The "status" hypothesis simply claims that we associate one another with a one-dimensional quantity: the perceived degree to which others' behavior can affect our well-being. And each of us behaves toward our peers according to our internally represented status mapping.
Imagine that, within your group, you're in a position where everyone wants to please you and no one can afford to challenge you. What does this mean for your behavior? It means you get to act selfish -- focusing on what makes you most pleased, and becoming less sensitive to lower-grade pleasure stimuli.
Now let's say you meet an outsider. They want to estimate your status, because it's a useful and efficient value to remember. And when they see you acting selfishly in front of others in your group, they will infer the lopsided balance of power.
In your own life, when you interact with someone who could affect your well-being, you do your best to act in a way that is valuable to them, hoping they will be motivated to reciprocate. The thing is, if an observer witnesses your unselfish behavior, it's a telltale sign of your lower status. And this scenario is so general, and so common, that most people learn to be very observant of others' deviations from selfishness.
On Less Wrong, we already understand the phenomenon of status signaling -- the causal link from status to behavior, and the inferential link from behavior to status. If we also recognize the role of selfishness as a reliable status signal, we can gain a lot of predictive power about which specific behavioral mannerisms are high- and low-status.
Are each of the following high- or low-status?
1. Standing up straight
2. Saying what's on your mind, without thinking it through
3. Making an effort to have a pleasant conversation
4. Wearing the most comfortable possible clothes
5. Apologizing to someone you've wronged
6. Blowing your nose in front of people
7. Asking for permission
8. Showing off
Answers:
1. Standing up straight is low-status, because you're obviously doing it to make an impression on others -- there's no first-order benefit to yourself.
2. Saying what's on your mind is high-status, because you're doing something pleasurable. This signal is most reliable when what you say doesn't have any intellectual merit.
3. Making an effort to have a pleasant conversation is low-status. It's high-status to talk about what you care about.
4. Wearing the most comfortable possible clothes is high-status, because you're clearly benefiting yourself. (Dressing in fashionable clothes is also high-status, through a different inferential pathway.)
5. Apologizing is low-status because you're obviously not doing it for yourself.
6. Blowing your nose is high-status because it's pleasurable and shows that you aren't affected enough by others to stop.
7. Asking for permission is low-status. Compare: recognizing that proceeding would be pleasurable, and believing that you are immune to any negative consequences.
8. Showing off is low-status, because it reveals that the prospect of impressing your peers drives you to do things which aren't first-order selfish. (Of course, the thing you are showing off might legitimately signal status.)
Pwno's post makes a good related point: The most reliable high-status signal is indifference. If you're indifferent to a person, it means their behavior doesn't even factor into your expectation of well-being. It means your computational resources are too limited to allocate them their own variable, since its value matters so little. How could you act indifferent if you weren't high-status?
You are describing second order status effects (status signaled to those analyzing your behavior for first order signaling motivations), which should be corrections to first order effects (status signaled to those taking your actions at face value), as if they were the whole story.
I'm not sure what "taking your actions at face value" means.
The main point is that, regardless of the other features of the interaction, people have a mental subsystem to make inferences about one another's statuses, and part of the inference works by measuring deviations from the ultimate high-status behavior: selfish pleasure-seeking.