Sam’s characterization of honor (as a personal characteristic–honor type A–rather than a reward–honor type B) is honor as a public good. It’s costly to have honor and the benefits of honorable behavior are not internalized by the honorable individual. It’s a positive externality in need of subsidization. Sam’s subsidies are honors (the reward–honor type B), things like ribbons, monuments, songs etc. Sam finishes his excellent post with a cautionary meditation on the public versus private provision of these subsidies:

Describe quietly to yourself as you reflect on this the likely agency problems of the sovereign awarding honors. Compare that to private honors offered by people unencumbered by a principal-agent problem.

Sam’s right, we should carefully consider whether the public provision of honors is faithful to the stimulation of real honor, whatever we as principals think it to be. The problem Sam is describing neatly mirrors debates about intellectual property law. We have a public good—innovation—and we have a subsidy via signals—patents, copyrights and trademarks. The nut of the debate in IP policy is whether we are faithfully incentivizing science and art, or merely rewarding rent-seekers (the RIAA, MPAA, Big Pharma, etc.). And, just like private honors, we do have private rewards for creativity and innovation. Tenure is the most obvious, but we shouldn’t forget privately-funded contests like the X-prize, or soft rewards like the prestige of being a notable contributor to open-source software libraries or the power of a successful YouTube account. Let me leave that analogy between honor and innovation to percolate for a moment.

Adam chimes in suggesting that honors may not be incentives to honor so much as bits of information necessary to discover what is honorable.

What is honorable is not something we simply know the same way we know how to breathe. We learn what is honorable by, at minimum, using what is honored as a starting point.

In IP policy we often talk of both incentives and coordination. The inventor or artist needs both a goad and a direction. You can think of the subsidy policy as a vector: it has both magnitude (incentive to invent) and direction (coordination of what should be invented). Adam’s saying we may or may not need incentives for honor (and it is intuitive—as well as ancient—to say that honor is something you cultivate without reward) but he’s suggesting that we do need coordination.

Building on my IP analogy, I’d like to disagree (for the sake of conversation) with both Adam and Sam here. There is a school of thought in IP policy that says that most of the work of incentivizing and coordinating innovation is internal to the innovation itself. Von Hippel writes about “user innovators,” who invent and publicly release their inventions—i.e. provide public goods—because the fractional private benefit they obtain from invention-use is sufficient to stimulate the public good’s optimal social production. Similarly, first-mover-advantage and network-effects theories can also explain why innovation may need no external goad or coordination. I innovate because by being the first to do so I will more likely capture temporary monopoly rents (as competitors rush to imitate) or because if my product becomes the standard in a network (the Facebook to your Myspace) I’ll also capture rents.

Could honor have use value sufficient to stimulate optimal social production? Or, are there first mover advantages to an honorable person? Are there network effects to honor? If any of these questions deserves a yes (or even a maybe) then we have an economic theory as to why honor might be something that does not require external reward, i.e. honors. We have an economic theory explaining the Aristotelian intuition—honor is something you do without external reward. There are rewards internal to the behavior—especially in the long term—and no dire public good problem exists.

I’m not certain what exactly honor’s use-value, first mover advantage, or network effects would look like. My intuition tells me it’s basically stoicism or, perhaps, Taleb’s “antifragility.” Honor (or dignity) is a guard against anxiety, rash action, and—cumulatively—monoculture or herd behavior and the madness of crowds. People develop a personal bearing that, as Sam eloquently puts it, is “staid in adversity, durable against insult, and refuses to cower when threatened.” These are the traits that may cost you in the short run, but their use value—perhaps the psychic benefit of avoiding agitation—could be sufficient to warrant their adoption despite benefit spillovers. Or, similarly, they may enable you to reap some long term benefit from anti-fragility. As the crowd of lemmings goes over the cliff your once costly non-conformity has paid off big. Moreover, you cultivate this honor not because you can reasonably predict the realization of any of these rewards. Instead, it’s just something you do. As Taleb says,

Wear your best for your execution and stand dignified. Your last recourse against randomness is how you act — if you can’t control outcomes, you can control the elegance of your behaviour. You will always have the last word.