||[Jul. 23rd, 2011|02:53 pm]
Home Effinomics, or Effin' Around the House
I had a moment of extreme coincidence the other day. I spent the early part of the day transcribing a bit of interesting info from Oren Harman's The Price of Altruism. Here's a bit of the section that caught my eye:|
The eighteenth century Scottish economist Adam Smith had a simple message to convey: Under certain conditions free economic competition will lead to the best allocation of society's resources. It sounded like a paradox, but it was unequivocally true: Unfettered contest will by an "invisible hand" maximize society's benefits. The more ruthless the competition, the greater the social good; individual selfishness leads to collective benefit and plenty.
By the time Thorstein Veblen arrived as a professor at the University of Chicago when it opened its gates in 1892, this economic worldview was referred to as "classical." Welded now more strongly to the political theory of laisez-faire, Adam Smith's legacy beckoned a new name. Veblen called it "neoclassical economics" and didn't shy away from expressing his view: he absolutely hated it.
. . . . The basic assumption that individuals pursuing their own self-interest necessarily promote the good of society was to him both insipid and false. Capitalism was leading to "conspicuous consumption" and "conspicuous leisure." Not only did this bring waste and inefficiency, it suppressed fundamental human instincts: acquisitiveness, workmanship, parenthood, and idle curiosity. Forms of social control could be used to reawaken them, but this could only be accomplished with the help of a broad science of human behavior. With its exclusive dependence on price theory, neoclassical economics was nothing but a narrow "hedonistic calculus." Based on "immutable premises," it had little to do with reality.
(Oren Harman, The Price of Altruism, W.W. Norton & Co., 2010, pp. 110-111.)
Later that day, I heard Veblen's name again, which I found a pretty powerful coincidence. Stephen Dubner mentioned that Veblen coined the term "conspicuous consumption" over a 100 years ago in the Freakonomics podcast "Hey, Baby, Is that a Prius You're Driving?". That podcast also introduced a concept I have had for years suspected, but one which I had not given a name: conspicuous conservation. From the transcript
(Steve) SEXTON: Psychologists have defined competitive altruism as a sort of keeping-up-with-the-Joneses type concept but applied to efforts to make society better. So, I’ll be competing with my neighbors to donate to a charity for instance or to reduce energy conservation, or environmental impacts.
DUBNER: Or, as the Sextons call it, “conspicuous conservation.”
S. SEXTON: Right, because conspicuous consumption, they’re investing in products that provide the same functionality as cheaper alternatives, but they’re flashier, or just because they cost more, or what have you. So that can be wasteful and leave nobody better off. But in this case with conspicuous conservation, because the costly effort that individuals are undertaking is providing benefits to society, this rat race could actually be a good thing.
Nice. Ah, but it turns out there's a dark side to the trend: Some people care more about the appearance than the benefit. It turns out economists have a term called "signaling":
Robin HANSON: Signaling theory is another way of talking about showing off. Or trying to present your best face. It’s all about what we do to look good. Or at least to not look bad. . . .
Managing our appearance is actually a lot of what we humans do. Trying to understand, business, trying to understand jobs, school, even medicine. If you don’t realize that people are trying to manage their image, you miss out on a lot of what’s going on.
When the psychological need to signal overcomes the altruistic need for people to contribute to their society through the purchase of sustainable technology (like a hybrid car or solar panels on their homes), it turns out people can make some silly decisions.
DUBNER: Now, do you think the consultant, the installer says to them, this is not going to really do as much for generating power as you would like, or as much as if you put it on the sunnier side of your house. Do you think those conversations happen?
S. SEXTON: We know that they do. I haven’t been at those conversations, but do understand that those conversations go on, that the experts advise, Here’s how to maximize the benefits from your solar panels, and the homeowners say, well no, I actually want it on that side of the house.
DUBNER: In other words the side where my neighbors will see that I have solar panels.
S. SEXTON: On the street side of the house, right. And again, we don’t judge that, that’s fine. We don’t take a position on that. But if that kind of an effect is occurring, then it has implications for both firms that might want to market these types of products as well as for governments that might want to maximize the benefit from investment in those types of products.
Exactly. I bemoaned this over three years ago when comparing the American SMART car to the European version. The American version is, quite simply, marketed to those afflicted with conspicuous conservation bad enough to overwhelm the cost/benefit center of their brains. Let me be very clear on this point: I regard anyone who buys the current configuration of the American SMART car — with its mileage almost half of the European version — as demonstrating shallowness and vanity as damning as others who mount solar panels on the shady street side of their house or, even more amusingly, mount wind turbines where the wind simply doesn't blow!
Indeed, there’s a fantastic example from the British physicist David MacKay, who points to building-top windmills in Japan that actually have little electric motors in them to keep them spinning around, because otherwise they would look really stupid on top of the building and not actually moving. So, these windmills actually cost energy.
(I had to emphasize that bit of foolishness.)
These people are not thinking critically. They are paying less than lip service to the world around them, to the problems currently threatening our civilizations with perhaps existential challenges.
Folks, we humans have brains adapted over millions of years (let's not forget our pre-primate ancestors!) to be social, not to find the most efficient solutions to individual problems. Signaling is a social phenomenon in all its forms, from the conspicuous consumer to the conspicuous conserver. The social brain is not rational. That is not its job.
But we can be rational if we choose. We can recognize our tendencies — our social assumptions, our heuristic limitations, our brainy weaknesses — and set them aside. We can run blinded experiments. We can theorize and postulate, poke, prod and probe. We can comparison shop, do research, invent. Given enough time, we can find solutions that best use our available resources to solve or mitigate existing problems. No, these solutions may not be pretty. They might hide the expensive panels on the sunny side of the roof, or the expensive turbine where only the wind will see it.
This is why I started home_effinomic, for all of us to share these experiments, these critical explorations that winnow the wheat of cost and effort efficiency from the chaff of social popularity. Moving in a single direction only guarantees that when we reach the edge of the cliff we all fall. We must, as John Michael Greer notes, practice "dissensus", a divergence of approaches to invention. By taking many paths we will best evaluate which of those paths works the best in a variety of situations. So as many of us as can should share, not just me.
Please! Get your hands dirty! Make your own sausage, and see how it compares to the store-bought! Share those shots of hanging tubes of tasty meat! Preserve your own fruit, perhaps with a novel method, and share! Build tools and boast of the savings over commercial alternatives! Invent! Modify! Wallow in data!
In the end, we will have all done something more useful than watching the latest re-run. We will fail sometimes, but each time we may learn a lesson from that failure that will guide us in a new and perhaps novel direction.
And our failures will probably be entertaining as well . . . but hopefully not too conspicuous.