

When she worked at Google, where she led online sales and operations for AdSense, YouTube and Doubleclick, she had a crystal statue she called the “I was wrong, you were right” statue that she’d hand out to colleagues and direct reports. (more)

Consider what signal a firm sends by NOT regularly reading the contents of locked anonymous bad news boxes at staff meetings. They in effect admit that they aren’t willing to pay a small cost to overcome a big problem, if that interferes with the usual political games. You might think investors would see this as a big red flag, but in fact they hardly care.

I’m not sure how exactly to interpret this equilibrium, but it is clearly bad news for prediction markets in firms. Such markets are also sold as helping firms to uncover useful bad news. If firms don’t do easier simpler things to learn bad news, why should we expect them to do more complex expensive things?

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Signal Inertia

For millennia, we humans have shown off our intelligence via complicated arguments and large vocabularies, health via sport achievement, heavy drink, and long hours, and wealth via expensive clothes, houses, trips, etc. Today we appear to have the more efficient signaling substitutes, such as IQ tests, medical health tests, and bank statements. Yet we continue to show off in the old ways, and rarely substitute such new ways. Why?

One explanation is inertia. Signaling equilibria require complex coordination, and those who try to change it via deviations can seem non-conformist and socially clueless. Another explanation is hypocrisy. As we discuss in our new book, The Elephant in the Brain, ancient and continuing norms against bragging push us to find plausible deniability for our brags. We can pretend that big vocabularies help us convey info, that sports are just fun, and that expensive clothes, etc. are prettier or more comfortable. It is much harder to find excuses to waive around your IQ test or bank statement for others to see.

Now consider these comments by Tyler Cowen on Bryan Caplan’s new book The Case Against Education:

Bryan’s strangest assumption, namely a sociologically-rooted, actually anti-economics “conformity is stronger than you think” argument, which Bryan uses to assert the status quo will continue more or less indefinitely. It won’t. To the extent Bryan is correct (and that you can debate, but at least he is more correct than most people in the educational establishment will let on), competency-based learning and changes in employer behavior will in fact bring about a new equilibrium…not quickly, but certainly in well under two decades.

And what about on-line education? Well, a lot of students don’t like it because they have to actually work on their own and pay attention. To the extent education really is just signaling, that should give on-line options a brighter future all the more. But not in the Caplanian world view, as conformity serves once again as an intervening factor. For better or worse, Bryan’s book subverts economics as a science at least as much as it does education. Bryan of course is smart enough to see the trade-offs here, and he knows if the standard model of economic competition were allowed to reign supreme, we would (even with subsidies, relative to those subsidies) tend to see strong moves toward relatively efficient means of signaling, if only through changes in the relative sizes of institutions.

Tyler suggests that Bryan’s views imply competency-based learning and on-line education are more efficient signals, and so should win a market competition for customers. Yet I don’t see it. Yes, such approaches may let some learn more faster, and signal what they have learned. But Bryan and I see school as less about learning.

Both competency-based learning and on-line education divorce learning from its usual social conformity context. You can use them to learn what you want when you want, and then to prove what you’ve learned. You don’t have to commit to and keep up with a standard plan of what to learn when shared by a large cohort, nor be visibly compared to this cohort.

Yes, such variations may let one better show initiative, independence, creativity, and self-actualization. And yes, we give lip service to admiring such features. But employers are not usually that eager to see such features in their employees. The usual learning plan, in contrast, is much more like a typical workplace, where workers have less freedom to choose their projects, must coordinate plans closely, and must deal with office politics and conformity pressures. It seems to me that success in the usual schooling plans work better as a signal of future workplace performance, and so would not be outcompeted by competency-based learning and on-line education. Even if they let you learn some things faster, and even if change was easier than it is.

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