Discover Your Inner Economist, by Tyler Cowen Dutton, August 2007. Page 89: ... Nowhere is signaling more important that in the family. Whereas direct cash incentives work only so well in families, signals are crucial in building family trust and cooperation. Many individuals - including my wife - like to feel protected against every possible danger. If I do not want to buy a warranty, my wife considers it irresponsible. I am not expressing maximum commitment to the idea of safety. Furthermore if I don't buy insurance when I could have, I will have the narrative of a man who did not care enough and let something go wrong. Often buying insurance is about investing in a story about who we are and what we care about; insurance salesmen have long recognized this fact and built their pitches around it. My colleague, economist Robin Hanson, argues that many protective activities are really about "showing that you care." What would we think of the parent who did not do "everything possible" to protect his or her children? What kind of man would tell his wife that he weighted costs and benefits before spending on an additional biopsy for her cancer? In the aftermath of Katrina, we are trying to rebuild New Orleans, not because we have made a trustworthy calculation, but because we feel obligated. No one wants to seem like they don't care about New Orleans, especially politicians. An economic approach suggests we should insure only against catastrophes that would wipe us out. Small accidents are not worth the insurance premiums, especially since that insurance is unfairly priced. The company offering the insurance must cover its payouts or repair costs plus the costs of selling insurance. ... Page 92-96: The more our families feel we are violating our commitments to care, the harder the reception that economic advice will receive. Economics appears dangerous precisely when it is presented as universal - "Bidding for the TV remote? That can't be good; such a practice would imply we need to trade for how many times my mother can visit." Think of "the economics of the family" as The Truth That Dare Not Speak Its Name. If you are the economically informed member of your family, or perhaps even an economist, don't flaunt it. Hide its universal nature or widespread applicability. Do not present economic wisdom as a matter of principle or as a general way of thinking about life. To look good at home, make all economic points in purely specific contexts. Don't prattle on about incentives or signaling as all-powerful means for understanding the entire world. *** One of the fundamental questions in life is how much we should invest in showing that we care. My colleague Robin Hanson, mentioned above, has made this question a central feature of his work. It is also a central feature of his life. Robin is a forty-six-year-old former computer scientist turned economist. He is a wonderful father with two smart and lovely boys. Robin cares. Robin's boys know that he cares. But Robin has studied signaling behavior for a long time. And anyone who studies signaling behavior for long enough will be repulsed by social hypocrisy and will be tempted to become some kind of intellectual radical, maybe a revolutionary, maybe a more peaceful eccentric, and this has happened to Robin. When it comes to showing that he cares, Robin wonders why it isn't enough that he cares. Robin wonders why he has to signal in all the traditional and indeed very costly ways. Robin is what I call a social revisionist. Robin has strange ideas. He pays $200 a year for the privilege of having his head frozen when he dies, if indeed that turns out to be possible. He looks forward to life in the very distant future and believes that he will be thawed out just for the heck of it, or perhaps because a future rich man just wants to have an interesting conversation about mankind's past. Robin believes that betting markets should be used to rule many human affairs, including government policy. We should bet on which policies will maximize national income, and governments should institute the policies what the betting markets show as most likely to succeed. Robin claims the money we spend on health care is a waste. Since doctors kill as many people as they save, we would live just as long without them. That sounds crazy, but the data show no correlation, either internationally or domestically, between health-care expenditures and life expectancy. Robin believes that we are headed toward a "robot economy" with rates of exponential growth exceeding 300 percent a year. Yet the wages of labor may fall below subsistence, leading to widespread poverty for those who do not own capital. No, I am not ready to drink the "Robin Hanson Kool-Aid," but Robin's views are a challenge that any social thinker should face. Unless you agree with Robin, you need to explain how you can justify and live with all of the waste from your signaling. My other friend and colleague Bryan Caplan put it best: "When the typical economist tells me about his latest research, my standard reaction is `Eh, maybe.' Then I forget about it. When Robin Hanson tells me about his latest research, my standard reaction is `No way! Impossible!' Then I think about it for years." Robin believes that signaling is virtually everywhere. Indeed he comes close to a "single cause" theory fo human behavior. In his reductionist view, the competition for survival is fierce. Species are honed by millions indeed billions of years of evolutionary competition. Why waste resources on anything not devoted to genetic fitness? The crude prediction is for only two kinds of activities: reproducing and trying to reproduce. Of course humans spend only a few hours a month, on average, having sex. So, in Robin's view, the rest of our activities must be devoted to furthering our genetic fitness. This usually means signaling, or in other words taking costly actions to show that we are fit mates. Robin does not hold the preposterous view that all activities are consciously directed at mating. If a ninety-year-old granny is sitting in her chair and knitting, she is not thinking about how this will attract a man. But the activity is, according to Robin, probably a byproduct of some other biological "program" that evolved to make us successful breeders. For instance, the woman may enjoy knitting because, in the past, nature rewarded women who practiced their dexterity with their fingers; perhaps it was a useful skill for caring for their families. If we like the arts, this capability has evolved to signal that we are caring beings and that we understand, or can crate, complex symbolic messages. If only feels like we love the arts for the arts' sake; in fact the charade is part of the point. If our love for the arts is to attract others - that is to fool them - we have to feel our passions as sincere. If we enjoy sports, perhaps we were programmed to show off our skill at hunting. If we discriminate against others, perhaps an "in group" orientation was functional in hunter-gatherer society. And if we seek sexual intercourse, well, we know why that is. A creature that didn't enjoy sex wouldn't get very far in the Darwinian struggle. We are even programmed to think that the highest forms of sex are spiritual or exalted in nature, if only to show just how seriously we take our relationships. Robin is a modern day Gnostic. He is convinced that the reality we observe is a mere shroud for some deeper set of truths. Hardly anything is at it first appears to be, and just about everything in the social world is guided fundamentally by instincts to propagate our genes. In Robin's view, our evolutionary programs are often ill-suited for modern society. Robin therefore sees the human race as facing a crisis of survival. Technology has changed society more rapidly than our biology and our instincts can adapt. For instance, we appear to be programmed to seek revenge against enemies. This may have been efficient (at least for the individual, if not for the world as a whole) when the major weapons were spears and stones. It is far more dangerous when the arsenal includes nuclear missiles and biological warfare. Robin wants us all to be more aware, and that is why he is a social revisionist. He is himself a good-natured, slightly nervous, but always enthusiastic sort of guy. Behind his scientific exterior lies the heart of a preacher, who wishes to thunder against social hypocrisy and dishonesty. On a more practical level, Robin doesn't see why he ought to be signaling all the time. He even imagines a futures world where we are all "computer uploads" and no one has to signal any more. Just read the other person's program. Everything explicitly stated, nothing covert, seductive, or mysterious. Doesn't sound like much fun to me, though some would say my view of signaling is just more conservative, less idealistic, and even jaded. I do not think signaling can go away, or that railing against it will have much positive impact. People, and society, can change only so much. But having been infected with the Robin Hanson bug, I cannot help wondering what is the preacher - Robin - trying to signal? How does a tendency to rail against hypocrisy help propogate human genes? *** Robin cares for his family, but what about people who are trying to start families in the first place? Which signals should they send? Enter Megan from California, one of my favorite blog writers; she posts at www.fromthearchives.blogspt.com Megan, a beautiful woman in her mid-thirties (I once met her at a bloggers' party), placed a personal ad on Craigslist in 2006. The question: how should she describe herself? ... Page 228 (References) Chapter 6 I have drawn the idea of building frustrations from conversations my colleague, Robin Hanson.