Countersignaling In Silicon Valley

A Facebook executive, who preferred to remain anonymous, made the following statement about the culture at the company.  “If someone buys a fancy car and posts a picture of it, they get ridiculed and berated.” Considering the fact that the two counties that make up Silicon Valley have some of the highest concentrations of wealth in the United States this sounds odd at first glance. However, the culturally literate Silicon Valley resident is well aware that having wealth is cool, gauchely displaying it is not.  The problem is that there is such a high concentration of wealth in Silicon Valley that being flashy serves as a useless signal.

So what happens in places like the Bay Area where there are numerous relatively wealthy males jockeying for high status?  They show off by not showing off, which is also known as countersignaling.  In signaling games we know that high-quality individuals will send signals to distinguish themselves from low-quality individuals.  Signaling games, however, become even more interesting when they are broken down into smaller and smaller social niches.  If you drive a flashy car, but so do all your peers, then driving a flashy car is not a very valuable signal in that social circle.

The term countersignaling is never mentioned in this NYT article, but it describes Silicon Valley culture and the idea of countersignaling perfectly.  “Fabulous home theaters are tucked into the basements of plain suburban houses. Bespoke jeans that start at $1,200 can be detected only by a tiny red logo on the button. The hand-painted Italian bicycles that flash across Silicon Valley on Saturday mornings have become the new Ferrari — and only the cognoscenti could imagine that they cost more than $20,000.”

The empirical work in a paper called “Too Cool For School? A Theory of Counter-Signaling” confirms the notion that subjects can learn to countersignal in order to distinguish themselves from others who are relatively similar.  When Mark Zuckerberg wears a hoodie that looks like it’s from Target to important meetings, he is demonstrating that he has clearly learned how to countersignal.

Another interesting thing to note about Silicon Valley culture is that not going college can be a sign of especially high status.  MBA’s, even from Ivy League schools, are a dime a dozen in the Bay Area and confer very little status in many social circles.  Based on the theory of countersignaling, then, one who is wildly successful, but didn’t finish college (e.g., Zuckerberg and Gates) is displaying an effective countersignal.  The fact that they bailed on college, and were still successful, signals how intelligent they really are.  Bryan Caplan asks an interesting question though: “How successful does someone have to be before he starts bragging, “I never finished college” or “I never went to college?”  In other words, how successful do you have to be before countersignaling improves your status instead of making you look like a chump?  Countersignaling can easily backfire if it’s used in the wrong circles.

The irony is not lost on me that writing a blog post about countersignaling in a public forum is itself a form of signaling, perhaps even countersignaling.  It’s almost as if I’m screaming, “Hey, LOOK AT ME, I’m so smart and clever that I can point out when others are countersignaling.”  I may be guilty as charged, but I really am those things (that’s a joke — or is it another signal?).  Human interaction is all about signaling and there is no way any of us can avoid signaling — it’s merely a matter of what you want to signal (trust me, signaling to others that you read this blog is a good thing).  Even refusing to signal is itself a signal.

Human culture is created by how we concoct and manage our images.  Accordingly, an old Sprite tagline from the early 90’s was wrong — image is actually everything.


Book Review: Discover Your Inner Economist

I often find that many people conflate economics and financial transactions.  However, in my opinion the most interesting parts of economics are not explicitly financial.  Analyzing the bizarre side of human behavior using the logic of economics is one of Tyler Cowen’s fortes and it’s the subject matter of his book Discover Your Inner Economist.  I think it is chicken soup for the economist’s soul.

In the book, Cowen tackles the following questions (and more).  How can you motivate your kids to do the dishes (hint: don’t try to pay them)?  How can you find the best ethnic restaurants (hint: they’re not necessarily the most expensive ones)?  How can you be a cultural billionaire?  The answer to these questions, in short, is to become in tune with your inner economist!  Be forewarned though, the logic of economic reasoning can often lead to strange conclusions.

Aside from the Marginal Revolution blog, Cowen also maintains a blog called Tyler Cowen’s Ethnic Dining Guide.  One chapter I found particularly interesting in the book was about food.  So what are some practical foodie tips?

Let’s start with restaurant selection.  The key lesson here is that relative rents matter.  According to Cowen, the best place to look for restaurants is in low-rent neighborhoods that are near high-rent neighborhoods.  Cowen’s inner economist informs us that these types of restaurants still try to cater to the nearby foodies.  The result — good eats on the cheap.  Restaurants in high-traffic areas (and thus high rent areas) don’t have as strong of an incentive to serve amazing food because they will likely attract enough walk-ins to make up for serving mediocre food.  Conversely, restaurants slightly off the beaten path in low-rent areas have a strong incentive to serve amazing food in order to attract repeat customers from the high-rent foodie neighborhoods, which keep their businesses afloat.

How about entree selection?  Cowen writes, “In a fancy restaurant, order the item you are least likely to think you want.”  The reason, in short, is because fancy restaurants don’t put bad things on the menu.  Think about it this way, entrees that are familiar (think roast chicken) will appeal to the masses, thus retaining their place on the menu by simply attracting many orders from first-time visitors and those who aren’t adventurous eaters.  The stuff that is less popular must be especially good otherwise it wouldn’t be on the menu.  Also, roast chicken is fairly easy to make at home, so Cowen suggests that we order dishes in which the restaurant has a comparative advantage.  For instance, do you know how to make the Cantonese dish of “Frog with Special Sauce Hot Pot”?  I sure don’t and this item is on the menu of my favorite Cantonese restaurant in Denver, which reminds me that I should order it on my next visit there.

Cowen doesn’t mention it, but this logic can backfire on you.  For one, he assumes you are an adventurous foodie.  Secondly, one also has to assume that other restaurant patrons aren’t rational.  If all people chose their entrees based on this line of thinking, then it wouldn’t work.  Since I like culinary adventures and since I don’t think most people behave this way, I cannot help but conclude that this way of thinking works.

So is it better to beware your inner economist or embrace him?  Well, it depends.  My inner economist tends to have a knack for getting me into trouble.  Sometimes he just can’t resist urging me to say something I later regret, even if it’s true.  I realize that not everyone wants to get in touch with their inner economist and they may be appalled by some of the things their inner economist tells them.  For example, my inner economist tells me that voting is irrational.  There is an explicit cost to me with virtually no benefit (an extremely low likelihood of affecting the outcome.)

In the end, Cowen reminds us that things like happiness and love cannot be purchased, but that doesn’t mean they’re immune from economic logic.  If we know what we are doing (hint: we don’t), we can often incentivize the outcomes we want.  One definition of wisdom, then, is knowing when to tell your inner economist to shut up.

[click the following for amazon.co.uk and amazon.ca copies of the book]


Is There Anything Good About Men?

The title of Florida State psychologist Roy Baumeister’s book speaks to how silly much of the rhetoric surrounding the gender debate has become. Dare I suggest that both sexes are good?  We don’t need our men to be more like women, nor our women to be more like men.  Both sexes need each other for who they are.  Someone had to write this book and I’m glad that Baumeister had the audacity (and tenure) needed to do so.  To put it simply, this is hands-down the best book on gender differences I’ve ever read.

Early in the book, Baumeister introduces us to the Imaginary Feminist.  She represents the way many men perceive feminists (Baumeister’s Imaginary Feminist almost perfectly depicts how I imagine feminists).  Of course, She only represents the stereotypical views most people have of feminists and not the entirety (or complexity) of views that any one actual feminist may have.  Basically, the Imaginary Feminist wants us to believe that men have rigged the world to help each other out and oppress women.  As men know, however, the competition for status, resources, and mates is not always friendly, and often ruthless.  Norah Vincent, a lesbian feminist who spent the better part of a year living as an “undercover man”, learned and confessed in her memoir that maybe it’s not so great to be a man after all.

In an age of political correctness gone wrong it has become taboo to explain unequal outcomes in our world through things like gender differences.  Despite what the Imaginary Feminist would have you believe, discrimination does not necessarily occur in situations where there is an unequal outcome.  This is true even when all participants have equal levels of innate talent.

Consider the controversy that surrounded Larry Summers, which Baumeister discusses briefly in the book.  Summers, the former president of Harvard University, was demonized for making a speculation about why there are more men at the top of elite science departments.  Summers suggested that there might possibly be a larger distribution of men in the right tail of intellectual ability.  It turns out that Summers was right.  There is now very solid scientific evidence supporting his speculation.  The data show that the male distribution of IQ scores has fatter tails than does the female distribution. In other words, there are more males clustered together at the extremes. Mother Nature apparently gambles more on males.

When the Imaginary Feminist evokes the case that women are oppressed because they are underrepresented in what She perceives to be the elite parts of society, She fails to realize a critical point, they are also underrepresented in the dregs of society.  While men tend to predominately occupy the top positions in society, they also overwhelmingly dominate the bottom positions in society too, you know, the places like prisons.

Innate talent only takes you so far.  Other attributes like discipline and motivation matter greatly too, and they can explain the differences in unequal outcomes.  To Baumeister, the real question, then, is: do men and women differ in things like their motivations to do certain tasks and achieve certain things?

To help answer this question, Baumeister directs readers to some surveys conducted amongst a population of female graduates from elite universities.  As Baumeister points out, it’s fair to say that these women have elite employers drooling over them.  Despite being in high demand, though, significant portions of these top-performing women are unemployed several years after they graduate.  How can this be?  Well, it turns out that these highly talented women make the decision to stay home with their children instead of pursuing their careers.  It’s not oppression (or lack of talent) that’s keeping these women from working in the top of their fields, but rather, their maternal instinct.  These women should remind us that if there is one thing to learn from economics, it’s that life is about trade-offs — you can’t have it all.

Here’s an interesting question from the book:  What percentage of your ancestors were men?  Baumeister, using DNA evidence, explains that today’s human population is descended from twice as many women as men.  Does this fact provide any insight into the nature of gender differences?  Indeed, it does.

An interesting sexual experiment was conducted on a college campus.  The experimenters sent out an attractive young female to approach college-age males and ask them if they wanted to go back to her room and have casual sex.  Not surprisingly, nearly 75% of the young men agreed to have sex with the anonymous woman.  The experiment was then reversed.  Again, not surprisingly, there were no female takers.  The reason the results from this experiment are not surprising come from what we know about sexual economics.

Due to the sexual economics of the situation, men have a relatively low cost of copulation. This means that men are relatively less picky about who they’ll have sex with than are women (visit your local pub on a Friday night if you don’t believe me).  The most sexually ambitious and genetically fit men have been the ones to have the most sex (and the most offspring) throughout the course of evolution.  Conversely, the men who aren’t so genetically fit (and lack sexual ambition) often fail to reproduce at all and their bad genes run into an evolutionary cul-de-sac.

If men are evolutionarily motivated to have a large quantity of mates, then women are focused on quality of mates.  As Genghis Khan demonstrated, a single man can father thousands of kids in one lifetime, but a woman cannot. She gets far fewer chances at genetic eternity and thus it’s in her best interest to hold out for the best sperm she can find. After-all, she potentially has to lug around a baby for nine months, which is quite costly.

And what does sexual economics tell us about likelihood of reproduction for each sex?  Well, at the margin, men add less reproductive value than do women. Throughout our evolutionary history, then, almost all women who wanted to were able to find a mate.  Many genetically unfit men, however, died without ever impregnating a female.  Their services simply weren’t needed since the elite males can spread their seed to thousands upon thousands of females.  Along these lines, Baumeister argues that since a single woman can only have a very limited number of babies during her lifetime, women have evolved risk-aversion.  Men, for evolutionary reasons, strive for that Khan-like sexual greatness, which often involves risk.  This point, then, might help explain why men tend to thrive in modern broad, but shallow social networks (like corporations or academia) and why woman prefer more tight-knit and small intimate groups (like family life).

One thing many people may find shocking is that Baumeister claims cultures flourish by exploiting men.  So how exactly do cultures exploit men?  Again, the answer isn’t terribly romantic, but science isn’t in the business of discovering only pleasant truths.  It’s argued that marriage is one way men are exploited.  He sees the cultural institution as a way of transferring wealth earned by men to women and children.  As one shrewd financier pointed out to a woman who was seeking advice on how to marry a millionaire in a NYC Craigslist ad, men get the raw end of the marriage bargain over time.  Over time, females tend to gain weight and lose their sexual appeal.  The men, however, become wealthier and more powerful, which only makes them more sexually attractive as they age.

By the end of the book, we learn that the problem with the Imaginary Feminist is that she wants to ignore the facts because they don’t mesh well with her ideology and worldview.  The facts, however, are still the facts, even if they’re not convenient ones for Her.  I’m left to wonder, if the Imaginary Feminist got Her way, shouldn’t 50% of the the humans who are electrocuted and put in prison be female?  Why is She so focused on equality of outcome in some spheres, but not in others?  I guess political correctness only cuts one way.

Ultimately, as you might expect, Baumeister did find something good to say about men all the while avoiding androcentrism.  This is a book that sensible people of both sexes will appreciate and it’s a must-read for those who want to have meaningful discussions about gender differences.  In America there seems to be much concern and cultural malaise about the disappearance of “real men”, but it’s mostly women I hear complaining about it.  The Imaginary Feminist and her ilk should be careful about what they wish for.

 


Bayesian Truth Serum: A Simple Trick To Catch Liars

Have you told a lie yet today?  Did you just lie about your answer to that question?  According to this study, the average number of lies consciously told per day by participants was 1.65.  This number seems low to me and it’s likely because people lie about how often they lie in these studies.  Regardless, my point is simply that myriad lies are hurled at you on a daily basis (and this doesn’t include what Harry Frankfurt calls “bullshit” either).

Relax, all this talk about lying isn’t meant to get you all worked up.  Lying and sophistry are natural and perfectly normal behavior for socially intelligent simians.  It’s theorized, that our ability to lie evolved as an important part of how we communicate with each other.  Most of us learn how to lie at a very early age and, according to this article, “lying is actually proof of cognitive development”.

Whatever the reason, I suspect that I have a proclivity to tell the truth more often than I should.  Even so, I think one of the worst pieces of advice I’ve ever heard is the following: don’t ever tell a lie.  If a female has ever asked you if she looks fat in a certain pair of pants you already intuitively know why.  Lying is not only acceptable in some situations, it can even be the right thing to do.  This is partly why I can’t classify myself as a deontologist.  I’m not sure of much, but when a female asks “Do I look fat in these pants?” I’m pretty confident that lying is the right thing to do.

With that being said, I still think it’s a valuable skill to know when you are being lied to.  In fact, sometimes it can be incredibly difficult to sniff out lies.  Alas, there is a tool to help improve your ability to do this in some domains. I was recently reading Discover Your Inner Economist and the author, economist Tyler Cowen, mentioned something called Bayesian truth serum (“Bayesian” may be a stretch here, but it sure sounds cool!).  In essence, this means that to get a more truthful answer from someone it is more useful to ask for their opinion on what they think other people do than it is to ask them what they do.

For example, one is more likely to home in on the truth if they ask a person “How many sexual partners do you think the average man/woman has had?” versus “How many sexual partners have you had?”.  The reason is due to the availability heuristic.  If a single man was asked the latter question by an attractive woman he’s likely to quickly concoct a lie to make himself look better to her.  However, if she asked him the first question mentioned above instead, he would use the mental shortcut of referencing his own number.  Interestingly, he will likely think his own number is indicative of the average person (even if it isn’t).

Who needs a lie detector when you have Bayesian truth serum?


The Sexual Ambition of Genghis Khan

What percentage of your ancestors were men?  I’ll give you a hint, it’s not 50%.  According to Roy Baumeister, author of Is There Anything Good About Men?, it has been confirmed via genetic evidence that today’s human population is descended from roughly twice as many women as men.  Baumeister has called this the “single most under-appreciated fact about gender.”  You may be wondering: how can this be?

Not all men bring value to the sexual marketplace, but nearly all females do.  To drive this point home, imagine life on two different islands.  The first island has 999 men and one woman and the second island has 999 women and one man.  Which island civilization could create more offspring and provide the species with a better chance of survival?  It becomes obvious that the services of most men aren’t needed, but nearly all females add reproductive value.

While it’s certainly true that it takes a man and a woman to reproduce, one sexually ambitious man can father thousands upon thousands of children in a lifetime, while an individual woman is lucky to have a dozen children in a lifetime.  Since most females get to reproduce they seem to be more egalitarian (and less violent) by nature.

Here’s another interesting fact: roughly 16 million men alive in Central Asia today are the direct descendants of Genghis Khan (confirmed by their possession of his unique Y chromosome).  Whatever else may be said about Genghis Khan, one cannot deny that the man had sexual ambition.

In their book, The 10,000 Year Explosion, anthropologists Gregory Cochran and Henry Harpending tell us what Genghis Khan’s definition of “supreme joy” was: “to cut my enemies to pieces, drive them before me, seize their possessions, witness the tears of those dear to them, and embrace their wives and daughters!”  Apparently, he and his sons seemed to find that last part of the definition especially joyful.  According to Cochran and Harpending, “He and his sons and his son’s sons — the Golden Family — ruled over much of Asia for several hundred years, tending to the harem throughout.  In so doing, they made the greatest of all genetic impacts.”

These two facts I’ve laid out are obviously very important to consider when analyzing the motivational differences between men and women in the modern world.  So what does this tell us about our men today?  Well, disheartening as we may find it, today’s men are disproportionately descended from the likes of Khan.  The men who lacked this type of sexual ambition (and the ability to compete) often failed to reproduce at all.  Their “bad” genes, then, ended up in an evolutionary cul-de-sac.

Most of us rightfully find Khan’s behavior odious.  However, Khan (and his ilk) can explain why nice guys finish last in evolutionary terms.


Humans Are Going the Way of Draft Horses

In his essay “Darwin Among the Machines” Samuel Butler wrote: “The machines are gaining ground upon us; day by day we are becoming more subservient to them; more men are daily bound down as slaves to tend them; more men are daily devoting the energies of their whole lives to the development of mechanical life.  The upshot is simply a question of time, but that the time will come when the machines will hold the real supremacy over the world and its inhabitants is what no person of a truly philosophic mind can for a moment question.”

So the machines are starting to get really good.  If you’re not yet convinced of that, consider the fact that Google’s robotic cars have now safely completed more than 200,000 miles of computer-led driving.  Barring any major legal and cultural holdups, it’s possible that jobs like driving cabs and trucks will be obsolete within a decade.  That machines are displacing human workers is not necessarily a bad thing though.  In many ways, this is a sign of economic progress.  However, economic progress often comes with unintended social costs (e.g., unemployment).  If we think about humans as racing against machines for jobs, then some of the evidence shows that many people appear to be already losing the race.

As early as 1821, the economist David Ricardo recognized that unpleasant consequences will befall on an economy when machines become directly substitutable for human labor.  Historically, however, this hasn’t happened and people who fear that machines take jobs from humans are accused of believing in the Luddite Fallacy.  Despite the fears of Ned Ludd (and the Luddites), machines have been a complement to human labor through the entirety of the 20th century.    Will this be true in the 21st century though?  If not, then machines will likely cause what John Maynard Keynes famously called the disease of “technological unemployment” in his essay “Economic Possibilities For Our Grandchildren“.

An interesting question to consider is the following: exactly whose jobs are the machines going to the take?  Perhaps there is a lesson to be learned by studying the “working horses” of the 18th century.  In Gregory Clark’s book A Farewell to Alms he wrote:

there was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early twentieth century. This was the horse. The population of working horses actually peaked in England long after the Industrial Revolution, in 1901, when 3.25 million were at work. Though they had been replaced by rail for long-distance haulage and by steam engines for driving machinery, they still plowed fields, hauled wagons and carriages short distances, pulled boats on the canals, toiled in the pits, and carried armies into battle. But the arrival of the internal combustion engine in the late nineteenth century rapidly displaced these workers, so that by 1924 there were fewer than two million. There was always a wage at which all these horses could have remained employed. But that wage was so low that it did not pay for their feed.

I recently finished reading Erik Brynjolfsson’s and Andrew McAfee’s book Race Against The Machine, which, by the way, was quite good.  In one section of the book they make the claim that “It can be easier to automate the work of a bookkeeper, bank teller, or semi-skilled factory worker than a gardener, hair dresser, or home health aide.”  This insight is taken from Moravec’s Paradox, which, according to Wikipedia, states that “high-level reasoning requires very little computation, but low-level sensorimotor skills require enormous computational resources.”  In other words, jobs that require vision, fine motor skills, and locomotion have been much harder to automate than ones that require fairly straightforward information processing.

I think the 21st century’s draft horses are the workers whose jobs don’t involve any innately human skills, like creativity.  Strangely, many of the jobs in danger of being lost to machines would be considered by many to be “white-collar” jobs.  For what it’s worth, I take one of Brynjolfsson’s and McAfee’s central claims very seriously, i.e., it’s not wise to try and compete with the machines.


The 10,000 Year Explosion

The evolutionary biologist, Steven Jay Gould, once famously said that “There’s been no biological change in humans in 40,000 or 50,000 years. Everything we call culture and civilization we’ve built with the same body and brain.”  Nonsense say University of Utah anthropologists Gregory Cochran and Henry Harpending.  Their book, The 10,000 Year Explosion, dismantles Gould’s claim in elegant fashion by arguing that human evolution has not stagnated, but rather, it has actually accelerated rapidly.  In fact, so much so that it “is now happening about 100 times faster than its long-term average over the six million years of our existence.”

If this sounds a bit far fetched, then consider the work of a Russian scientist named Dmitri Belyaev.  In the 1950s, Belyaev and his team bred silver foxes by selecting only those individual foxes that showed the least fear of humans.  After roughly ten generations of controlled breeding, the domesticated silver foxes showed significant changes in their nature.  They no longer showed any fear of humans and often wagged their tails and licked their human caretakers to show affection.  In other words, they became dogs.

Now, humans and foxes are certainly different, but if foxes can evolve into dogs in such a relatively short time period, shouldn’t we consider what this might mean for human evolution?  At the very least, this should make us consider what happens to our brains, biological makeup, and behavior after major environmental changing events (e.g. the agricultural revolution or the rise of the Internet).

Cochran and Harpending, who run a blog called West Hunter, essentially argue that the adoption of agriculture has dramatically altered the course of human evolution.  And there is plenty of evidence to confirm that genetic innovation has run rampant since the dawn of agriculture.  For example, the gene that allows one to tolerate lactose appears to have arisen in Europe about 8,000 years ago among the first humans who herded cows and other milk-producing animals.

The authors claim that the lactose-digesting gene quickly spread throughout parts of Eurasia.  New genetic variants, like the one that allows people to tolerate lactose, thrived namely because it helped people cope with the challenges an agricultural way of life presented.  Is a similar effect happening now to those of us who are constantly plugged-in?  I can’t help but think that there are changes going on in my brain from all the information I consume in the modern digital world.

Jared Diamond, for one, has argued that the agricultural revolution was the worst mistake of the human race.  Then, there are those who argue that the industrial revolution was the worst mistake of the human race.  And now I’m sure there those who argue that the digital revolution was the worst mistake of the human race.  Cochran and Harpending, however, ultimately refrain from anthropomorphically commenting on whether or not any of these events are “good” or “bad”.  Cochran and Harpending do acknowledge, however, that most hunter-gatherers were egalitarian anarchists.  As they put it, “They didn’t have chiefs or bosses, and they didn’t have much use for anyone who tried to be a boss.  Bushmen today still laugh at wannabe “big men”.  Perhaps we could learn from them.”  Touché!

With agriculture came the rise of elites (defined as those who live almost solely off the work of others), who are clearly still a nuisance today.  Agriculture certainly enabled the rise of strong governments (although forms of governance arguably already existed).  Strong governments need individuals as citizens who can be “tamed” (like the Russian foxes) in order to function properly.  Not surprisingly, peoples with little or no exposure to agriculture tend to be less submissive, on average, than members of longtime agricultural societies.  As the authors put it: “One possible indicator of tameness is the ease with which people can be enslaved, and our reading of history suggests that some peoples with little or no evolutionary exposure to agriculture ‘would not endure the yoke’, as was said of Indians captured by the Puritans in the Pequot War of 1636.”  The authors also remind us that the Bushmen have been described as the “the anarchist of South Africa” for a reason.

As an evolutionary health enthusiast, I found the parts of this book that related to human diet and health very interesting.  This book should make open-minded and well informed evolutionary health enthusiasts question some of their own basic assumptions and arguments.  Are all grains as bad as some Paleo zealots make them out to be?

Near the end of the book, Cochran and Harpending make the controversial argument that people of Ashkenazi Jewish descent (European Jews) have, on average, evolved a higher level of intelligence relative to other ethnic groups.  Politically incorrect as it may be to say, the evidence seems to confirm that human races are truly genetically different at some levels (although they are indeed mainly similar).  Back in 2010, it was even confirmed that most of us have at least a little neanderthal in us.

This book is mischievous, humorous, lively, and very educational.  In the end, Cochran and Harpending remind us that “history looks more and more like a science fiction novel in which mutants repeatedly arise and displace normal humans –sometimes quietly, simply by surviving, sometimes as a conquering horde.”  I think it’s fair to say that without a doubt Steven Jay Gould was grossly mistaken.  After reading this book, I’ve only been left to wonder about where exactly evolution plans on taking us.


An Interview With Jules Evans

Jules Evans is a British writer and author of Philosophy for Life and Other Dangerous Situations.  His journalism has, amongst other places, appeared in Prospect, The Economist, The Wall Street Journal, and New Statesman.  He’s also the policy director at the Centre for the History of the Emotions at Queen Mary, University of London.  He writes a blog called Philosophy For Life and co-runs the London Philosophy Club.  Jules also practices the Hellenistic philosophy of Stoicism, which he was kind enough to discuss with me via email for this interview.  Follow him on twitter @julesevans77.

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First off, I have now read your wonderful essay titled “Why I Am A Stoic” several times.  Having grown up in a Western culture, can you explain how you came to embrace Stoicism as your philosophy of life?  Is it something your learned in school or after your formal education?

I think I first read Marcus Aurelius at school, but I only really got into Stoicism after university, in my early 20s. It helped me through an emotional crisis and I thought, wow, this stuff really works.

I’ve noticed that people often confuse being a Stoic (capital “S”) with stoic (lower-case “s”).  Can you briefly explain the difference?

People often think being ‘stoic’ means not showing any emotion. But the Stoics didn’t suppress their emotions. They understood how emotions arose through our beliefs, and how we can change our emotions by changing our beliefs. So they would deconstruct negative emotions by deconstructing the beliefs that gave rise to them. That’s different to suppression.

Stoicism is a philosophy of life and not a religion.  Accordingly, how do you think Stoicism and religion relate to each other?  Is it possible that there are both atheistic Stoics and a theistic Stoics?

There definitely are today. Some Stoics are fiercely atheistic. In the ancient world, too, I think there were theistic and atheistic Stoics – I’m not sure Marcus Aurelius or Seneca always believed in God, while Epictetus seems more religious to me.

Many people often think that Zen Buddhism and Stoicism are very similar.  In many ways I think they are too.  Can you describe what you think the main differences are?

I don’t know much about Zen, but in general, Buddhism has more of an emphasis on compassion and loving-kindness than Stoicism. Of course, Buddhism also believes in reincarnation – so you accept what happens to you not because it’s the will of God (which is what Stoics believe) but because you caused it in a previous life. And if your life is crappy, don’t worry, you’ll have another one – Stoics by contrast are rather reticent about what happens in the after-life. Also, Buddhism has the whole tradition of breath exercises which the Stoics didn’t have. So there are many differences – but some similarities as well, such as the aim of overcoming attachment and aversion, the idea of transcending passion by becoming mindful of one’s beliefs and attitudes.

What kind of people do you think are drawn to Stoicism?

Mainly men, typically middle class, sometimes it’s people who lacked a strong father figure so they’ve needed to construct their own moral code. They’re often pretty individualistic, can be quite libertarian. And a lot of people in public service too. That’s a generalisation – there are many different types of Stoics today.

Over the past few years authors like Nassim Taleb and Tim Ferriss have created some buzz on the Web surrounding Stoicism.  Do you think the philosophy is gaining in popularity in the Western world?

Maybe. I think you’d have to mention the way Cognitive Behavioural Therapy brought ideas and techniques from Stoicism to millions of people. That’s how I got into it. I think that has a bigger impact than the occasional mention by Ferriss or others. But the difficulty is the lack of rituals or community in Stoicism. People long for community. And I don’t really see a Stoic community evolving. Personally I’ve moved from focusing exclusively on Stoicism to exploring the whole ‘Socratic tradition’, including other schools like Platonism and Aristotelianism. I think it’s a very rich tradition – but there’s still the question of it lacking rituals etc.

There are several psychological techniques Stoics use to deal with the problems inherent to existence (e.g., negative visualization and self-denial).  Do you have any other practical tips for aspiring Stoics?

Find ways to practice with other people. Find ways to socialise and communalise your philosophy. Here in London, for example, I run the London Philosophy Club. I think ethics are much more powerful and real if we share the practice of them with others.

UK Readers can pre-order a copy of Jules’ book here.


The Economics of Gift Giving

Here’s something interesting to consider: if we really care about our loved ones’ best interests, we ought to reconsider giving them gifts other than cold hard cash.  I already know what you’re thinking — giving cash, how tacky!  How can it possibly be better to give our loved ones cash instead of gifts?  This may sound strange to the non-economist, so allow me to explain.  Before reading on though, please heed the following warning: I don’t generally recommend taking romantic advice from economists.  You’ve been warned.

So here’s the issue: gift giving (non-cash gifts) is often a potential source of what economists call deadweight loss.  According to the theory of consumer choice the consumer (i.e., the receiver of the gift) knows more about what will maximize their utility than the gift giver does.  Accordingly, if we really care about allowing the receiver of the gift’s ability to maximize their utility, we should only give cash as a gift.

Consider a hypothetical ugly shirt that you received on your last birthday from your great aunt.  Let’s suppose that the shirt was purchased from Gap for $39.99, but let’s also suppose that you only value at, say, $10.  Now, think of all the other things you might like to do with that $39.99 that don’t involve owning an ugly shirt.  The difference between the price of the ugly shirt and the amount you value at it after receiving it is the deadweight loss.  Notice that the deadweight loss destroyed almost 75% of the gift’s original value.  Your estranged aunt who gave you the Gap shirt could have improved your financial welfare by $20.99 if she had simply given you cash instead of the shirt.

Interestingly enough, I recently stumbled across a paper by the economist Joel Waldfogel called “The Deadweight Loss of Christmas“.  In the paper, he conservatively estimates that the deadweight loss of all 1992 gift giving was roughly $4 billion (yes, that’s billion with a “b”).  In Waldfogel’s book, Scroogenomics, he claims that Americans spent $66 billion on gifts in 2007.  However, the gift recipients only valued the gifts they received at $54 billion, producing a near $12 billion deadweight loss.  Holy smokes!

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Here, then, is the interesting question: why don’t people give cash as gifts more often?  The reason, I think, is that giving cash signals that one has money and that’s about it.  And gift giving is really all about signaling, not helping others maximize their utility as efficiently as possible.

Giving cash may be the best way to ensure that the gift recipient can maximize their utility, but it doesn’t really signal anything of importance to our loved ones.  I’m not all that wise, but I am wise enough to know that giving my girlfriend a $100 bill for her birthday is not a prudent thing to do.  This is true no matter how romantically I wax poetic about the potential for deadweight loss.  Alas, there is more to romance than efficiency!

To put it simply, anyone can give her cash.  She expects me to signal that I’m closely in tune with her by showing her that I listen and know what gifts she would like.  It’s certainly a possibility that I could make a major financial gaffe when it comes to picking out a gift, but I suspect that my attempt at signaling is more important to her than is my concern that her utility be maximized.  Obviously, if I were to spend $100 on a gift that she valued at $100, it still wouldn’t make her any better off than if I just gave her cash.  This is because she could simply buy the gift with the equivalent amount of cash I gave her.

Is it possible that gift giving is sometimes purely selfish too?  Absolutely!  Giving gifts can be used as a means to control people.  The gift, then, is not a gift at all, but a way to make the recipient feel guilty and in emotional debt.  It sounds sinister and it is.  However, I think it occurs more often than most of us realize.  I think many parents (both strategically and inadvertently) do this to their kids sometimes.  My parents, however, have never done this to me and I’m very thankful for that!

In case I haven’t made it abundantly clear, I don’t think we should give non-cash gifts because we want to help our loved ones maximize their utility.  As I’ve mentioned, giving cash is certainly a more efficient way to do that.  Rather, I think we should give gifts because they can make for great signals.  And sometimes the signals have to be incredibly inefficient or wasteful, otherwise they don’t work.  Ultimately, the practice of gift giving is a terribly inefficient and costly way to help our loved ones; however, it’s an amazingly cheap way to signal how much we care.

If you enjoyed this post, please consider buying me a cup of coffee. Thanks!

13 Bankers

Oligarchy, n., a government in which a small group exercises control especially for corrupt and selfish purposes.

The United States is ruled by an oligarchy that, despite almost wrecking the world economy, has only grown more powerful and more resistant to change.  Perched atop this structure are 13 bankers who are involved with the six mega-banks (Bank of America, JPMorgan, Chase, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) that have been rendered “too big too fail”.  How did this happen?  How did the American financial system develop in this way?  The answer to these questions is largely the subject of Simon Johnson’s and James Kwak’s book 13 Bankers.

It’s worth noting that the authors do a wonderful job of detailing the numerous financial crises that have occurred across the world (Korea and Russia were particularly interesting case studies).  Overall, the book is very intelligible (most of the time) to the lay reader. Due to the politics and incentives (or lack of disincentives) in our financial system, bankers have been encouraged to engage in high risk investments.  Here’s the catch though: when the risky investments work out, the bankers keep the profits, but when the investments fail, we (the taxpayers) take the losses and bail out the bankers.  So the bankers have upside with no downside — sounds pretty nice, right? Although many people blame the advent of derivatives like credit default swaps in the early 90’s as the catalyst for the financial crisis of 2008, the root of the problem dates back much further.  Johnson and Kwak, who also write an economics blog called The Baseline Scenario, argue that the origins of the most recent financial crisis dates back much further than much of the surface-level analysis in the news would have us believe.  In fact, they believe the roots of the crisis are as old as the beginnings of the United States’ banking history itself.  Thomas Jefferson, then, rightly feared what might happen if there were concentrated banking power amongst a few financial elites. Ultimately, the financial crisis of 2008 wasn’t really so much a financial crisis as it was a crisis in political economy.  The fact that these six mega-banks came to control roughly 60 percent of America’s GPD is telling of how large and powerful they have become.  Some bankers want us to believe that finance plays an important role in allocating capital throughout the economy and that unregulated finance is important for markets to work properly.  After-all, Goldman Sachs CEO Lloyd Blankfein has assured the public that he is “doing God’s work”, since banks raise money for companies who employ people and make things.  As a general rule of thumb, if someone tells you they are “doing God’s work”, you can be certain they aren’t. To return to a healthy balance in our economy, the authors recommend that banks be “busted”.  Particularly, they suggest that each bank is limited to no more than 4% of U.S. GDP (investment banks would have a lower limit of 2%).  Banks, then, could be allowed to fail without threatening the take-down of the entire economy.  The best part of this solution is that taxpayers would no longer “have to” subsidize wealthy bankers through bailouts when things turn south. It’s important to remember that capitalism isn’t about only about incentives, it’s also about disincentives.  Bankers are operating in a domain where there is a gross asymmetry, i.e., they are exposed to the upside and immune from the downside.  In the end, Johnson and Kwak remind us that not matter how nicely we ask, bankers won’t change on their own accord.  As they put it, “Simply asking bankers to behave differently will not work; the solution can only come by changing the rules of the financial system, which requires government action.”  In the end, I’m not sure what the correct process to get there is, but ultimately I agree with the authors, the mega-banks do indeed need to become small enough to fail.