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Read: Success and Luck - Good fortune and the myth of meritocracy

While I agree with Frank’s policy recommendation and how he arrived at his conclusion I cannot honestly say I have enjoyed his recent Success and Luck: Good Fortune and the Myth of Meritocracy.

The primary goal is not to tell a story about Success and the role of Luck it in, it is an argument for a progressive consumption tax and maybe also a reaction to earlier critique on Frank’s 2011 The Darwin Economy that argued for the progressive consumption tax, too.

While The Darwin’s Economy main rationale for the introduction of a progressive consumption tax was the reduction of wasteful conspicuous consumption that results from a consumption arms race as every consumption is assessed relative to some accessible standard, maybe the consumption of nearby (socially and geographically) reference group in society Success and Luck focuses on the chance element of being rich and successful as a justification for a tax on the (still wasteful) consumption of the rich.

The supply of status goods is limited and cannot be increased, therefore competition for these goods just drives their price up without improving the buyers’ living standard. Or, a slightly inferior good, at a lower price, would result in an even higher enjoyment if the saved (that is taxed) amount of wealth is used for public goods like infrastructure.

Frank now argues that being rich is, despite all the effort and talent that were necessary, also largely determined by luck as being rich is the result of a competition with many competitors with similar abilities and willingness to exert effort. Any competition has an element of luck in. Taking a risk implies actually the reliance on luck, the submission of oneself to one’s good fortune, not skill, not effort. As the prize of the competition is largely determined by the society, a rich society offers bigger prizes as the prize is related to the individuals human and the societies material capital. Both are at least partially the result of public goods, public investments, and therefore taxes. Consequently, the lucky rich should just (shut up and) pay it forward to enable the next generation of high(er) prized tournaments.

Nothing wrong with that. I could not agree more. I also do not mind Frank’s rather personal perspective in his narrative and rhetoric.

What is wrong is this:
Success and Luck is a neat, short book. Being short is a virtue (for a book). Frank, indeed mentions that he could have written more but chose to keep it short, not adding any unnecessary tangential material. Great. However, there is little that is new. Most (all?) of the ideas and examples that illustrate Frank’s points are already in The Darwin Economy. Indeed, I was tempted to run the present text through a plagiarism detection software to see whether he just cut and pasted the old material or whether he at least attempted some rephrasing. Either way, I found this recycling and its extent highly annoying. Even the idea of the winner takes all, the role of luck and its use as a justification for a consumption tax was already discussed at length in another earlier book of Frank’s, The winner-take-all society, published in 1995.

The original (?) content can be boiled down to the two appendices. The first offers a numeric example illustrating the impact of luck on winning contests with many participants if luck even only marginally influences performance. The second is a FAQ on the introduction of a progressive consumption tax. And yes, FAQ implies he must have answered these frequent questions already elsewhere. Hence, the numerical example is probably the only original contribution of the book. The book could have been much shorter. It should have been a blog post.

At the very least, Frank should have put a warning somewhere that he is just reorganizing old material that he has already published elsewhere. Even though his two old books are referenced for some specific points, he never acknowledges the substantial extent of overlap in ideas and concrete examples between his seemingly separate works. He is selling old wine in new bottles (which, by chance, is also a chapter title in his 1995 book). Frank cheats his readers.

Read: Trekonomics

Post-scarcity is not just a recent idea, predicted in such work like The 2nd Machine Age as a result of the imminent and highly anticipated singularity, and it is not just the necessary condition for implementing the communist dream, it is the world of Star Trek (after the Original Series). Manu Saadia tries to analyze this science fiction utopia in Trekonomics from an economic perspective.

It’s all there and, still, it also seems lacking.

Saadia clearly identifies Star Trek (of The Next Generation, Deep Space Nine, and Voyager) as a post-scarcity society. The Replicator, the technological offspring of the Transporter of the Original Series, can produce any goods you want. As a result, in the Federation, there are no unfulfilled material needs anymore. The economic problem has been solved by abundance.

The existence of the Replicator is, however, not a sufficient condition. Saadia, identifies this, too. Only the free (as in speech) and free (as in beer) access to it, effectively the provision of the Replicator as a public good, allows Federation citizens to enjoy the benefits of goods at marginal costs of zero. Instant recycling reduces the cost of any choice further (in terms of post decision regret and resources forewent), it eliminates any lasting material consequence, basically eliminating the need to consider tradeoffs. No economic problem remains.

Hence, a technology able to create abundance and a policy decision to allow free access to this technology (eliminating capitalism) are necessary for creating the utopia of Star Trek.

Saadia also explains the absence of money - a consequence of having all necessities and even luxury goods freely available (How do you define these in the absence of an income elasticity of demand?), there is no need for exchange and therefore no need for a numeraire that can serve to facilitate exchange. He also explains the absence of paid work (the marginal product of labor must be zero in material terms if the price of goods is zero) and the shift to status seeking instead. Status seeking is then also responsible for even further development and improvement of technology.

Capitalism was required to create the knowledge and the machines; once production reached its singularity society was able to transcend. All in all, Saadia identifies the key points.

He also discusses singular topics like externalities, collective action, and the curious case of the merchant race, the Ferengis. (So, there still is trade after all!)

So, why seems Trekonomics lacking?

Saadia puts the cart before the horse. The economic implications of the Replicator are only discussed after he tells about the absence of money, the change in the nature of and motivation for work. And only then he mentions the importance of policy, growth, and the limitless resource: ideas. This sequence, I argue, hinders an in-depth and logically progressing analysis of the economic history of Star Trek.

While the exposition is easily grasped by laypersons, some more technical discussions (maybe in appendixes) would have been (more) fun for the more trained (in economics) Star Trek aficionado.

Trekonomics is very much a personal account, the general Sci-Fi affinity of the author is obvious and, of course, appropriate. It is appropriate that Asimov gets plenty of credit for his influence on Sci-Fi in general and Roddenberry and Star Trek in particular.

If I write that Trekonomics is lacking it is not because it is bad. It is because it could have been (and I hoped for) more in-depth, more detailed, more an Economics of Star Trek, more an Economic History of Star Trek, more… just more.

Read: Feet of Clay

Feet of Clay must be one the pun-niest Discworld novel in the series so far (that is until book 19). It’s a decent mystery novel and a great installment of the City Watch sub-series.

Discrimination, stereotyping, gender (identity), exploitation of the worker class, politics, governance, and the social contract: All this in a fantasy novel.

Most important (for my personal enjoyment of the novel), however, is that I absolutely loved the stabs at religion.

Read: Does Altruism Exist?

Altruism is usually defined as social behavior that decreases the fitness of the altruist and increases the fitness of the recipient (Hamilton 1964). If you are an economist you will likely prefer utility in lieu of fitness. A society of pure altruists can be successfully invaded by a non-altruist and with enough time the pure altruists would die out. Pure altruism (without any additional assumptions) is not evolutionary stable. Therefore, the question whether altruism exists does not have an obvious answer despite all the kind actions that we may observe in our society.

In “Does Altruism Exist?”, David Sloan Wilson’s does not only try to answer the question given in his book’s title he also tries to convince the reader of the superiority or at least applicability of multilevel evolutionary selection theory, in short, group selection, to analyze a potential justification for the existence and survival of altruism in human society.

I have several issues with the book.

Kind actions are not necessarily acts of altruism

The idea of selfish genes can lead to kin selection that would entail also the inclusion of indirect fitness. Kind acts towards kin would increase the indirect fitness and are therefore self-interested, they can be interpreted as the result of the maximization of a utility function that includes benefits accruing to kin (Dawkins 1976).

A kind, costly action today in the hope of a reciprocal kind action by the recipient later can be seen as an investment, a self-serving maximization of one’s expected utility (Trivers 1971). Reciprocity leads to a mutual benefit. Reciprocal cooperation is not altruism.

A kind, costly action today without the expectation of direct reciprocation but the hope of building a good reputation or gaining social status that may lead to kind acts by other members of the society, i. e. indirect reciprocity, is an investment. It can also act as a costly signal that allows screening for a cooperative partner that will then allow mutual beneficial cooperation (Zahavi 1975). Again, it is an investment and a self-serving maximization of one’s expected utility, not altruism.

Cooperative behavior is not necessarily altruistic behavior as it is more often than not mutually beneficial. No one would label the act of giving something to someone else that is part of a voluntary trade and therefore mutually beneficial an altruistic act. An act that will result or is expected to result in a benefit, direct and indirect, that exceeds the cost of the act is not an altruistic act.

Now, does altruism exist?

Wilson offers the following answers to the central question.

  • ALTRUISM EXISTS. If by altruism we mean traits that evolve by virtue of benefiting whole groups, despite being selectively disadvantageous within groups, then altruism indubitably exists and accounts for the group-level functional organization that we see in nature.

  • Altruism also exists as a criterion that people use for adopting behaviors and policies, with the welfare of whole groups in mind rather than more narrow individual and factional interests. This kind of intentional group selection is as important as natural group selection in the evolution of functionally organized human groups.

  • Finally, if by altruism we mean a broad family of motives that cause people to score high on a PROSOCIALITY scale by agreeing with statements such as “I think it’s important to help other people,” then altruism also exists, although more in some people than others. Thanks to the High-PROs of the world, our families, neighborhoods, schools, voluntary associations, businesses, and governments work as well as they do.

Wilson gives three different conceptualizations of altruism: self-reported pro-sociality, (social) efficiency seeking behavior, and weak altruism.

Yes, people report (different degrees) of pro-social proclivities and we are able to observe behavior that seeks to maximize social efficiency (and therefore may be likely to increase individual utility at the same time). And, yes, weak altruism exists, too. Wilson gives some empirical examples in his book.

Weak altruism is not altruism

A weak altruistic act implies only a relative fitness disadvantage within the own group. Other group members benefit more from the act than oneself does. This means that actions that provide a benefit to everyone in the group, including the actor, are labeled weakly altruistic. If the individual benefit exceeds the costs the act would not be called altruistic according to the standard definition.

The provision of a public (or rather club) good that generates a private benefit that exceeds its cost is weakly altruistic. However, it is (or at least can be) also the result of a self-interested maximization of the actor’s utility function. It is not altruism.

In his book, Wilson argues for the equivalence of group selection and kin selection. They are different perspectives to look at the problem of explaining cooperative behavior. Cooperative behavior is explained under kin selection as the self-interested maximization of inclusive fitness, a utility that includes also benefits accruing to kin. Consequently, if group selection is equivalent to kin selection it is obvious that cooperative behavior explained by multilevel evolutionary forces are also a result of a self-interested maximization of an extended fitness concept. The novelty may be, that the inclusive fitness of the group members is not necessarily only determined by their genetic relatedness. Cultural cohesion may be able to increase the inclusiveness. Wilson, however, never makes this point explicitly.

By redefining altruism Wilson gives a correct answer to the wrong problem. Weak altruism exists. The question whether altruism exists remains, however, unanswered.

This is insofar even more disappointing as Wilson states numerous times that he provides a post-resolution perspective and that consensus has been achieved (on the issue of group selection as the dominant theory among evolutionary theorists). It is not.

Another reason for discontent: Altruism and Economics

Wilson discusses (concepts of) altruism in different contexts. One of these contexts is economics or the strangely biased idea of what economics is according to Wilson. Wilson confuses (reckless) greed and selfishness with self-interest. Despite briefly mentioning authors like Hayek (Austrian Economics), Friedman (as a representative for Neoclassical Economics), or Richard Thaler (Behavioral Economics) he focuses his discussion of altruism and economics on Ayn Rand (the popular author, not an economist). Consequently, he, again, focuses on aspects of limited relevance – and now also with limited competence.

Given that Wilson’s discussion of altruism, or rather weak altruism, is maybe more properly framed as in inquiry into human cooperation (and this now includes mutually beneficial acts) he would indeed be able to contribute constructively. Economic activity is a prime example of human cooperation. The Evolution of Values, Trust and Trustworthiness, Law, and Moral Behavior in Markets are important topics in economics as evidenced by, e. g., Friedman’s Moral and Markets and Zak’s Moral Markets.

A positive surprise: Altruism and Religion

Even though I have found points disagreement or annoyance I have also learned an interesting fact.

Given that Wilson’s work is funded by the Templeton Foundation it is no surprise that he also has to comment on the link between altruism and religion. It is a credit to the Templeton Foundation that he does it with the following revelation: Religions do not promote altruism. Indeed, cooperative behavior is instrumental in obtaining whatever rewards are promised (after death). Benevolence, charity, and human caring in the foundation texts of the religions lead all to a direct benefit for the actor. Consequently, according to the religions studied, all kind behavior is an investment in one’s future fate and hence the result of a self-interested utility maximization.

For the religious, there is no such thing as altruism. Altruism is a fundamentally secular concept.

A constructive thought?

Richard Dawkins rails against Wilson’s group selection as a “poorly defined and incoherent view that evolution is driven by the differential survival of whole groups of organisms.”

Indeed, after reading Wilson’s book important aspects of multilevel selection remain unclear. If altruistic behavior is “selectively disadvantageous within groups” then even if altruistic groups prosper the altruists in these groups will die out over time. So “altruistic” groups need not only to drive out “selfish” groups they need to protect their altruists from selfish individuals within their society. Wilson does not explain the necessary processes that allow altruistic groups to remain altruistic. I can only imagine that a fast growing society needs to split off offspring societies that are more homogeneous than the parent society so that altruistic individuals are more likely to meet other altruistic individuals. (He does mention a similar mechanism elsewhere.)

However, an obvious modification of the evolutionary model was introduced by Wilson without him noticing. In Altruism in Everyday Life, he plots the spatial distribution of the above mentioned pro-sociality score in Binghamton. A clear clustering of high-score individuals in one area and low-score individuals in other areas are evident. Spatial structure defines the likelihood of interaction. Schelling’s work showed segregation results even with only a slight preference for “similar“ neighbors (Schelling 1971; Schelling 1978). In such spatially structured interactions pure altruists can survive and, indeed, prosper (Ohtsuki et al. 2006). No multilevel selection is needed, selection on the level of the individual is sufficient.

It’s not as bad as I make it seem it is

I have focused on the points of disagreement. Wilson also discusses or at least hints at fascinating and important ideas like the distinction between altruistic action and motivation, the difficulty of identifying motivations, and groups as organisms instead of groups of organisms.

All in all, despite the criticism expressed above Does Altruism Exist? is an interesting, thought-provoking treatise on human cooperation and altruism.

References

  • Dawkins, Richard. 1976. “The Selfish Gene.” Oxford University Press.
  • Hamilton, W. D. 1964. “The Genetical Evolution of Social Behaviour. I.” Journal of Theoretical Biology 7 (1): 116.
  • Ohtsuki, Hisashi, Christoph Hauert, Erez Lieberman, and Martin A. Nowak. 2006. “A Simple Rule for the Evolution of Cooperation on Graphs and Social Networks.” Nature 441 (7092): 5025.
  • Schelling, Thomas C. 1971. “Dynamic Models of Segregation.” The Journal of Mathematical Sociology 1 (2). Taylor & Francis: 14386.
  • ———. 1978. “Micromotives and Macrobehavior.” New York: Norton.
  • Trivers, Robert L. 1971. “The Evolution of Reciprocal Altruism.” The Quarterly Review of Biology 46 (1). University of Chicago Press: 3557.
  • Zahavi, Amotz. 1975. “Mate selection—A Selection for a Handicap.” Journal of Theoretical Biology 53 (1). Elsevier: 20514.

Read: The Nearest Exit

There is nothing romantic, nothing glamorous about Steinhauer’s Tourist. This burnt (-out) spy, reactivated for service in a black-ops department, addicted to amphetamines, a troubled soul, has a conscience and doubts about his job. He is unfit for duty. Steinhauer has created an interesting, mostly credible character. Though far from a perfect hero, he has a tendency to survive. Though, not with style.

Steinhauer has not only created a convincing protagonist, his story plot is convincing, too. The story moves quickly, changes pace, there are twists – that I did not anticipate. And, in the end, it all makes sense without me feeling duped.

The weakness of Nearest Exit is the same as in the first Tourist novel. Only the protagonist is fully developed. All other characters remain rather flat. All but one that is. A German mid-level BND analyst also gets sufficient space to be fleshed out in slightly more detail.

The bottom line is: one convincing protagonist, sufficient context provided by additional (one-dimensional) figures, plenty of scenery hopping to add an international flair, a villain who is not worse than the “good guys” and a healthy dose of critique on the (existing?) system of international relations (espionage and black-ops) in a violent post cold war, post 9/11 world.

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Read: Economics - The User's Guide

Chang’s Economics: The User’s Guide is less a guide to economics as it is practiced but more to an economics that should be: A pluralistic study of the economy, not one single approach to analyze everything.

Chang introduces to some of the non-mainstream approaches to economics and shows where they differ from the mainstream by discussing concrete current economic issues (with a slight emphasis on macroeconomics) and how we got there. As such, the Guide is rather a work in economic history and comparative economics. The presentation of relevant statistics on a wide range of countries to provide context is commendable.

Underlying the obvious narrative, an introduction to economics, there seem to be two theses. First, economics is inseparable from politics. Politics provides the institutional context, the rules of the game, economic analysis has to be performed within this frame. Economics, however, provides the reasoning for many political decisions, it “is a political argument.” The two fields cannot be without the other. Second, as a result, all economics is normative. There is no value-free economic analysis. “[T]here are no objective truths in economics that can be established independently of political, and frequently moral, judgements.” Hence, “[e]conomics is not - and can never be - a science.”

While I mostly agree with the first thesis, I do not agree with the second one. Economic analysis (in particular of microeconomic issues) can be purely descriptive, positive. Without some understanding of the causal links, the mechanics of the economy, the decision-making behavior and process a meaningful normative analysis would not be possible. I would also argue, that, e. g., experimental economist are not just going through the motions of the scientific process of knowledge generation, they are scientists: Observing, hypothesis generating, falsifying, and theory building scientist.

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