Who Will Speak For Us?

Storytelling is central to the human experience. It sets us apart from other animals to almost the same degree as language itself.

As stories are generated and retold, we develop a kind of grammar. These days, we call the units of that grammar tropes. I have a trope in mind that I wanted to begin with, but for once TV tropes appears to have failed me. There’s one that’s in the ballpark of what I’m going for, but not exactly there. But I’m betting you’ll find this familiar.

Imagine a father who has very particular expectations for their son. Beyond expectations, he have been excited by the prospect of his son taking over the family business, or becoming a doctor or lawyer, or starting a family, ever since he was born. The father has invested an enormous amount of emotional energy into this vision. The son wants to go to college, or wants to be an actor, or doesn’t want to have kids, or is gay. When he confronts his father about it, it is a tremendous blow. His father is completely devastated to lose this story of his son’s life that he had held onto so tightly. But the father pulls himself together, and gives his blessing, even if it isn’t needed. Even if the son is still dependent on the father materially, the father respects his son’s autonomy too much to try and strong-arm him into the path he wanted.

The son goes on to pursue his chosen path, and the father never once gives him grief about it again. But he also never entirely recovers from the disappointment. Perhaps it is only a lingering sadness, perhaps it becomes a more acute depression as the years go on. But he genuinely cares about and respects his son, and never makes him feel as though this depression is his son’s fault. Perhaps he skillfully conceals it; perhaps the son lives in a distant city so the visits are few enough that not much skill is required. But he takes pride in the life that his son has, even if he still can’t help letting the glimmering dream of what could have been weigh on him.

A Story of a Different Kind

Now, let’s tell that again in the language of economics.

The father had strong preferences when it came to how his son was to live. His son’s life choices thus constituted an externality on him, positive or negative. When given the opportunity to attempt to credibly threaten to impose costs should his son deviate from his preferred path, the father revealed through his action that he more highly valued his preference for being respectful than his preference for the specific life plan he had in mind for his son. This choice entailed certain costs but it gave him the most value out of his available options, as it must have if he made the choice voluntarily.

Has rather a different feel to it, doesn’t it?

At my request, Mark Lutter offered a few critical comments on Deirdre McCloskey’s latest paper. I’m not going to get into the comments on economic growth; for one thing, I’m not all that qualified to. For another, McCloskey hasn’t really made her positive case there yet. But I want to address his last three points, especially the last one:

McCloskey is arguing that economics should embrace speech, stories, shame, and the Sacred. I agree. Economists should also take culture more seriously, take beliefs and morality more seriously, and rely less on complex mathematics. However, economists can do all that just fine within the existing framework.

Related is his sixth point that “she argues that things like identity and morality cannot be captured by neo-classical economics, but gives little reason as to why.” I would say that “cannot” is probably the wrong word. You can capture anything within any framework, if you desire to—but beyond a certain point it often means assuming the can opener.

What McCloskey means when she makes statements about “the immense literature on ethics since 2000 BCE” or “the exact and gigantic literature about ideas, rhetoric, ideology, ceremonies, metaphors, stories, and the like since the Greeks or the Talmudists or the Sanskrit grammarians” she is advocating learning from the humanities. She is saying that there has been a conversation about human nature and culture and ideas for thousands of years, and economists would do well to familiarize themselves with it. If they’re going to dismiss it, they ought to dismiss it from a place of knowledge rather than because it is the path of least resistance.

I think the central point of debate here is what should be integrated into what. Should the sacred be integrated into “the existing framework” in economics, or should the existing framework be integrated into something bigger, older, and richer? I think you know my answer, and McCloskey’s.

The story I started out with is based on insights drawn from a storytelling tradition that I have been immersed in since practically before I spoke my first word. You tell me: do you want to reduce that story to the version that can be accommodated by the existing framework in economics? Or do you want to use the insights of economics without giving up on what is at work in the older tradition?

The Conversation of Social Science

“Cross-discipline” is a phrase used to describe the collaboration across the traditional boundaries between academic schools, but usually still within social science. It’s the talk among economists, sociologists, and psychologists, to name a few prominent fields that come to mind.

It’s this conversation that I thought of when I read Mark’s seventh point:

Seventh, and this applies to McCloskey more broadly than just this paper, what basis does she have for abandoning central economic assumptions. For ideas to matter either preferences are not constant (what she seems to be arguing given her jabs at de gustibus) or rational expectations is false. You cannot have all constant preferences, rational expectations, and ideas mattering. Given the importance of constant preferences and rational expectations the burden of proof is on McCloskey to change methodological assumptions. This burden of proof is especially difficult to reach in complex problems, and she fails to meet it.

Setting to the side whether McCloskey provided enough evidence, it seems odd to say that the burden is on those who are challenging assumptions just because those assumptions are important. Especially since constant preferences is one of the most notorious assumptions of economics outside of the field. To quote Daniel Kahneman:

To a psychologist, it is self-evident that people are neither fully rational nor completely selfish , and that their tastes are anything but stable. Our two disciplines seemed to be studying different species, which the behavioral economist Richard Thaler later dubbed Econs and Humans.

Kahneman and Thaler are one side of a big conversation that started in the 70s between psychologists and economists, the impact of which is still being felt in the latter field today. Psychologists like Kahneman can point to experimental evidence indicating that people’s preferences are not stable.

Economists, especially the institutional and Austrian variety, argue that taking people outside of institutional and cultural contexts into the highly specific environment of (usually) a college lab can only yield limited insights. Moreover, they point out how microeconomics makes the best predictions in specific domains, most concretely in auctions or in finance. And those predictions rest on the assumption of stable preferences, among others.

The categorical nature of the debate as I have witnessed it can grow tiring. Personally, I am persuaded by the “of course preferences aren’t stable” line of argument; I find it hard to believe that the changes I’ve witnessed in people in my own life are merely anecdotal. On the other hand, preferences must be stable to some degree; while not completely unchanging, nothing would get done if they were just constantly cycling.

So my question is: to what degree are preferences stable. Or more methodologically significant: what degree of stability is required to explain the empirical phenomena that line up with economic theory? I’m sure there’s a literature on this, but I confess to not having read it. Perhaps Mark or a reader can point me in the right direction.

More Human Than H(u) = α + βM + γA + δN + ε

But the most important disagreement is right there in Mark’s sixth point:

A simple explanation of identity and morality is they serve to signal in group status. People want to trade with people who have a shared set of expectations about what constitutes fair trade. More importantly, they want to live with people with a shared understanding of permissible violence. Because the most convincing person is one who believes what they are saying, identity and morality are a central part of humanity.

This is the exact sort of thinking that McCloskey is going after.

A relevant passage from her paper:

I get the price theory: price and property, the variables of prudence, price, profit, the Profane as I have called them, move people. But the point here is that they are also moved by the S variables of speech, stories, shame, the Sacred, and by the use of the monopoly of violence by the state, the legal rules of the game and the dance in the courts of law, the L variables. Most behavior, B, is explained by P and S and L, together:

B = α + βP + γS + δL + ε

Signaling, avoiding violence, setting terms of trade; these are P variables or possible P and L variables. McCloskey doesn’t deny them. But if Mark thinks he’s “embracing” S variables “within the existing framework”, he’s wrong. He’s simply reduced them to P (and possibly also L) variables.

This can perhaps be understood by reference to an earlier Sweet Talk conversation on the subject of honor and honoring. Sam, ever the economist, pointed out that honorable behavior is often socially desirable. As a result, we confer honors upon people who have proven themselves to be honorable; we give them medals in public, we announce their names on a list, sometimes we even erect monuments. This serves to subsidize the positive externalities to honorable behavior.

I agreed, but quickly added that there is such a thing as honor. Honor is not simply about producing social value—not that Sam every claimed as much, mind you! No, honor is about doing the right thing, even if you are not honored for it, even if it results in a material or emotional loss. And the conversation, reaching back before the Greek tragedians and up to the present from thinkers such as Rosalind Hursthouse, is full of people arguing that you should do the right thing even when it is in some way spiritually or morally deforming. If the only options in front of you are all terrible ones, you still must do what a good person ought to do, given those options.

Rather than whether or not S variables can be integrated into economics, the real debate is whether they exist at all. McCloskey’s claim, which I believe, is that attempts to translate S variables the way Mark did is the same as writing them off entirely for P variables. In an otherwise marvelous paper, Vlad Tarko errs in seeming to think that McCloskey herself makes a symmetrical mistake by assuming that there are only S variables, or that they are the only ones that matter. In fact, The Bourgeois Virtues is simply about making the case that there are S variables at all, in the face of a discipline that effectively rejects it.

Tarko takes an approach that I think McCloskey would approve of, speaking of “incentive-invariant” ideas and culture. It reminded me of this section of her paper:

The equation is not wishy-washy or unprincipled or unscientific. The S and L variables are the conditions under which the P variables work, and the P variables modify the effects of the S and L variables. Of course. For example, the conservative argument that laws serve as education would connect L causally to S, by a separate equation. Or again, when the price the Hudson Bay Company offered Indians in Canada for beaver pelts was high enough, the beaver population was depleted, in line with P-logic. But S-logic was crucial, too, making the P-logic relevant. As Ann Carlos and Frank Lewis explain, “Indian custom regarding the right to hunt for food and other aspects of their `Good Samaritan’ principle mitigated against the emergence of strong trespass laws and property rights in fur-bearing animals; conflict in the areas around the Hudson Bay hinterland contributed to an environment that was not conducive to secure tenure, and attitudes towards generosity and even a belief in reincarnation may have played a role” in running against better P-logic rules that would have preserved the beaver stock.

What this is all getting at is that there are true, internal goods as well as external ones. Commitment to particular internal goods both face external constraints, and have implications for the shape of some of those constraints. S variables influence P variables and are influenced by them in turn.

The traditional agrarian way of life has been largely washed away by the tide of the Great Enrichment in the countries where it has advanced the furthest. But the Amish have largely preserved it in their communities. They have done this in part through a commitment to shared values; S variables. They also have a very unique way of governing their communities, and are highly committed to enforcement through practices such as shunning; L variables. They have also had to buy up farmland in order to maintain their way of life; as that strategy has been exhausted they’ve had to allow a larger and larger fraction to work off the farm and even open businesses; P variables.

McCloskey’s equation is, of course, just a useful metaphor. As David Weinberger paraphrased:

As Umberto Eco says, there are many ways to carve a cow but none of them include a segment that features a snout connectd to the tail.

McCloskey’s three variables are a useful way of carving the cow, as is “the existing framework” in economics. But none should stand on their own, and (to stretch this metaphor a bit further than its usefulness) all end up discarding large segments of the original animal.

The best approach to understanding the human animal is to take in the whole conversation, not just economics and not just social science. For McCloskey as well as Michael Oakeshott, the voice of poetry, one of the oldest voices, deserves a place. Personally, I stand with them.

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Virtue After Abundance

Our sense of virtue evolved in the context of groups living under immense scarcity. Consider the virtue that one shouldn’t be overly self-indulgent (because resources must be rationed). Or the suggestions against taking on debts (r > g for foragers, so borrow wisely). Even honor, that most sacred virtue, seems to work particularly well in environments where “a man’s resources can be thieved in full.”

How should, say, “hedonistic self-gratification” look to a sensibility sculpted by absence? More than a vice, for our ancestors it was solipsistic to the point of immorality. Today still, commentators from religious conservatives to anti-consumerist liberals continue to treat hedonism as an anti-virtue despite economic abundance. Even among the strongest followers of self-gratification, there is a self-awareness that something about hedonism is at least figuratively satanic.

Of course, our virtues and vices needn’t be connected to the facts on the ground of the contemporary environment to be things we still hold valuable. In this sense, modern civilization made all values vestigial and many of them, like the scarcity mindset, potentially maladaptive. At the very least, many of our past vices have lost their edge. Character flaws once thought immoral are now deserving of respect.scarcityCleanliness is next to Godliness” is my favorite example of a virtue as opposed to moral act, in particular for how ubiquitous it is in theology. “Be clean” and “Don’t kill” are both statements of value however hygiene is self-directed while murder is directed at inter-relations between selves. For religious fundamentalists there’s no distinction between virtues and morals, so they happily label homosexuality, masturbation, drug use, blasphemy and so on as equally sinful and dirty.

There are some immediate political implications of this realization (beyond re-branding the “moral majority” the “virtuous majority”). For instance, in this light the Straussian critique of liberalism as leading towards nihilism had it backwards: abundance enabled classical liberalism to enshrine individualism and laws that strive only to abridge human freedom in order to correct interpersonal harms, not individual character flaws or poor showering technique.

Of course, “no man is an island” is still true. There are many personal vices that are apt to spill over into the public domain, which ponces may want to regulate to varying degrees. I could only support this if personal values were not directly imposed on others (piety may be virtuous, but forcing others to be pious is theocratic).

Liberals since Mill and Bentham generally opposed regulating virtue. They said: ingest, do, believe and feel what you will as long as it doesn’t interfere with my ability to do the same. Yet they never said “murder, slander, vandalize” because these are decidedly inter-personally moral in nature.

Our psychology may be social, but the largest unit of psychological consideration is still an individual’s mind – the subject in subjective. Communitarian political systems and puritanical societies aren’t immoral a priori. It all depends on the sincerity of the citizens, how institutionalized the values are, and the nature of transaction cost. If you live in a Buddhist commune but your favorite book is The Virtue of Selfishness, it only becomes illiberal when you’re not permitted to leave.

Meanwhile, the five best scarcity-mindset coping mechanisms according to this psychologist read like they were written by an ancient stoic. Go figure.

A great conversation about this post is happening on Reddit here. This post, and Sweet Talk itself, is about creating conversations, so I’m highly grateful for all the constructive engagement. 

 

Blood Disease: A Metaphor

AG writes that he agrees with Deirdre McCloskey when she argues that the sacred and profane are inseparable. Spivonomist starts it when he observes that honor is hard to define, distinguishing two of its meanings as sacred (honor) and profane (prudence).  SH really gets things cooking with his wonderful example from Schopenhauer, exposing those Greeks for the troublemakers they are. It’s not their fault, really, driving into the realm of ethics the notions of virtue, that is, putting into the realm of pure intellect those matters unseen, that which is cooked in the human liver. And heart. A physician, for example, must distinguish blood from bone in order to make a diagnosis of indications. But where does blood come from?

If the blood is diseased, it stands to reason that the bone is diseased, and the flesh. Even if the disease is not actually observable in the one, but only in the other, no one says, “Gosh, only my blood is diseased; I can live without that.” A painful disease to the bone is a painful disease to the entire body, and a deadly disease to the bone is a deadly disease.

When we say that the sacred and the profane are inseparable, we are really making an observation that the sacred intertwines the profane in the same way that blood vessels intertwine flesh and bone. Where does one end and the other begin? Nevertheless, we must distinguish, knowing that the distinction, like this metaphor, will cease to serve our intellectual pursuit of what is virtue versus what is prudence, and which has what effect on the other.

What we’re trying to do, of course, is diagnose indications, usually in an effort to treat our ills, beginning with the self, extending to the community, then, finally, to the society. A society filled with Schopenhauer’s Tituses would be ideal because his liver is healthy. Nevertheless, a society filled with Caiuses would be a good society, though short-lived because his liver is not healthy.

Thus, it is easy to change minds, and you can do it by force, as we have seen in the realm of American morality over the last several years. The goal to have many Caiuses is achievable. The goal to have many Tituses is hopeless because it is impossible to change hearts.

Impossible? Near-impossible. To borrow from a possibly-deceased pastiche twitter account, whom I looked to as a father figure: when was the last time you looked at yourself in the mirror and asked, “What was the last thing about which you changed your mind? And what was the last thing about which you changed your heart?” And the dagger, I think: “How do you know you changed your heart?”

 

Prudence is Good, but Not By Itself

The discussion started by Sam boils down to this: honor is a sacred quality, and prudence is by necessity profane, worldly. People have always in the back of their minds, or explicitly, believed that we should be able to embrace with sacred without resorting to incentives which derive from profane motivations.

When all is said and done, however, I agree with Deirdre McCloskey when she argues that the sacred and the profane are deeply intertwined, inseparable even. To speak of a human good we have to consider human nature. If our ideal is utterly unmoved by honors then our ideal is unattainable, even by approximation.

Aristotle’s mean, or intermediate, never involves discarding motivations entirely, but rather experiencing them in the right way, in the right circumstance, in the right amount, and so on. An honorable person will do what is right even when no one will honor them, but the prudently honorable person also understands that much of the time this does work out to your advantage. That does not mean that prudence justifies honor—just that the concerns of the sacred and the profane must work together (not simply be balanced) in subtle ways that require experience and practical reason to judge, not to mention peers and community.

Just as the tension that the artist feels between their vision and the demands of making a living can yield work just as great (and arguably greater) than the independently wealthy artist, so too does the tension the actual person feels between honor and prudence yield more truly honorable behavior than the person utterly indifferent to what is honored by other people.

Errata: Honor and Eudaimonia

PV writes:

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.

Important questions deserve serious answers. “Honor is its own reward” sounds nice, and it’s assuredly aspirational, but my training in economics urges me to think on the margin, so to speak. What motivates the next honorable act? So “could honor have use value sufficient to stimulate optimal social production?” For people with a natural propensity to act honorably, I reckon the answer is yes. External incentives are there for otherwise indecisive folks to behave honorably, even if honor isn’t otherwise a part of their character. 

I admit, this sticks in my craw a bit. Honorable behavior spurred by promises of acclaim are pallid, anemic. It ain’t eudaimonia. It’s makarismos. Consider DD‘s closing question ” why bother with all the labor of ethical virtuousness if I can get the same benefits without working?” The reason to bother is because sloth is a vice. It galls the sensibilities to be obliged to pay someone for virtuous behavior, even if the outcomes of the exchange are felicitous. It feels like dirty pool. Or maybe like a dirty pool. Whatever.

My complaint is chiefly aesthetic, I admit. Here I am bathed in the milk of peaceful voluntary exchange and it rankles me that there’s a market in virtue. I irrationally want people to act well of their own accord, to work towards developing excellence in themselves and within their communities without having to be bribed. I want eudaimonia. I have a hunch that the possibilities forwarded by Peter (first mover, network effects) are more likely to exist for eudaimonic honor than for makarismic “honor”, but that’s still just my own sense of right and wrong, and it’s as fallible as the garden of good and evil in which my ethics were cultivated.

Honor = Innovation?

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.

Honoring the Honorable

Sam’s post puts me in mind of a problem Julia Annas spells out with Aristotle’s concept of greatness of soul. By Aristotle’s reckoning, someone with greatness of soul does what is honored by people, but does not do it for the sake of being honored. Instead, he does it out of honor, the noun rather than the verb—because it is the right thing to do. But if that’s the case, then what’s the point of the honoring in the first place? Why do we need to make reference to it at all to describe an honorable person, if it comes from within rather than without?

Sam’s answer is the classic economics one—we need honorable people in the world, and if we make them take on all the costs of being honorable without any reward, there will be fewer of them. This, of course, simply casts aside Aristotle’s requirement for greatness of soul in favor of of allowing in external incentives.

There’s a middle ground here, though, I think. Consider that honoring may also serve as information. 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. Aristotle did—though he and the Hellenistic schools that came after him (and used the same starting point) ultimately revised conventional notions substantially in the course of their inquiries.

Because few of us become truly honorable, and we are naturally drawn to being honored the way that econ 101 would lead us to expect, I do think that Sam’s story plays a big role. The informational honoring and the incentivizing honoring are not mutually exclusive. But I do think Aristotle was correct that those who are most praiseworthy do not do the honorable thing for praise.