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Salemicus comments on Open thread, Oct. 13 - Oct. 19, 2014 - Less Wrong
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It probably includes finding a person with expertise on the subject matter. That means it's easier if you reduce the level of abstractness and specify the issue at least a bit.
I'm happy to specify completely, actually, I just figured a general question would lead to answers that are more useful to the community.
In my case, I'm helping to set up an organization to divert money away from major party U.S. campaign funds and to efficient charities. The idea is that if I donate $100 to the Democratic Party, and you donate $200 to the Republican party (or to their nominees for President, say), the net marginal effect on the election is very similar to if you'd donated $100 and I've donated nothing; $100 from each of us is being canceled out. So we're going to make a site where people can donate to either of two opposing causes, we'll hold it in escrow for a little, and then at a preset time the money that would be canceling out goes to a GiveWell charity instead. So if we get $5000 in donations for the Democrats and $2000 for Republicans, the Democrats get $3000 and the neutral charity gets $4000. From an individual donor's point of view, each dollar you donate will either become a dollar for your side, or take away a dollar from the opposing side.
This obviously steps into a lot of election law, so that's probably the expertise I'll be looking for. We also need to figure out what type of organization(s) we need to be: it seems ideal to incorporate as a 501c(3) just so that people can make tax-deductible donations to us (whether donations made through us that end up going to charity can be tax-deductible is another issue). I think the spirit of the regulations should permit that, but I am not a lawyer and I've heard conflicting opinions on whether the letter of the law does.
And those issues aside, I feel like there could be more legal gotchas that I'm not anticipating to do with Handling Other People's Money.
It seems to be implicit in your model that funding for political parties is a negative-sum arms race. This is starkly at odds with much of political thinking, which sees funding for political parties as a positive-sum game. This is expressed by public subsidies for political parties, in such terms as public funding/matching funding/tax deductibility of political donations, depending on where you reside.
Political parties turn funding into votes by getting their message out to voters, so the more funding political parties have, the better informed an electorate we will have. Moreover, to the extent that funding getting your message out becomes less binding of a constraint, then other constraints (such as the persuasiveness of that message) will become more binding - which seems like a good thing.
I guess it just goes to show that one person's public good is another person's public nuisance. In my own view, the most damaging negative-sum arms race is academia. Perhaps you will inspire me to set up my own 501c(3) to allow matching donations to universities to be diverted to political parties.
Consider the incentives for people who express this "political thinking".
More political agitprop does not necessarily lead to more informed voters. Is there any real-world data on the relationship between political campaign spending and voter knowledge (once you pass the very low bar of "oh, there is an election and X, Y, and Z are on the ballot")?
P.S. Analogous reasoning would argue for public funding of advertising as leading to "more informed" consumers who could make better choices about what to buy X-D
Well, for starters it helps to also have some information about who X, Y, and Z are.
Which political agitprop won't give you.
I definitely agree with the line of argument that advertising is a public good, because it leads to more informed consumers, and I am highly sceptical of knee-jerk claims that it is a negative-sum arms race. So at least we're both consistent!
However, I don't think that advertising (whether commercial or political) should be subsidised, because I think the government is very bad at encouraging public goods. My point was merely that HonoreDB's charity, although no doubt well intentioned, appears to me to be destroying value, rather than creating it...
Consider your own analogy to commercial advertising. Suppose Coke and Pepsi signed a compact to reduce their advertising expenditures by a specified amount; would you suppose that to be good or bad for the consumer?
I don't think that agitprop and/or advertising leads to more informed voters/consumers because its purpose is not to inform. Its purpose is to manipulate, to force the subject to a certain opinion by all means necessary. Any "informing" that happens is entirely coincidental and, depending on the circumstances, could be considered a feature or a bug.
In local terminology, advertising tries to change the map in your head and the main feature of the one it wants to install is that it shows all paths leading to the same place, the one conclusion that it wants you to make. An accurate map is bad from the advertising point of view and needs to be replaced. In the service of this goal the advertisers can and do use biases and fallacies, they spin, mislead, and obfuscate, and on occasion just lie.
Economically -- good. Psychologically -- I don't know. People like to be told what to prefer :-/
Wow. Let's just say we're very far apart on this.
There's a wealth of law and economics literature about the effect of advertising, which demonstrates that advertising bans hurt consumers and help producers - see for example this classic. An agreement within a cartel isn't the same as a legal ban, but we should surely expect it to have a similar effect - especially given that many real-world advertising bans were lobbied for by major incumbents. Do you have any rationale for why you think consumers would actually benefit?
I was inviting you to consider what I considered an obvious cartel behaviour aimed at suppressing consumer ability to get the best deal. But bravo on biting the bullet!
First, we were not talking about legal bans (which I am generally not in favor of).
Second, you have to be quite careful here not to confuse "advertising" and "intensity of competition". I have no doubts that reducing the competition hurts consumers, but I am not convinced that reducing advertising expenditures necessarily leads to reduced competition. I suspect that these two things are often conflated (and the causation flipped).
In this particular case, do you think that if both Coke and Pepsi reduce their advertising budgets by, say, $10m each, the consumer will be hurt economically? What is the mechanism for that?
Third, are you implicitly claiming that the current level of advertising expenses is optimal? If we accept your thesis and start to increase advertising, will there be some point when the curve bends -- the advertising becomes excessive? Presumably so. Where are we with respect to this point? How do you know?
Plain-vanilla cost savings some which will be passed on to consumers.
Huh? I walk into a supermarket and look at the prices of Coke and Pepsi which are there side by side. I know from experience to which degree I prefer one over another. How will advertising help me get the best deal?
Glad to hear it. Do you agree with the wealth of literature showing that bans on advertising are bad for the consumer? And do you agree that a binding agreement within a duopoly would have a similar effect to a legal ban?
Yes, I think the consumer would be hurt. Advertising alerts us to new products, changes to existing products, and changes in the terms (eg price) under which those products are sold. Let me give you two examples of Coke/Pepsi advertising and how it affects me.
Where I live, Coke produces a wide variety of products, and is constantly adding more. Currently, they are heavily advertising their new "Coke Life" product, which has a different kind of sweetener, and a slightly different taste. If Coke had a smaller advertising budget, fewer consumers would be aware of this new product and what it's about, resulting in loss of the potential consumer surplus from drinking the new product among those who prefer it to other Coke or Pepsi products.
In addition, Coke frequently has promotional offers on. Just walking into the supermarket and look at the prices is inadequate, I specifically go there to buy Coke because of the promotional offer. Otherwise I might miss out. And I know about the promotional offer because of advertising. In the absence of this, consumers would have to go to the supermarket on a much-more-frequent basis, just to check the price of Coke. This would be a loss.
I am claiming that, given that the current level of Coke vs Pepsi advertising is the result of adversarial competition in a free market, I think there's a very heavy burden on people who claim it's "too high" (or "too low"). I am not claiming that it's "optimal" by everyone's idiosyncratic criteria.
Why on earth would the cost savings be passed on to consumers? Do you think Coke or Pepsi is sold at marginal cost? This is a market with unique products and partial substitution, so these companies are price-setters, not price-takers. This saving would just increase their profits.
You seem to be making a fundamental assumption which I disagree with. You are assuming that what is best for the producer is best for the consumer and that increased consumption is a public good. You are assuming that we are dealing with homo economus who decides correctly and for whom more information is always a good thing. We are dealing however with homo sapiens, who can be easily led into things against his best interest. I do not think your basic assumption holds and I point to the massive increases in obesity which have benefited producers (more demand) but not consumers (die sooner) as evidence. To use the specific example you've been using, coke is rather unhealthy, being mainly simple sugars which have been proven to lead to obesity in sufficient quantities. Its consumption is kept well above the normal set point by advertising and I think this is a negative thing on the whole.
However, the issue has become sidetracked in economic minutiae. The real question is this: Is campaign funding a greater or lesser good than effective altruism. $1000 to Malaria Foundation provides 20-100 DALY, as Yvain said higher up. I find it spectacularly unlikely that $1000 spent on TV adverts extolling the virtues of a candidate and lawn signs showing his face can provide a similar benefit or even one within the same order of magnitude. This is especially relevant when half comes from each candidate.
So, the ball is in your court.
I am not sufficiently familiar with it and, frankly, I don't care enough about the topic to go read a bunch of economics papers and then fisk them. My data-less suspicion is that bans on advertising are a consequence of reduced competition and/or near-monopoly behavior by incumbents, just a harm to consumers is also a consequence of the same thing, and people misinterpret the correlation between "less advertising" and "harm to consumers".
So, you pointed out the benefits. What about costs? Why do you believe the benefits are higher than costs?
Also, you're ignoring the advertising for established products, as well as for failed products (e.g. the New Coke).
Note that I'm not saying that all advertising is harmful and that zero advertising is the desired state. I am saying that my best guess at the "optimal" point (which balances costs against public benefits) is such that I think the current levels of commercial advertising are above that point. Reducing advertising would get us closer to that optimum -- though, obviously, I don't know where exactly it is.
Of course the optimal point which balances costs against public benefits is different from the optimal point which balances costs against the firm's benefits.
Let's not get quite this ridiculous X-)
That's a cop-out :-) Besides, adversarial competition in a free market optimizes for the firm's benefits from advertising, not for the public benefits.
Because, as you mentioned, there is "adversarial competition in a free market". That includes price wars, promotional coupons, etc. By your logic, there should never be promotions for a product -- why lessen your profits for no good reason?
This doesn't jibe with my intuition - I think virtually no one would be upset if there were fewer soda advertisements.
Do you think the same is true for iPhone advertisements?
Yeah, I think so. Maybe this is a culture-bubble thing, but I don't think I know anyone who would notice, much less care, if there were more or fewer advertisements for one particular product or another (ad space, keep in mind, is fungible).
But how will they know which product is cool, that is, is efficient at signaling status?
Even if political advertising produces a little more informat voters, I find it unlikely that the money is as well spent as money on a GiveWell recommended charity.
Furthermore a lot of TV ads don't really inform and aren't completely honest. Watching a news show is more likely to inform than watching a campaign ad.
Polling that interrupts people also steals them valuable time and many people are too polite to simply put down the telephone. Less money spent on pollsters that optimize advertising messages is a net gain.
GiveWell's top recommended charity is giving direct aid to poor Africans. This may make their lives more pleasant, but is very unlikely to have any long-term effect - Africa is poor because it has bad institutions, not inadequate consumption. In 30 years time, GiveWell will still be trying to find ways to alleviate African "poverty," but will that word mean near-starvation, or something akin to the lives of poor Westerners today? That will be determined by the rates of economic and technological growth for the world as a whole, which in turn are critically influenced by public policy in the First World. Public policy in (broadly-defined) Western countries is the most important issue facing mankind today, and even small improvements are therefore worth vast sums. My own altruistic giving is entirely to a domestic political party for just this reason.
But a lot of news shows don't really inform and aren't completely honest, so your conclusion doesn't follow. Campaign adverts allow politicians to get their message out unfiltered by the news media - which has its own agenda. This is particularly important for anti-incumbent politicians. Advertising turns information presentation around elections into a properly adversarial process. If information only goes through the news media, that crucial element is often lost, and with it much of the accountability of elections.
Oh come on, this is marginal at best. Did you object to the census on the same grounds, or is this just mood affiliation?
Well yes, ceteris paribus. But presenting election information in a way that doesn't speak to the electorate is a net loss, ceteris paribus. I complained the other day that you can make anything look good under "benefit analysis" - here we have the converse, a "cost analysis." We do both sides of the cost-benefit analysis for a reason.
Have you looked at the actual arguments put forth by GiveWell? The money isn't mainly used for consumption but often used by people to start businesses that they otherwise couldn't start.
Empowering individuals to start businesses has advantages over funneling money into bad existing institutions.
I do value checks and balance and I don't want unfiltered lies.
The problem is that the value of the time of the person answering the phone isn't priced into the calculations of the person running the query.
I think the census does provide valuable data. More targeted political ads don't provide much value.
I'm not sure whether all the advertising is just about choosing between the two brands. A costumer might drink many different beverages besides Coke and Pepsi.
It probably is on the margin. I'd guess that, while if both parties received 99% less donations there might be some kind of adverse effect, if both parties received epsilon less donations the effect would be of order epsilon squared or smaller.
What army1987 said. The specific assumption is that on the margin, the effect of more funding to both sides is either very small or negative.
This is definitely an extendable idea. It gets a lot more complicated when there are >2 sides, unfortunately. Even if they agreed it was negative-sum, someone donating $100 to Columbia University would generally not be equally happy to take $100 away from Harvard. I don't know how to fix that.