This is a linkpost for https://sideways-view.com/2016/11/22/less-costly-signaling/
I'm annoyed at the bit about people polishing up their social media posts being mere useless signalling-- a net with more intelligent, wittier posts is presumably actually giving pleasure and possibly usefulness.
Occasionally signalling leads to the production of long-term value. Sometimes rich people showing off produces art that people continue to enjoy. I don't have a feeling for when a signalling competition is about totally useless things and when it's about soemwhat useful things, especially those with enduring value.
I think only in a few cases do the signaling externalities consume 100% of the benefits of some activity. (Really I don't think it's true even for the swiss watch example.)
Polishing up social media posts can have both useful components, since better posts are better for the reader, and a zero-sum component. In this case the positive effects are also external to the post-writer, so I agree that it's actually unclear whether you end up with too much or too little polish.
One main prescription of the article seems to be "encourage signaling of prosocial goods, so that the cost at least goes to somebody." I think this does not necessarily work, because if something's value as a signal depends on its cost and not on its prosocial qualities, then the natural pressure will optimize away from real benefits and towards apparent benefits.
What you get, I think, if you aim for "at least make your signaling do-gooder-ish" is a proliferation of fake do-gooding, which has the real harm of giving actual do-gooding a bad name. I'm not sure that this is net harmful, but I think it's a matter of real doubt. "Conspicuous philanthropy" has, after all, provided the US with countless Carnegie libraries. But it's a serious question whether poorly-aimed aid might be net harmful for poor countries. For another example, the Crusades were acts of "conspicuous philanthropy" -- European nobles did not profit from them, but committed vast sums to foreign wars out of piety. It's not at all clear that this was good for the world.
I endorse this concern. I do think it is possible to create social value in this way though, especially for relatively simple activities with good alignment between apparent and real benefits, e.g. transferring money / fungible resources to an agent that is trying to do good, or supplying additional tax revenue. So I think there are at least some equilibria where the benefits significantly overwhelm the negative effects, and indeed are a significant fraction of the total loss to the signaler.
I think that reaching a good equilibrium is especially plausible amongst the rationalists/EAs.
If 90% of the price of a diamond ring goes to an efficient charity, then the ring seems to lose 90% of its signaling value for an EA. Suppose an EA is planning to donate $X or Y% of lifetime income to an efficient charity (believing that to be the optimal balance between selfish and altruistic values), then after buying the ring they would reduce their future donations by 90% of the price of ring, since that would maintain the optimal balance between their values. So the amount of money they "lost" by buying the ring is only 10% of its price, and that would be taken into account by the recipient of the ring and other observers.
Yes, the signaling effect only works for those who don't much value the social good. If someone is overinvesting in costly signaling then there must be some form of social good they don't value (namely the welfare of the other people who are engaged in the signaling game). If you align these negative externalities perfectly with the positive externalities you create, then everything works out perfectly (and this is obvious to observers). Otherwise, you are counting on the person not much preferring the beneficiaries of the charity to the losers from the signaling game. That's often going to fail in the conspicuous philanthropy case, and I'm not sure how to make an alternative that comes closer.
Of course as long as the conspicuous philanthropy is not the absolute most effective philanthropy for the signaler then you could in principle just scale up the signaling costs appropriately. But this introduces lots of extra problems, since by giving you are then mostly signaling that you like charity.
True, but EAs tend not to demand burning money as strongly as society as a whole does, and it won't loose all it's effective signaling power to non-EAs unless there's a lot better flow of information than is typical in society.
For example, a fiancé's parents might be mortally offended if their child didn't give and/or receive the usual burnt offering in the form of costly signaling. However, I suspect that in most cases the charity diamond would be acceptable, even if the parents understood EA and knew that the counterfactual amount burnt was only 10% of the standard burnt offering.
After all, what they really care about is their son or daughter in law not embarrassing the family by looking cheap. So, unless all their friends also understand EA, they likely won't care about whether the offering is donated or burnt, so long as there's a diamond.
This might not work if the 90% was going to something besides charity, but luckily it's socially costly to criticize good deeds. (Hence, why EAs have a hard time arguing against donations to curing rare diseases in cute puppies. You look like a dick if you criticize warm fuzzies.)
When there is a socially salient opportunity to help a friend, rather than spending N minutes helping them, help give them a credit for N minutes of help-at-any-time. They can redeem the credit immediately, or if it’s not a great opportunity then they could save it for a more efficient opportunity.
This seems pretty cool and I might try it.
Normalize and celebrate conspicuous philanthropy as a substitute for conspicuous consumption.
My first idea was that we should have seen this in earlier times where charity was even more necessary for the operation of society and found this:
The Social and Religious Meanings of Charity in Medieval Europe
There is considerable evidence that during the 12th and 13th centuries, Latin Christendom experienced a charitable revolution. This period witnessed the foundation of large numbers of leprosariaand hospitals for the sick and poor, as well as the creation of confraternities and religious orders engaged in intensive charitable work. Some historians have argued that this charitable outpouring was principally spurred by economic and material forces, as well as a burgeoning urban culture. However, others have suggested that developments in spirituality and devotional culture are central to understanding what medieval charity meant to its practitioners. For still other scholars, medieval charity was primarily a way to elevate one’s social status and affirm existing hierarchies of power. This essay surveys different historical interpretations of the social and religious meaning of charity during the Middle Ages, including how historians of medieval and early modern Europe have periodized charitable practices and how they have used charity as a window into the interactions between the rich and poor, powerful and powerless.
-- by Adam J. Davis (emphasis mine)
I just looked into the status-related parts but even these alone indicate that trying to shape signalling toward charity is a complicated albeit worthwile matter.
I don't know much about signaling, but I thought the whole point was to spend money on nothing. It won't work if the money goes somewhere useful.
For example, let's say that a Rolex costs $4000, and that you could buy an equally-beautiful watch for $500. You're spending $3500 for nothing. If we can believe MacAskill's book Doing Good Better, $3500 is about what it takes to save a life in Africa. If there were a $4000 watch that included both the $500 watch and a saved life in Africa, and showed it conspicuously, I don't know that it would work as a signal. I'm wealthy enough to buy a $4000 watch that saves a life, but not a $4000 watch that doesn't. Only a truly wealthy person would buy the Rolex, and that's enough to ruin the save-a-life's watch as a signaling object. (Put another way, anything that I would buy can't possibly be a signal of wealth.)
In the diamond example, I think your idea would ruin both real diamonds and synthetic diamonds, since no one would want to appear to be a jerk by buying a real diamond, nor want to appear poor by making good use of their money with a synthetic diamond (with 90% going to good causes).
It's like smoking cigars with $100 bills. The whole point is that you get nothing out of it.
I was trying to get my cousins to realize that I was rich, and they didn't need to feel guilty for the help I was giving them. I gave 500 bucks to the next homeless dude to ask us for change, and they seemed to get it. Same principle as literally smoking the money. Buying an expensive watch wouldn't have worked as well, they'd have just thought I liked watches.
The fact that a lot of charities run gala dinners and wealthy people are willing to pay a lot of money for that, suggests that the model can work.
I think many more rich people go to charity gala dinners than rich people smoking cigars with $100.
But the gala dinners work because they're conspicuously wasting significant resources, e.g. being held in a prominent venue, being hosted by or presenting famous performers or entertainers; the signal is costly, i.e. a significant portion of the money raised by gala dinners goes to paying to put on the gala dinner itself.
Katja Grace's post on cheap signaling seems relevant here:
In a signaling model, Type A people can be distinguished from Type B people because they do something that is too expensive for Type B people. One reason this action can be worthwhile for Type As and not for Type Bs is because type As have more to gain by it. A man who really loves his girlfriend cares more about showing her than man who is less smitten. A box of chocolates costs the same to both men, but hopefully only the first will buy it.
But there is another reason an action may be worthwhile for As and not for Bs: the cost is higher for type Bs. Relating some intimate gossip about a famous person is a good signal that you are in close with them because it is expensive for an ignorant person to fake, but very cheap for you to send.
Directly revealing your type can be thought of as an instance of this. Taking off your shirt to reveal your handsome muscles is extremely cheap if you have handsome muscles under your shirt and extremely expensive if you do not.
That sounds like there's room for a company that combines artificial diamonds with betnets. I see no need why the tax has to be created by the government.
Wouldn't such a company be out-competed by a company that combines artificial diamonds with donations to the rare diseases in cute puppies fund? More warm fuzziest per dollar spent.
Also, both would have to compete with much, much cheaper artificial diamonds, and so likely could not capture the 90% premium. Plus, the signaling value of having an artificial diamond is much less if some are cheep and other are not. Branding doesn't help a small charity diamond startup much, since the people their customers are trying to signal to haven't heard of them. You might be able to do it with a major name brand jewelry company, though, but they'd have an incentive to maximize warm fuzzies/$ and minimize donation amount.
Wouldn't such a company be out-competed by a company that combines artificial diamonds with donations to the rare diseases in cute puppies fund? More warm fuzziest per dollar spent.
Given that there's at the moment no company that combines it was cute puppies I don't think that's a major issue.
Branding doesn't help a small charity diamond startup much, since the people their customers are trying to signal to haven't heard of them.
The difference between a natural diamond and an artificial one isn't visible to the naked eye. It's only visible when people talk about the origin of the diamond.
I would not be at all surprised if someone told me that the deadweight losses from signaling swallowed 10% of society’s productive capacity.
I was surprised to see such a low figure. I would put the number much, much higher.
I'd bet than, at a typical randomly selected company, they could achieve their objectives for close to an order of magnitude less cost if the employees actually cared about the objectives in an actually trying sort of way. I'm getting this 90% inefficiency by judging the difference in cost between companies with an objective it's employees actually care about and companies with phony objectives the employees aren't so emotionally invested in. (For example, SpaceX vs Boeing or Lockheed Martin.) I don't think it's quite that bad, but it seems to be the right order of magnitude.
I think most people are trying mostly to signal competence and hard work to their bosses. It's far easier to look like you're doing useful work than to actually do something useful. I can't find the link at the moment, but I believe some survey showed that almost everyone would take a bet with 10:1 odds against winning if the payoff was $100 for every dollar bet. However, when asked whether they thought their boss would want them to take such a bet with company money, almost all said "no". This hints that individuals within companies may pass up on risky or non-Ra-flavored opportunities.
In order to signal competence well in most jobs, you still have to be somewhat competent. Perhaps programming ability is hard to fake, but management consulting is easy to fake. If so, then in accordance with Goodhart's law, a rational self-interested management consultant should spend almost all his or her time making spreadsheets as pretty as possible, learning all the buzzwords, keeping up with the latest management fads, and optimizing for whatever other subjective or objective metrics of success they may be judged by. If they do not, and waste time on actually achieving the company's goals, they will quickly be out-competed by someone better at signaling.
But all that is just signaling losses within a company. There are entire industries devoted to signaling. If half of all GDP is for products that exist to signal, then we might estimate that 0.1*0.5=0.05=5% of all human activity is devoted to things besides signaling. Unfortunately, this is harder to estimate, since the big industries like mining and construction make products that serve a mix of signaling and non-signaling purposes. I'd be a little surprised if 90% of GDP was exchanged for signaling reasons, for a total signaling burden of 99%, but that doesn't seem completely unreasonable to me. We can put an upper bound on it, though. Suppose the cost of 1 person living comfortably with 0 signaling is $15,000 a year or less, but this could be $1,500 a year without signaling bloat in industry. Per capita GDP in the US is $72,923, so that puts an upper bound of ~98% signaling. If you think the minimum amount you could live comfortable for is $20,000, and you think my 90% figure is inflated, then use 75% to get a cost of living of $5,000/year. That would suggest 93% of GDP goes to signaling.
(The efficient market hypothesis does make this argument less probable, but not impossible. It's financially, socially, and legally difficult to monitor not just employees actions, to make sure they aren't slacking, but also their thoughts, to make sure they are spending significant mental effort looking for better ways of doing things, rather than just blindly doing what's mentally easiest on their System 1. Perhaps in the Age of EM we will have that level of monitoring, but at the moment it's too expensive to go full 1984 on employees. The only good metric we have is the success of large projects, which suffers from coordination problems and free-rider problems. Some startups get around this by using the "change the world" line and convince employees to make company goals into personal goals. They then oust the old regime, and slowly turn into the next generation's stagnant industry.)
This seems believable; but losses compared to what is the question.
It's hard to maintain "actually trying" levels of effort to achieve objectives in a large organization, simply because it's hard to communicate across large numbers of people what the objectives are.
However, large organizations are still economically efficient for some uses. An economy consisting only of five-person startups would, I'm pretty sure, be poorer than the one we live in today.
It seems that we trade off "degree of honest goal-alignment" with "returns to scale" to some extent.
Arguably, monopoly power artificially makes organizations larger than they would naturally be, which makes a higher share of the economy into signaling/makework than it optimally would be. See https://www.minneapolisfed.org/publications/the-region/the-costs-of-monopoly-a-new-view, and, like, all of Gabriel Kolko.
404: File Not Found. I think LW added the comma to the URL. This link should work though, for anyone interested:
https://www.minneapolisfed.org/publications/the-region/the-costs-of-monopoly-a-new-view
TL;DR:
The new research also shows that monopolists typically increase prices by using political machinery to limit the output of competing products—usually by blocking low-cost substitutes. By limiting supply of these competing products, the monopolist drives up demand for its own. Thus, in contrast to conventional theory, the monopolist actually produces more of its own product than it would in a competitive market, not less. But because production of the substitutes is restricted, total output falls.
He says that this is because, contrary to the standard view of monopolies as homogeneous and rational actors, they are actually composed of many subgroups vying for power. Sometimes this is within a single organization, or sometimes a similar effect can be created by large groups of independent practices banding together. Lawyers band together to uphold legislation keeping people from offering legal advice without passing the bar exam. Construction unions prevent the use of prefabricated parts.
I can't find the link at the moment, but I believe some survey showed that almost everyone would take a bet with 10:1 odds against winning if the payoff was $100 for every dollar bet. However, when asked whether they thought their boss would want them to take such a bet with company money, almost all said "no".
If you still find the source I would be interested.
Normally, I'm pretty good at remembering sources I get info from, or at least enough that I can find it again quickly. Not so much in this case. This was about halfway through a TED talk, but unfortunately TED doesn't search their "interactive transcripts" when you use the search function on their page. A normal web search for the sorts of terms I remember doesn't seam to be coming up with anything.
I scanned through all the TED talks in my browser history without much luck, but I have this vague notion that the speaker used the example to make a point about the importance of risk taking or something. But that doesn't really narrow down the search space within TED much, so I can't use it as a heuristic to screen search results.
Unless you want to scan through a couple hundred or thousand TED transcripts, or know of a way to search TED for keywords not in the titles, I'm ad a dead end. Sorry.
I'm always torn when I see something like this.
Yeah, some work is for reals, and other work is makework.
And this gives rise to the brilliant idea of getting rid of all of the makework. Cut out ALL the middlemen. Sounds great.
But you are playing with fire there.
Like, middlemen...are men. Useless people....are people. If you take away their meal ticket they will be annoyed. Annoyed humans are the most dangerous things that exist.
At least for the suggestions in the link around improving consumer behavior (with the effect of improving the world), it seems to be similar (in intent, at least) to the Thaler/Sunstein "nudges", where things like choice architecture can help move people to choose better outcomes.
I'm unsure about how effective nudges are, though, in terms of how much additional change we can expect (e.g. effort to consumer response ratio) before it becomes not worth the resources.
Also, it seems like these two would overlap for some qualities. I recall reading about a nudge where consumers could purchase a pin (or other accesory) that would light up red to green corresponding to their carbon footprint. Obviously this could be easy to fake, but it does bring up the idea that there are certain positive traits we could more publicly reward people for doing via some sort of novel signaling products.
Other possible things that might be good to have a way of signaling:
Are you in favor of China's social credit program? Or do you mean something different when you speak about incentivising positive traits?
To me, the idea of a social credit program seems to trespass on some internal ethical boundary i have. Part of this may be because China has other policies like removing foreign competition and blocking certain sites that infringe upon free thought and autonomy, and those are things I value.
So, I'm not in favor of the social credit program.
I think, with low confidence, that the framing here is a little turned around. I suspect that people mostly don’t underinvest in things of genuine value because they’re overinvesting in a conspicuous consumption arms race. Instead, they overinvest in conspicuous consumption because they’re having trouble finding things of genuine value to invest in.
The “extravagant houses” example is instructive here. When wages go up, people often find that housing prices near work or preferred schools go up in tandem, so they can’t afford to invest more in this real good. It becomes a positional good. But house construction and renovation don’t become correspondingly more expensive because we haven’t regulated it as much, so to the extent that more of anything is bought, it has to be in the latter category, of only-mostly-positional goods.
Of course if you tax conspicuous consumption you can restore the balance – but it seems to me that the more natural solution is to relax constraints that make real resources artificially scarce.
Similarly, people on Facebook overinvest in wit and cleverness, because Facebook is an ephemeral medium that doesn’t reward writing things that will be of lasting use as references. The solution here is not to regret that wit is appealing, but to regret that creating lasting value is not – and try and fix the latter problem rather than the former.
Your 4th suggestion seems basically consonant with this.
I think this is plausible, but I'm not totally convinced. I think there are lots of valuable things to invest in. This is a little bit obscured at the level of the individual, because you can't buy something unless lots of other people buy it. At the level of society, I think there are probably many ways that we could spend more resources to give rich people happier lives. (And many ways that we could use Facebook-post-writing efforts to create real value.)
That said, I certainly agree that e.g. increasing the appeal of "creating lasting value" is an easier/better route than decreasing the appeal of wit.
Regarding 'relax constraints that make real resources artificially scarce' - why not both your idea and the OP's idea to tax positional goods? In the long run the earth/our future light cone really is only so big so don't we need any and all possible solutions to make a utopia?
Attention is scarce. I wouldn't lobby against such a tax, but I would advise people not to put energy into advocating for one, because I think it's an especially inefficient solution.
Here's a post by Scott Sumner (an economist with a track record) about how taxing positional goods does make sense:
Paul's arguing for punitive taxes on positional goods for the sake of reducing wasteful consumption. I think Sumner's mostly trying to argue that the social costs of taxing the consumption of the rich are low. I agree with the latter point, for roughly the same reason I disagree with the former; I think wasteful conspicuous consumption's a side-effect of limited opportunities for more substantive consumption or investment.
Most forms of signalling fall into one of two categories - "ability" signalling and "commitment" signalling. (Not all forms of signalling - e.g. wealth - fall easily into one of these, but I think the distinction is a useful one). The clearest example of ability signalling is Bryan Caplan's model of education - you go through a rigmarole in order to demonstrate intelligence, which employers look at when choosing employees. Engagement rings are a form of commitment signalling.
The whole point of a commitment signal is that it is costly to the signaller - it is a sacrifice which would be utterly senseless if one were not committed to a particular course of action. Hence banks building expensive buildings that mean they're attached to a particular location; people from minority groups taking the time to learn languages which will not allow them to communicate with anyone outside the group; etc. Ability signalling, on the other hand, need not involve any such sacrifice for the signaller. Rather, it should be difficult or expensive for people who do not possess the trait being signalled; for those who do possess it, the cheaper the signal is the better! Hence the value of a degree is not that you found it difficult to get a top grade, but that someone of lower intelligence could not have done so (except perhaps with extremely hard work).
(One consequence of this: taxing commitment signals doesn't necessarily harm the signaller, but taxing ability signals does.)
So ability signalling should be cheap to the signaller, commitment signalling expensive to the signaller, and both can involve costs to society (through wasted resources and through the weakening of other people's signals). Weakening of other people's signals is perhaps (?) inevitable, and the whole point of a commitment signal is to be expensive to the signaller. This suggests that ways to improve the efficiency of signalling should include at least two categories: reducing wasted resources from commitment signalling, and making it cheaper to signal ability.
Philanthropy is a mixture of wealth signalling (which I lack a good model for - intuitively it feels more like an ability, but seems to function more like a commitment) and commitment signalling (giving money away only makes sense if one cares about other people, or at least about other people's opinions of oneself). Most of your suggestions fall into the category of reducing wasted resources; the exception is your idea of increasing on-the-job assessments as a way of reducing the need for higher education, which it seems to me is more about making ability-signalling cheaper.
I suggest that the best signalling will be wearing cryotoken which is only given to people who paid upfront for whole body cryopreservation in Alcor (which is around 200K). Such money would go directly in research in better cryopreservation and may be on other good things.
MIRI also could provide its top donors some kind of tokens, which they could proudly wear on EA conferences.
The idea is that if costly signaling is needed in society, we could find better ways for it, which promote research in useful areas, not just refining mechanics of Rolex watches.
The main problem with taxing positional goods is that the consumption just moves to another country.
I don't have an economics degree, but:
1) governments could cooperate to tax positional goods (such as with a treaty)
2) governments could repair the reduced incentive to work hard by lowering taxes on the rich
3) these 2 would result in lower prices for non-positional goods
4) governments could adjust for lost tax revenue by lowering welfare programs because of (3)
The flaw I can think of (there are probably others) is that workers in positional goods industries might lose their jobs.
What other flaws are there or why isn't this happening already?
What other flaws are there or why isn't this happening already?
https://en.wikipedia.org/wiki/Luxury_tax Bush senior did pass such a tax but the Clinton administration allowed it to be repealed.
Provide additional trappings that make it easier to signal philanthropy. For example, high-profile designers/artists could designate particular items as philanthropic, giving away most profits from sales of those items. Or we could normalize “ethical” versions of positional goods that are accompanied by large donations (e.g. large carbon offsets to accompany extravagant houses).
This seems pretty much like “fair trade” style stuff, and it seems worth someone figuring out what the effect of that has been.
I endorse this concern. I do think it is possible to create social value in this way though, especially for relatively simple activities with good alignment between apparent and real benefits, e.g. transferring money / fungible resources to an agent that is trying to do good, or supplying additional tax revenue. So I think there are at least some equilibria where the benefits significantly overwhelm the negative effects, and indeed are a significant fraction of the total loss to the signaler.
I think that reaching a good equilibrium is especially plausible amongst the rationalists/EAs.
If 90% of the price of a diamond ring goes to an efficient charity, then the ring seems to lose 90% of its signaling value for an EA. Suppose an EA is planning to donate $X or Y% of lifetime income to an efficient charity (believing that to be the optimal balance between selfish and altruistic values), then after buying the ring they would reduce their future donations by 90% of the price of ring, since that would maintain the optimal balance between their values. So the amount of money they "lost" by buying the ring is only 10% of its price, and that would be taken into account by the recipient of the ring and other observers.