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Lumifer comments on Open thread, May 15 - May 21, 2017 - Less Wrong Discussion

1 Post author: Elo 15 May 2017 07:06AM

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Comment author: Vaniver 16 May 2017 05:18:53PM 2 points [-]

Instead it rewards those who provide value to those who provide value! It's recursive, like PageRank!

Contra Lumifer, this looks right to me. Notice the second-order effects, where a value-provider not only gets tokens to spend, but also them having more tokens means that everyone else is more sensitive to their desires.

That's the main reason why we have so much inequality. Recursive systems will have attractors that concentrate stuff.

This isn't as clear to me. If transactions happen entirely at random, but debts aren't allowed, then you'll end up with a Boltzmann-Gibbs distribution for income, which will be highly unequal. If you allow debts, then probably the resulting distribution is normal or something, which is still highly unequal. That is, this likely explains the particular shape of inequality, but not the existence of inequality at all. (Note, for example, a world where everyone has the same utility function but has variable capacity to produce goods and services will have significant inequality, driven by the variable capacity rather than the spiralling effects.)

That's also why you can't blame people for having no jobs. They are willing to provide value, but they can't survive by providing to non-providers, and only the best can provide to providers.

Trying to reach a conclusion about blame seems like trying to cross the is-ought chasm, and note that not being able to satisfy producers doesn't imply being able to satisfy non-producers.

Comment author: Lumifer 16 May 2017 05:50:16PM *  0 points [-]

a value-provider not only gets tokens to spend, but also them having more tokens means that everyone else is more sensitive to their desires

This is a good thing, since you do want to incentivize people to provide value.

I also don't know about "everyone". If you are a baker selling loaves of bread for $1, there is no reason to care more about billionaire Alice than about working-stiff Bob if both happen to be your customers. Alice still can eat only one loaf a day so her billions are irrelevant to you.

distribution for income

Wealth distributions in societies tend to be power-law distributions and income is basically the first derivative of wealth.

Comment author: Vaniver 19 May 2017 09:16:59PM 0 points [-]

I also don't know about "everyone".

This is a component of the information conveyed by prices, which everyone is sensitive to.

Wealth distributions in societies tend to be power-law distributions and income is basically the first derivative of wealth.

Only for the rentier class. A fit of real-world income distributions to a combination of the Boltzmann-Gibbs for the bulk and then a power law for the top seems to perform better, because it separates the two classes.

Comment author: Lumifer 20 May 2017 02:53:42AM *  0 points [-]

This is a component of the information conveyed by prices, which everyone is sensitive to.

A price is a scalar, there isn't much information it can convey -- in simplified economics like what we are discussing, it just tells you where the intersection of the demand and the supply curves is. Even if you are a producer and can manipulate the prices to observe the shifts in demand, all you can find out is the approximate shape of the demand curve. There is no information about the total wealth of your customers in the price for common goods.

A fit of real-world income distributions to a combination of the Boltzmann-Gibbs for the bulk and then a power law for the top

An interesting paper, though it seems to suffer from a serious confusion between the map and the territory. I also wish it would show the fit of the distributions to the data and the errors. As it is, we have to peer at not-too-detailed graphs and I don't know if they are as convincing as the paper makes them out to be. In particular, to my eye the switching point between the two distributions in Fig. 2 isn't necessarily where the paper says it is.

Comment author: philh 17 May 2017 09:51:13AM 0 points [-]

I think "everyone" is pretty much true. Your counterexample seems like it only works as long as Alice and Bob's preferences aren't in conflict. And I guess they often won't be. But I don't think that being in that situation means people care about their preferences equally; it just means they don't have to choose right now.

To be more explicit about when your counterexample fails: suppose Alice wants a particularly fancy load of bread. It takes you all day to bake so you can't make bread for Bob (or any of your other customers) any more, but she's willing to pay $1000 for it.

She doesn't actually care very much about having this $1000 loaf over a $1 loaf, which is why she's only willing to pay $1000, which isn't very much to her. Bob's $1 has more value to him than $1000 does to Alice. The cost to Bob of not getting the $1 loaf is more than the value to Alice of getting the $1000 loaf instead of the $1 loaf.

But you make the $1000 loaf anyway. This is great for you. But it's pretty bad for Bob, and only slightly good for Alice.

Comment author: JEB_4_PREZ_2016 17 May 2017 04:03:17PM *  1 point [-]

Alice would probably not want to pay $1,000 for a loaf that she prefers only slightly to the $1 loaf. She'd likely be willing to pay $1.05 or $1.10 for it. And Bob would be willing to pay $2 or $3 or maybe even $4 since he wants it so badly.

Comment author: philh 19 May 2017 10:03:06AM 0 points [-]

Alice would probably not want to pay $1,000 for a loaf that she prefers only slightly to the $1 loaf. She'd likely be willing to pay $1.05 or $1.10 for it.

I did not intend that to be taken literally. I picked an extreme example to make the effect intuitively obvious, not because it was realistic.

If you think the effect doesn't exist, or is too small to be worth mentioning, at realistic levels, then that seems worth saying. But it doesn't seem very interesting to say that my example was unrealistic.

Bob would be willing to pay $2 or $3 or maybe even $4 since he wants it so badly.

There exists an amount that Bob can value a loaf of bread, where he's willing to pay $1 but not $2. Nothing I said is inconsistent with Bob valuing the bread at that level.

Comment author: ChristianKl 18 May 2017 03:23:59PM 0 points [-]

Some billionaire's like Warren Buffet do care about the price difference between a $1,000 and a $1 loaf but many don't.

It might be more clear when you replace "loaf of bread" with wine.

Comment author: JEB_4_PREZ_2016 18 May 2017 08:08:40PM *  1 point [-]

All [long-term] wealthy people care about price differences. They'd go broke if they didn't (see lottery winners). Even billionaires don't just throw their money around, because their money is still scarce and they want to spend it so as to maximize their expected utility.

Replacing bread with wine doesn't change anything; if a billionaire slightly prefers one type of wine to another, he doesn't arbitrarily pay a ton more for it. He pays the market price.

Comment author: ChristianKl 18 May 2017 08:51:14PM 0 points [-]

There's a reason the saying "If you have to ask for the price, it's too expensive for you" exists.

A huge reason why lottery winners go broke is that they don't earn more money, there are other rich people who do earn money and who spent it lavishly.

Comment author: JEB_4_PREZ_2016 18 May 2017 11:17:36PM *  1 point [-]

There's a reason the saying "If you have to ask for the price, it's too expensive for you" exists.

That saying has more to do with poor people not having the purchasing power of rich people and less to do with rich people and their lack of stinginess.

A huge reason why lottery winners go broke is that they don't earn more money

False. Most jackpot winners (and almost all of the ones that go broke), come from the lower and less educated classes. If they were to invest their entire prize in passive investments and live off the annual returns, they'd be earning far more money than any salary they could've ever hoped to achieve with their labor. These people don't go broke because they don't earn more money--they go broke because they squander multiple lifetimes worth of upper class earnings astonishingly quickly.

there are other rich people who do earn money and who spent it lavishly.

Not in the way that was described in the original example. Note that in philh's comment, Alice "doesn't actually care very much about having this $1000 loaf over a $1 loaf," but decides to go ahead and drop $1,000 on it anyways. The overwhelming majority of ultra rich people don't spend this way. And when they sort of do, they don't stay ultra rich over the long run.

Comment author: Lumifer 17 May 2017 02:45:04PM *  1 point [-]

I think "everyone" is pretty much true

In real life? I don't think so.

I don't expect that anyone at my supermarket, or at a corner gas station, or in the local Starbucks is "more sensitive" to the desires of the rich.

There are a couple of things going on here. First, someone rich has the resources to, let's say, exert an economic force. She can use that force to make things happen. Phrasing such events as "more sensitive to" is bad framing: we don't say that a weight is "more sensitive" to a greater force.

Second, as has been pointed out, in free markets a producer cares only about the demand supported by purchasing power. Some producers make expensive things and they are certainly more sensitive to the desires of the rich because the rich are their only customers. However a lot of other producers make common, inexpensive things -- bread, gasoline, jeans, etc. -- and they don't care much about the rich because the rich are a very small fraction of their customers and so a source of only a small fraction of their profit.

Comment author: philh 18 May 2017 11:32:41AM 0 points [-]

First, someone rich has the resources to, let's say, exert an economic force. She can use that force to make things happen. Phrasing such events as "more sensitive to" is bad framing: we don't say that a weight is "more sensitive" to a greater force.

The desires aren't the force, the money is. Being rich means the same amount of desire gets translated into a larger amount of money. Framing this as people being more sensitive to the desires seems natural to me. A physical analogy might be levers: a weight is more sensitive to force being applied at one end of a lever than the other end.

But I don't think we disagree about anything real.

Comment author: Dagon 18 May 2017 02:01:40PM 0 points [-]

People with money (or in other systems, people with birth rank or status or strength) definitely have more power than people without. So, what's the alternative to the individual freedom to choose to serve the powerful over the powerless?

I guess we can make all humans into serfs for the great AI. Not terribly appealing to me.

Comment author: philh 18 May 2017 05:25:09PM 0 points [-]

To clarify, I think capitalism is pretty great (applause light). I'm pointing at something that I think is a not-great feature of capitalism, but I don't have any better ideas.

Comment author: Dagon 18 May 2017 06:27:22PM *  2 points [-]

I get that. From my standpoint, this isn't a not-great feature of capitalism, it's a not-great feature of human choices, or maybe of a universe that contains limited resources and independent-goal actors. Capitalism is neither great nor problematic, in fact it's not a thing at all. It's a side-effect of individual agency and individual decisions about resources.

(edited to add) you can argue that it's also a side-effect of our particular consensual popular conception of "property". Ok, stipulated. But there's not much hope in having ANY system of persistent ownership that doesn't include lots of elements of capitalism. And without the idea of property ownership, everything goes to hell (well, to the strongest/cruelest/luckiest risk-taker).

Comment author: philh 19 May 2017 10:03:50AM 0 points [-]

Yes, I agree with that too.