In Chapter 22 of The Prince, Niccolò Machiavelli asserts that "there are three classes of intellects: one which comprehends by itself; another which appreciates what others comprehended; and a third which neither comprehends by itself nor by the showing of others; the first is the most excellent, the second is good, the third is useless." I will explain the usefulness of the distinction between the first two types, and how it relates to honesty.
The concept of signalling in the field of economics is a useful introduction to the underlying problem: the difficulty of measuring capabilities or knowing what to expect in the future from the actions of another person, or even the inaccuracy of expectations in general. Much of society is based on establishing accurate standards of judgement so we know what to expect from a situation, and what to avoid.
Many problems are the result of our collective evaluation being inaccurate. Sometimes this is because no one found a solution that could satisfy the often conflicting requirements and goals of society; but other times it's because the expectations that people have prevented a correct solution from being adopted.
In the context of signalling, you could say that this is because there are too many people attempting to learn the existing signals in society, and not enough people maintaining the quality of existing signals or creating accurate new ones to supplement or replace ones that indicated a certain attribute or correlation with future events.
The reason this happens is simple: creating or verifying a new standard of judgement or 'signal' takes effort in proportion to the complexity of the situation being evaluated. There is no real shortcut to this, so when signals are expected to be accurate the optimal strategy for most people would be to avoid confirming their validity. This habit is the cause of problems when the accuracy of signals shift due to a change in the underlying situation they're meant to indicate, and people refuse to evaluate new evidence until a catastrophic event forces them to see reality.
Two analogies for this: the first is that some materials can be permanently bent from the application of force, while others just shatter. The second is that a bullet only has about 1800 J of energy, which is the same amount absorbed from being in sunlight for three seconds or from eating 1/4 of a Tic Tac®.
The way to prevent these events from occurring is not for everyone to spend all of their time confirming other people's conclusions, but rather to be aware of the possibility that the consensus opinion can be wrong so that when they encounter a situation where this seems to be the case, it doesn't require a major change in world view to support a new type of signal or expectation of future results or changes to an existing signal. (I'm using "signal" in the sense of what people expect the optimal signal to be, although in economics it's generally used it in the sense of a selection from one of several indicators that not everyone is able to possess.)
The widespread ability to recognize and verify these corrections to the frame of society's expectations would mean that people would feel socially rewarded for making positive contributions to doing this. Without this reward, these actions have positive benefits (or "externalities" in the language of economics) to society but no reliable value to the individual.
There are many attempts to formally recognize advances of knowledge, but these are subject to their own criticisms such as the reasons given by Grigori Perelman for his rejection of the Fields Medal in mathematics. Since verifying the accuracy of a given signal requires intimate knowledge of the situation it's meant to predict, formal recognition of improvements to signals or expectations in everyday life is even more problematic because the people who control the award-giving process could be just as incorrect as the general consensus is. Without the ability for every individual in society to recognize inaccurate signals, this sort of central planning approach is just as flawed which is why the Soviet Union, using this centralization of standards of judgement, was unable to create the society free from corruption that it wanted to.
The benefits to society from a widespread ability to evaluate signal accuracy, or "think critically", should now be obvious. However, there is an additional complication I should mention: people who perceive the outline of this problem tend to migrate away from social communities or situations with inaccurate signals, and this can cause people to misevaluate both the possibilities for improving those situations afflicted by inaccurate signals or signal drift, and the possibilities for the world as a whole that are implied by the presence of this variation in signal quality.
As a result it becomes important to maintain a widespread recognition of the varying reliability of signals in all of society, to prevent a catastrophic event from occurring due to accumulation of inaccurate signals in one part of society despite a lack of perception of this growing tension by people who see no indication of this problem in their immediate environment.
The way to cultivate this proficiency is to deliberately introduce conflict in the goals society seems to impose on the individual, to prevent the expectation that signals to indicate competence can always be easily discovered.
With the work concept described on this site, the conflict is between total income and average wage rate.
This relates to honesty because without widespread ability to evaluate signals, someone can support an inaccurate signal that they know to be wrong but benefit from, and use the excuse that they were just "following everyone else" or had not done the effort to determine the accuracy of alternative standards of judgement. Emotions play a role as well but the above explanation should be enough.
Some examples:
1) This report on public perceptions prior to the 2004 US presidential election, as well as a site that references it.
"Despite an abundance of evidence—including polls conducted by Gallup International in 38 countries, and more recently by a consortium of leading newspapers in 10 major countries--only 31% of Bush supporters recognize that the majority of people in the world oppose the US having gone to war with Iraq. Forty-two percent assume that views are evenly divided, and 26% assume that the majority approves. Among Kerry supporters, 74% assume that the majority of the world is opposed."
2) This study on prediction of one's reactions in a certain situation.
"The study is consistent with decades of psychology research pointing to the same thing: People are really bad at predicting their own actions in socially sensitive situations."
3) The importance of income to getting messages on dating sites.
"if you're a young guy and don't make much money, cool. If you're 23 or older and don't make much money, go die in a fire. It's not hard to see where the incentive to exaggerate comes from."
4) The reason economists have not provided advice to decision-makers that would allow them to eliminate undesirable outcomes in the economic framework.
5) A criticism of China's education system that may have been posted by a hacker posing as a student reporter who interviewed the principal of the prestigious Tsinghua University.
So as stated, the concept on this site would make being honest a more rewarding strategy.
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