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May 19, 2009

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Can somebody explain to me the basis upon which the hypothesis "people purchase Ferraris because they like owning Ferraris" has been rejected, and why the hypothesis "people purchase Ferraris to show off" is preferred? What are the testable predictions?

Of course I accept that signaling goes on and that people do like to show off, I just do not understand the reasons why it's apparently fashionable to believe these motives permeate our behaviour to so great an extent, and why people seem to place so little weight upon the idea of purchases made for the sake of direct utility. It looks to me like academics looking down their noses at vulgar stock brokers etc. and making themselves feel superior by placing themselves above the grubby business using material goods to show off. Why not believe that vulgar stock brokers simply have different preferences to academics?

hmm, mea culpa. I'm off to read the links in Robin's mea culpa post, on evidence for positional goods.

Luis, have a look at some of the links in the positional data page.

One of them is not behind a pay wall and shows that some people think that their relatives will be more content in world where they have a more expensive than average car, than one where they have have a more expensive car but it is less than the average.

So they would pick worlds where their kin had a BMW and everyone else had Fords, vs a world where they had a Ferrari F40 and everyone else had a McLaren F1. (I'm exaggerating things somewhat as the price range didn't go up to an F40)

These are not necessarily car lovers, so may not be indicative of car lovers motivations.

Couple of thoughts.

The author is signalling, deafeningly, his support of classical virtues with which I have no quibble. However, I do not like the nasty little habit of intellectuals to suggest coercive social engineering projects to impose their values on others using highly debatable empirical studies heavily influenced by bias, no doubt. Jealousy maybe? It may not be tasteful, but if you have made a great deal of money and decide to signal the fact, it is not an easily fakeable signal and so counts for something to the people you may wish to impress...future mates etc... not Frank and Miller clearly.

When one buys a very expensive watch or unnecessarily fast car, I think it rash to suggest it is 100% signalling. I am sure the more intellectually honest and patient could list many other reasons you might want to own a beautifully made item, many of which could be quite noble.

For the utilitarian minded, is it not clear that removing the reach of various 'undesirable' signals will alter the incentives of those who would otherwise have striven for such signals? And is it not possible that the negative material consequences (foregone fruits of their labour) could outweigh the claimed positive social ones? Are we really to accept that imposing a small groups values on others by force is acceptable but corporations who supposedly do the same to you without force is not?

"Can somebody explain to me the basis upon which the hypothesis "people purchase Ferraris because they like owning Ferraris" has been rejected, and why the hypothesis "people purchase Ferraris to show off" is preferred? What are the testable predictions?"

I imagine this could be tested easily. Other things equal, if you had the choice between a brand-name product and a product with identical direct utility but no brand, you should be indifferent between the two unless you place value on signaling as well. For a fun experiment, change the name on a real Rolex watch to Roleks and see if people are still willing to pay the same amount of money for it as for one that says Rolex. In fact, let them watch you replace the letters; assuming the change is irreversible, it won't matter - they'll still discount it relative to a watch that says Rolex. Unless you claim that people would attach great value to a letter or two, people clearly must value signaling. Otherwise, they should value functionally identical items the same.

Fun data point: I remember reading, though I can't locate, an article discussing how people who buy expensive suits in some subsaharan African countries will sew the label to the lapel or sleeve so it's clearly visible to passersby. [I remember a subtler form of this being done in Eastern Europe as well.]

I haven't read the book, and am trying to understand its thesis from your summary here, so I may have it wrong. But I see the following potentially good points:

1) Conspicuous consumption of consumer goods is negative-sum. If you and I are both after the same mate, and you spend $100,000 on a fancy car to impress her, then I have to spend $100,000 on a fancy car (if I can) or else be left behind, even if I don't really want a fancy car. Since our relative position is then the same as if neither of us had bought a fancy car, we've just wasted a total of $200,000 on something that doesn't help either of us. This drags down the whole community, eg African-Americans spending more on signaling and less on health and education (see http://www.slate.com/id/2181822/ ). Signaling intelligence through political discussions doesn't have these issues (unless it reaches the point where people spend all their money on rhetoric classes). This sounds sort of like what Point 5 of your last post is trying to say (otherwise I don't know why he'd bring up externalities).

2) I'm not as convinced as you that everything is just another form of signaling. If I understand your Luxury Fever post right, you take the example of signaling by buying an expensive new grill, versus signaling by spending more time with your family, and say there's no evidence there's any interesting difference between them other than that "time with your family" sounds warmer and fuzzier. But according to positive psychology research, certain goods (like close human relationships) really do make people happier than other goods (like the Ultra Barbecue 9000), and people are very bad at allocating resources to these superior goods. If our goal is to make people happier, then there is something to be said for a change in policy or social norms that discourages conspicuous consumption in favor of eg more time with the family.

This seems a far more plausible explanation of the popularity of sports than sport marketers tricking us into wasting our time on sports.

When I think of "sports" I usually think of spectator sports - I think more people care about professional sports than participate themselves in competitive sports. I suspect that participation in competitive sports, at least in the United States, drops off sharply after high school and college. When was the last time you, or anyone you know, played a game of baseball, or basketball, or whatever? (There's still bowling and golf, though - people actually play those, instead of just rooting from the sidelines.)

Incidentally, I've always hated the "it's just a game" mentality. Games are important!

Praxeo, no one is suggesting anything is 100% signaling.

Yvian, signaling through discussions can waste the same total amount, via wasted time. Proposing that we just subsidize anything that happiness studies suggest make folks more happy than average is a very different proposal, and would require a very different response.

Doug, I'm talking about participating in sports.

Is he claiming that we think signaling is more important than it is, or that we're doing it less effectively than we could?

I see signaling everywhere, but I suppose it's because it's a critical part of social human life rather than because most of humanity is making an error. I guess I could be wrong on this, but it would take both theory and evidence to convince me.

I am VERY interested in ideas that lead to "better" signaling, which IMO are signals that are harder to fake, cheaper to send, or more finely match to the information that we want from each other (especially ability and willingness to provide support, IQ, resource levels, categories of interest). Anti-consumerism isn't good for this, as I need a replacement rather than a notice that signaling is part of my desire for stuff. OF COURSE signaling is a large part of my motivation. I'm human. Tell me how to do it better, or leave me alone.

For at least some of what I want to signal, thoughtful consumerism works pretty well. I have a somewhat rare sports car. I have opinions about microbrew beer. I travel a bit. I play mid-limit poker. I (pay someone to, but doing it myself would qualify) maintain my yard and garden. All of these are expensive (except poker, but it used to be and is even now not much better than breakeven), and while I enjoy them, I recognize that a good part of their value is signaling.

I'm pretty convinced that this is a problem not of production (too much signaling), but of consumption (people desire good signals from their peers). Trying to make it more expensive via taxation does nothing for the inefficiency or even amount, it just changes a little bit what the signal means.

Signaling is no different from any other "undesirable" human desire: interdicting the source is expensive and ineffective. Minimizing the demand is about all you can do.

I'll just 2nd Yvian's conviction, that it seems like Robin has waaaaaaay too much faith in everything being signaling. Evolution just isn't going to be that optimal. You should be careful that your social circle isn't full of a bunch of autistic/psychopaths (i.e. academics)

HEH, who the hell plays poker for signaling?

In terms of the conclusions Miller reaches -- they seem pretty conventional. Its amusing that many people start from extremely different premises and reach the same conclusions. Perhaps the conclusions are more sound than the premises. I would put more faith in them, then the particular arguments (a decision market probably would as well).

Signals sent through consumer goodas are intentionally vague and ambiguous. There is far more to them than merely the display of wealth. They are also an expression of my sense of aesthetics, my sensitivity to social cues and my cultural and political sympathies. A whole wealth of information can be communicated through them. Social identity can be shaped and negotiated through these signals in a myriad of ways. There is a whole lot more going on in peoples selection of consumer goods than just a consideration of their price. In a world of less vague and more efficient signalling it would seem to me that individuals would have far less room for negotiation of their place in the social hierarchy. It would presumably be a less attractive world too since the signaling capacity of beautiful objects has been neutralized. All things considered its not a world I want to live in. Frank and Miller are welcome to it.

My guess is most of the criticism of "consumer capitalism" is misdirected anger. People hate being deceived. If the motivation to signal is mostly instrumental ("attracting practical support from kin, friends, and mates") then it will also be mostly deceptive.

Our choices of friends & mates have massive impact on our lives, so it's understandable to fear and resent deceptive signaling. Raising the cost of products used for deceptive signaling will only make them more powerful signals. At present, designer labels signal credit-card debt rather than wealth.

Perhaps misdirected anger. But the Palahniuk book _Fight Club_ largely shaped Geoffrey Miller's intuitions about consumerism. If you dig through some of his less scientific publications, you'll see what I mean.

Still, I don't see what's so bad about giving anti-conspicuous consumption norms a pep talk for competing in the trenches of cultural evolution. New England old money culture is pretty big on this approach, and their WASPs seem pretty happy to signal in the ways they do.

I think the signaling issue is very relevant, but as a 43 year old dad, much less relevant to my decisions than previously. Not zero, but very small. My priorities are focused on raising good kids, as opposed to finding a mate to create good kids. I have enough, and I'm focused on them.

Also, I think the signaling problem is two-fold. First, the strategic choice of what peer group to impress, second, to impress within that group. Miller is basically suggesting his peer group is the best to impress, those with his preferences. There is a lot of uncertainty over which peer group will be most fruitful, and your payoffs are from relative status within that group plus the relative status of that group relative to other groups. It seems only natural that the peer group you chose is better than other peer groups, because it would be difficult to motivate oneself to excel in a group one did not think had the best future, was on the right track (or at least, not way off track like say a pomo lit crit theorists).

I think Robin is in danger of peer group relativism, or nihilism, and this will hurt his own status signaling because it seems so pointless if true. Further, some status groups are, objectively, better than others: they are more productive, contribute more to their neighbors, the arts, sciences, posterity. So, the debate as to whether it is better to be a libertarian economist or liberal psychologist may be unresolvable, these are better than working up the status hierarchy in a crack house, playing stupid politics as satirized in The Office, or being a professional wrestling groupie.

Dagon, he's claiming signaling could be more effective. Miller is trying to minimize the demand for fancy cellphones by making it socially shameful to buy them.

Jerome and Eric, Frank and Miller have set their sights on changing your world, not just theirs. They want us all to adopt more of the signaling style of their status group.

George, Miller is not proposing to reduce signaling, but to change what is used to signal. So the level of deception would remain similar.

Isn't it rational to think your status orientation is not merely a game, but should be the focus of others? That is, you aren't just maximizing an arbitrary status but about insights and skills closest to Truth, Beauty and Good? If you didn't believe that, you wouldn't be very good within the group you chose to signal among. If you think, "different strokes for different folks", aren't you conceding your group is no better than a bunch of Trekies or Esperanto speakers, people with skills to be sure, but irrelevant if not socially obtuse?

"Yvian, signaling through discussions can waste the same total amount, via wasted time."

Do you have any evidence for this statement? It doesn't seem obvious at all to me that signaling through discussion or personality must necessarily waste resources the same as signaling through money. Signaling through discussion is not a competition to see who can waste the most time in the same way that signaling through money is a competition to see who can waste the most money. If you are a more interesting and charming person than I am, you are likely to come out ahead with only minimal effect from the amount of time each of us puts in. Compare this to money, where it only becomes possible to compare our wealth once we have both wasted a large amount of it.

"Proposing that we just subsidize anything that happiness studies suggest make folks more happy than average is a very different proposal, and would require a very different response."

In your post "Luxury Fever", you quote Frank as saying that "What ... I call 'inconspicuous consumption' - freedom from traffic congestion, time with family and friends, vacation time, and a variety of favorable job characteristics. In each of the examples discussed, the evidence suggests that subjective well-being will be higher in the society with a greater balance of inconspicuous consumption." Isn't he making exactly that proposal? Or do you interpret it differently?

Yvain

"Signaling through discussion is not a competition to see who can waste the most time in the same way that signaling through money is a competition to see who can waste the most money. ... Compare this to money, where it only becomes possible to compare our wealth once we have both wasted a large amount of it."

Actually, the goal isn't to waste the most money. It's to appear to have wasted the most money. You don't have to actually spend $100,000 on a sports car - buy it at a police auction for $18K and drive it around. You'll send the same signal as long as no one knows your dirty secret.

"If you are a more interesting and charming person than I am, you are likely to come out ahead with only minimal effect from the amount of time each of us puts in."

We're clearly not after the same women...

I don't think signalling through money is purely a competition to see who can waste the most money. Wasting your money well is critically important in this game. Even among people deeply immersed in the game of signalling status through consumption there is often a dislike of vulgarity. Accusations of vulgarity can pretty much negate attempts to gain status through excessive consumption particularly among more sophisticated players of the game.
What are the right things to waste your money on? I think you are judged by how you balance conformity to the social trends and pressures around you with expressing your individuality within those parameters.

In my opinion people who claim that status signalling with expensive stuff is just about shoving your net worth in peoples faces are misunderstanding it.

Eric, my goal is not just to have a convenient belief; I need to ask if I have any evidence for that belief.

Yvian, money is obtained from time spent; so ultimately money and discussion signaling are spending the same resource. The question is how much you get out of the process aside from jockeying for rank. In the quote you cite, I interpret Frank as making an incidental comment which doesn't fit in his main argument.

I think the problem is not in HOW we signal but in WHAT we signal. The consumer culture makes us emphasize signaling for wealth, individuality, status, etc. Signaling for these things doesn't help build are relationship with people - something that gives us more happiness. We would be better off if we signaled for more "natural" things that Miller delineates. More natural signals would me more efficient in the sense that they give more happiness.

Does this mean that we should tax conspicuous consumer products? Not necessarily. We need to discourage products that signal for things that won't make us as happy and encourage those that do.

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