Suppose you are considering buying a small item, such as a hardcover book or a piece of cookware. If you buy it from one seller, the price is $50, but shipping costs $20; if you buy it from another, it costs $70 but you’ll get free shipping. Which one do you buy from?
If you are being rational, you won’t care in the slightest. But most people don’t seem to behave that way. The idea of paying $20 to ship a $50 item just feels wrong somehow, and so most people will tend to prefer the seller with free shipping—even though the total amount they spend is the same.
Sellers know this, and take advantage of it. Indeed, it is the only plausible reason they would ever offer free shipping in the first place.
Free shipping, after all, is not actually free. Someone still gets paid to perform that delivery. And while the seller is the one making the payment, they will no doubt raise the price they charge you as a customer in order to make up the difference—it would be very foolish of them not to. So ultimately, everything turns out the same as if you had paid for shipping.
But it still feels different, doesn’t it? This is because of a series of heuristics most people use for their financial decisions known as mental accounting.
There are a lot of different heuristics that go into mental accounting, but the one that is most relevant here is mental budgeting: We divide our spending into different budgetary categories, and try not to go over budget in any particular category.
While the item you’re buying may in fact be worth more than $70 to you, you probably didn’t budget in your mind $20 for shipping. So even if the total impact on your finances is the same, you register the higher shipping price as “over budget” in one of your mental categories. So it feels like you are spending more than if you had simply paid $70 for the item and gotten free shipping. Even though you are actually paying exactly the same amount.
Another reason this works so well may be that people don’t really have a clear idea what the price of items is at different sellers. So you see “$70, free shipping” and you assume that it previously had a price of $70 and they are generously offering you shipping for free.
But if you ever find yourself assuming that a corporation is being generous—you are making a cognitive error. Corporations are, by design, as selfish as possible. They are never generous. There is always something in it for them.
In the best-case scenario, what serves the company will also serve other people, as when they donate to good causes for tax deductions and better PR (or when they simply provide good products at low prices). But no corporation is going to intentionally sacrifice its own interests to benefit anyone else. They exist to maximize profits for their shareholders. That is what they do. That is what they always do. Keep that in mind, and you won’t be disappointed by them.
They might offer you a lower price, or other perks, in order to keep you as a customer; but they will do so very carefully, only enough to keep you from shopping elsewhere. And if they are able to come down on the price while still making a profit, that really just goes to show they had too much market power to begin with.
Free shipping, at least, is relatively harmless. It’s slightly manipulative, but a higher price plus free shipping really does ultimately amount to the same thing as a lower price plus paid shipping. The worst I can say about it is that it may cause people to buy things they otherwise wouldn’t have; but they must have still felt that the sticker price was worth it, so it can’t really be so bad.
Another, more sinister way that corporations use mental accounting to manipulate customers is through the use of credit cards.
It’s well-documented that people are willing to spend more on credit cards than they would be in cash. In most cases, this does not appear to be the result of people actually being constrained by their liquidity—even if people have the cash, they are more willing to spend a credit card to buy the same item.
This effect is called pain of paying. It hurts more, psychologically, to hand over a series of dollar bills than it does to swipe (or lately, just tap) a credit card. It’s not just about convenience; by making it less painful to pay, companies can pressure us to spend more.
And since credit cards add to an existing balance, there is what’s called transaction decoupling: The money we spent on any particular item gets mentally separated from the actual transaction in which we bought that item. We may not even remember how much we paid. We just see a credit card balance go up; and it may end up being quite a large balance, but any particular transaction usually won’t have raised it very much.
Human beings tend to perceive stimuli proportionally: We don’t really feel the effect of $5 per se, we feel the effect of a 20% increase. So that $5 feels like a lot more when it’s coming out of a wallet that held $20 than it does when it’s adding to a $200 credit card balance.
Imagine you have become stranded on a deserted island. You need to find shelter, food, and water, and then perhaps you can start working on a way to get help or escape the island.
Suppose you are programmed to be an optimizer—to get the absolute best solution to any problem. At first this may seem to be a boon: You’ll build the best shelter, find the best food, get the best water, find the best way off the island.
But you’ll also expend an enormous amount of effort trying to make it the best. You could spend hours just trying to decide what the best possible shelter would be. You could pass up dozens of viable food sources because you aren’t sure that any of them are the best. And you’ll never get any rest because you’re constantly trying to improve everything.
In principle your optimization could include that: The cost of thinking too hard or searching too long could be one of the things you are optimizing over. But in practice, this sort of bounded optimization is often remarkably intractable.
And what if you forgot about something? You were so busy optimizing your shelter you forgot to treat your wounds. You were so busy seeking out the perfect food source that you didn’t realize you’d been bitten by a venomous snake.
This is not the way to survive. You don’t want to be an optimizer.
No, the person who survives is a satisficer—they make sure that what they have is good enough and then they move on to the next thing. Their shelter is lopsided and ugly. Their food is tasteless and bland. Their water is hard. But they have them.
Once they have shelter and food and water, they will have time and energy to do other things. They will notice the snakebite. They will treat the wound. Once all their needs are met, they will get enough rest.
Empirically, humans are satisficers. We seem to be happier because of it—in fact, the people who are the happiest satisfice the most. And really this shouldn’t be so surprising: Because our ancestral environment wasn’t so different from being stranded on a desert island.
Let’s consider another example. Suppose that you have created a powerful artificial intelligence, an AGI with the capacity to surpass human reasoning. (It hasn’t happened yet—but it probably will someday, and maybe sooner than most people think.)
What do you want that AI’s goals to be?
Okay, ideally maybe they would be something like “Maximize goodness”, where we actually somehow include all the panoply of different factors that go into goodness, like beneficence, harm, fairness, justice, kindness, honesty, and autonomy. Do you have any idea how to do that? Do you even know what your own full moral framework looks like at that level of detail?
Far more likely, the goals you program into the AGI will be much simpler than that. You’ll have something you want it to accomplish, and you’ll tell it to do that well.
Let’s make this concrete and say that you own a paperclip company. You want to make more profits by selling paperclips.
First of all, let me note that this is not an unreasonable thing for you to want. It is not an inherently evil goal for one to have. The world needs paperclips, and it’s perfectly reasonable for you to want to make a profit selling them.
But it’s also not a true ultimate goal: There are a lot of other things that matter in life besides profits and paperclips. Anyone who isn’t a complete psychopath will realize that.
But the AI won’t. Not unless you tell it to. And so if we tell it to optimize, we would need to actually include in its optimization all of the things we genuinely care about—not missing a single one—or else whatever choices it makes are probably not going to be the ones we want. Oops, we forgot to say we need clean air, and now we’re all suffocating. Oops, we forgot to say that puppies don’t like to be melted down into plastic.
The simplest cases to consider are obviously horrific: Tell it to maximize the number of paperclips produced, and it starts tearing the world apart to convert everything to paperclips. (This is the original “paperclipper” concept from Less Wrong.) Tell it to maximize the amount of money you make, and it seizes control of all the world’s central banks and starts printing $9 quintillion for itself. (Why that amount? I’m assuming it uses 64-bit signed integers, and 2^63 is over 9 quintillion. If it uses long ints, we’re even more doomed.) No, inflation-adjusting won’t fix that; even hyperinflation typically still results in more real seigniorage for the central banks doing the printing (which is, you know, why they do it). The AI won’t ever be able to own more than all the world’s real GDP—but it will be able to own that if it prints enough and we can’t stop it.
But even if we try to come up with some more sophisticated optimization for it to perform (what I’m really talking about here is specifying its utility function), it becomes vital for us to include everything we genuinely care about: Anything we forget to include will be treated as a resource to be consumed in the service of maximizing everything else.
Consider instead what would happen if we programmed the AI to satisfice. The goal would be something like, “Produce at least 400,000 paperclips at a price of at most $0.002 per paperclip.”
Given such an instruction, in all likelihood, it would in fact produce exactly 400,000 paperclips at a price of exactly $0.002 per paperclip. And maybe that’s not strictly the best outcome for your company. But if it’s better than what you were previously doing, it will still increase your profits.
Moreover, such an instruction is far less likely to result in the end of the world.
If the AI has a particular target to meet for its production quota and price limit, the first thing it would probably try is to use your existing machinery. If that’s not good enough, it might start trying to modify the machinery, or acquire new machines, or develop its own techniques for making paperclips. But there are quite strict limits on how creative it is likely to be—because there are quite strict limits on how creative it needs to be. If you were previously producing 200,000 paperclips at $0.004 per paperclip, all it needs to do is double production and halve the cost. That’s a very standard sort of industrial innovation— in computing hardware (admittedly an extreme case), we do this sort of thing every couple of years.
It certainly won’t tear the world apart making paperclips—at most it’ll tear apart enough of the world to make 400,000 paperclips, which is a pretty small chunk of the world, because paperclips aren’t that big. A paperclip weighs about a gram, so you’ve only destroyed about 400 kilos of stuff. (You might even survive the lawsuits!)
Are you leaving money on the table relative to the optimization scenario? Eh, maybe. One, it’s a small price to pay for not ending the world. But two, if 400,000 at $0.002 was too easy, next time try 600,000 at $0.001. Over time, you can gently increase its quotas and tighten its price requirements until your company becomes more and more successful—all without risking the AI going completely rogue and doing something insane and destructive.
Of course this is no guarantee of safety—and I absolutely want us to use every safeguard we possibly can when it comes to advanced AGI. But the simple change from optimizing to satisficing seems to solve the most severe problems immediately and reliably, at very little cost.
Good enough is perfect; perfect is bad.
I see broader implications here for behavioral economics. When all of our models are based on optimization, but human beings overwhelmingly seem to satisfice, maybe it’s time to stop assuming that the models are right and the humans are wrong.
Optimization is perfect if it works—and awful if it doesn’t. Satisficing is always pretty good. Optimization is unstable, while satisficing is robust.
In the real world, that probably means that satisficing is better.
I have great respect for cognitive-behavioral therapy (CBT), and it has done a lot of good for me. (It is also astonishingly cost-effective; its QALY per dollar rate compares favorably to almost any other First World treatment, and loses only to treating high-impact Third World diseases like malaria and schistomoniasis.)
But there are certain aspects of it that have always been frustrating to me. Standard CBT techniques often present as ‘cognitive distortions‘ what are in fact clearly necessary heuristics without which it would be impossible to function.
Perhaps the worst of these is so-called ‘mind reading‘. The very phrasing of it makes it sound ridiculous: Are you suggesting that you have some kind of extrasensory perception? Are you claiming to be a telepath?
But in fact ‘mind reading’ is simply the use of internal cognitive models to forecast the thoughts, behaviors, and expectations of other human beings. And without it, it would be completely impossible to function in human society.
For instance, I have had therapists tell me that it is ‘mind reading’ for me to anticipate that people will have tacit expectations for my behavior that they will judge me for failing to meet, and I should simply wait for people to express their expectations rather than assuming them. I admit, life would be much easier if I could do that. But I know for a fact that I can’t. Indeed, I used to do that, as a child, and it got me in trouble all the time. People were continually upset at me for not doing things they had expected me to do but never bothered to actually mention. They thought these expectations were “obvious”; they were not, at least not to me.
It was often little things, and in hindsight some of these things seem silly: I didn’t know what a ‘made bed’ was supposed to look like, so I put it in a state that was functional for me, but that was not considered ‘making the bed’. (I have since learned that my way was actually better: It’s good to let sheets air out before re-using them.) I was asked to ‘clear the sink’, so I moved the dishes out of the sink and left them on the counter, not realizing that the implicit command was for me to wash those dishes, dry them, and put them away. I was asked to ‘bring the dinner plates to the table’, so I did that, and left them in a stack there, not realizing that I should be setting them out in front of each person’s chair and also bringing flatware. Of course I know better now. But how was I supposed to know then? It seems like I was expected to, though.
Most people just really don’t seem to realize how many subtle, tacit expectations are baked into every single task. I think neurodivergence is quite relevant here; I have a mild autism spectrum disorder, and so I think rather differently than most people. If you are neurotypical, then you probably can forecast other people’s expectations fairly well automatically, and so they may seem obvious to you. In fact, they may seem so obvious that you don’t even realize you’re doing it. Then when someone like me comes along and is consciously, actively trying to forecast other people’s expectations, and sometimes doing it poorly, you go and tell them to stop trying to forecast. But if they were to do that, they’d end up even worse off than they are. What you really need to be telling them is how to forecast better—but that would require insight into your own forecasting methods which you aren’t even consciously aware of.
Seriously, stop and think for a moment all of the things other people expect you to do every day that are rarely if ever explicitly stated. How you are supposed to dress, how you are supposed to speak, how close you are supposed to stand to other people, how long you are supposed to hold eye contact—all of these are standards you will be expected to meet, whether or not any of them have ever been explicitly explained to you. You may do this automatically; or you may learn to do it consciously after being criticized for failing to do it. But one way or another, you must forecast what other people will expect you to do.
To my knowledge, no one has ever explicitly told me not to wear a Starfleet uniform to work. I am not aware of any part of the university dress code that explicitly forbids such attire. But I’m fairly sure it would not be a good idea. To my knowledge, no one has ever explicitly told me not to burst out into song in the middle of a meeting. But I’m still pretty sure I shouldn’t do that. To my knowledge, no one has ever explicitly told me what the ‘right of way’ rules are for walking down a crowded sidewalk, who should be expected to move out of the way of whom. But people still get mad if you mess up and bump into them.
Even when norms are stated explicitly, it is often as a kind of last resort, and the mere fact that you needed to have a norm stated is often taken as a mark against your character. I have been explicitly told in various contexts not to talk to myself or engage in stimming leg movements; but the way I was told has generally suggested that I would have been judged better if I hadn’t had to be told, if I had simply known the way that other people seem to know. (Or is it that they never felt any particular desire to stim?)
In fact, I think a major part of developing social skills and becoming more functional, to the point where a lot of people actually now seem a bit surprised to learn I have an autism spectrum disorder, has been improving my ability to forecast other people’s expectations for my behavior. There are dozens if not hundreds of norms that people expect you to follow at any given moment; most people seem to intuit them so easily that they don’t even realize they are there. But they are there all the same, and this is painfully evident to those of us who aren’t always able to immediately intuit them all.
Now, the fact remains that my current mental models are surely imperfect. I am often wrong about what other people expect of me. I’m even prepared to believe that some of my anxiety comes from believing that people have expectations more demanding than what they actually have. But I can’t simply abandon the idea of forecasting other people’s expectations. Don’t tell me to stop doing it; tell me how to do it better.
Moreover, there is a clear asymmetry here: If you think people want more from you than they actually do, you’ll be anxious, but people will like you and be impressed by you. If you think people want less from you than they actually do, people will be upset at you and look down on you. So, in the presence of uncertainty, there’s a lot of pressure to assume that the expectations are high. It would be best to get it right, of course; but when you aren’t sure you can get it right, you’re often better off erring on the side of caution—which is to say, the side of anxiety.
In short, mind reading isn’t optional. If you think it is, that’s only because you do it automatically.
As you are no doubt aware, a lot of people on the Internet like to loudly proclaim support for really crazy, extreme ideas. Some of these people actually believe in those ideas, and if you challenge them, will do their best to defend them. Those people are wrong at the level of substantive policy, but there’s nothing wrong with their general approach: If you really think that anarchism or communism is a good thing, it only makes sense that you’d try to convince other people. You might have a hard time of it (in part because you are clearly wrong), but it makes sense that you’d try.
But there is another class of people who argue for crazy, extreme ideas. When pressed, they will admit they don’t really believe in abolishing the police or collectivizing all wealth, but they believe in something else that’s sort of vaguely in that direction, and they think that advocating for the extreme idea will make people more likely to accept what they actually want.
But, in principle, it could still be a thing that works. There is a cognitive bias known as anchoring which is often used in marketing: If I only offered a $5 bottle of wine and a $20 bottle of wine, you might think the $20 bottle is too expensive. But if I also include a $50 bottle, that makes you adjust your perceptions of what constitutes a “reasonable” price for wine, and may make you more likely to buy the $20 bottle after all.
It could be, therefore, that an extreme policy demand makes people more willing to accept moderate views, as a sort of compromise. Maybe demanding the abolition of police is a way of making other kinds of police reform seem more reasonable. Maybe showing pictures of Marx and chanting “eat the rich” could make people more willing to accept higher capital gains taxes. Maybe declaring that we are on the verge of apocalyptic climate disaster will make people more willing to accept tighter regulations on carbon emissions and subsidies for solar energy.
To see why this strategy seems to be failing, I think it’s helpful to consider how it feels from the other side. Take a look at some issues where someone else is trying to get you to accept a particular view, and consider whether someone advocating a more extreme view would make you more likely to compromise.
Your particular opinions may vary, but here are some examples that would apply to me, and, I suspect, many of you.
If someone says they want tighter border security, I’m skeptical—it’s pretty tight already. But in and of itself, this would not be such a crazy idea. Certainly I agree that it is possible to have too little border security, and so maybe that turns out to be the state we’re in.
But then, suppose that same person, or someone closely allied to them, starts demanding the immediate deportation of everyone who was not born in the United States, even those who immigrated legally and are naturalized or here on green cards. This is a crazy, extreme idea that’s further in the same direction, so on this anchoring theory, it should make me more willing to accept the idea of tighter border security. And yet, I can say with some confidence that it has no such effect.
Indeed, if anything I think it would make me less likely to accept tighter border security, in proportion to how closely aligned those two arguments are. If they are coming from the same person, or the same political party, it would cause me to suspect that the crazy, extreme policy is the true objective, and the milder, compromise policy is just a means toward that end. It also suggests certain beliefs and attitudes about immigration in general—xenophobia, racism, ultranationalism—that I oppose even more strongly. If you’re talking about deporting all immigrants, you make me suspect that your reasons for wanting tighter border security are not good ones.
Let’s try another example. Suppose someone wants to cut taxes on upper income brackets. In our current state, I think that would be a bad idea. But there was a time not so long ago when I would have agreed with it: Even I have to admit that a top bracket of 94% (as we had in 1943) sounds a little ridiculous, and is surely on the wrong side of the Laffer curve. So the basic idea of cutting top tax rates is not inherently crazy or ridiculous.
Now, suppose that same idea came from the same person, or the same party, or the same political movement, as one that was arguing for the total abolition of all taxation. This is a crazy, extreme idea; it would amount to either total anarcho-capitalism with no government at all, or some sort of bizarre system where the government is funded entirely through voluntary contributions. I think it’s pretty obvious that such a system would be terrible, if not outright impossible; and anyone whose understanding of political economy is sufficiently poor that they would fail to see this is someone whose overall judgment on questions of policy I must consider dubious. Once again, the presence of the extreme view does nothing to make me want to consider the moderate view, and may even make me less willing to do so.
Perhaps I am an unusually rational person, not so greatly affected by anchoring biases? Perhaps. But whereas I do feel briefly tempted by to buy the $20 wine bottle by the effect of the $50 wine bottle, and must correct myself with knowledge I have about anchoring bias, the presentation of an extreme political view never even makes me feel any temptation to accept some kind of compromise with it. Learning that someone supports something crazy or ridiculous—or is willing to say they do, even if deep down they don’t—makes me automatically lower my assessment of their overall credibility. If anything, I think I am tempted to overreact in that direction, and have to remind myself of the Stopped Clock Principle: reversed stupidity is not intelligence, and someone can have both bad ideas and good ones.
Moreover, the empirical data, while sketchy, doesn’t seem to support this either; where the Overton Window (in the originally intended sense) has shifted, as on LGBT rights, it was because people convincingly argued that the “extreme” position was in fact an entirely reasonable and correct view. There was a time not so long ago that same-sex marriage was deemed unthinkable, and the “moderate” view was merely decriminalizing sodomy; but we demanded, and got, same-sex marriage, not as a strategy to compromise on decriminalizing sodomy, but because we actually wanted same-sex marriage and had good arguments for it. I highly doubt we would have been any more successful if we had demanded something ridiculous and extreme, like banning opposite-sex marriage.
The resulting conclusion seems obvious and banal: Only argue for things you actually believe in.
Yet, somehow, that seems to be a controversial view these days.
While a return to double-digits remains possible, at this point it likely won’t happen, and if it does, it will occur only briefly.
This is no doubt a major reason why the dollar and the pound are widely used as reserve currencies (especially the dollar), and is likely due to the fact that they are managed by the world’s most competent central banks. Brexit would almost have made sense if the UK had been pressured to join the Euro; but they weren’t, because everyone knew the pound was better managed.
The Euro also doesn’t have much inflation, but if anything they err on the side of too low, mainly because Germany appears to believe that inflation is literally Hitler. In fact, the rise of the Nazis didn’t have much to do with the Weimar hyperinflation. The Great Depression was by far a greater factor—unemployment is much, much worse than inflation. (By the way, it’s weird that you can put that graph back to the 1980s. It, uh, wasn’t the Euro then. Euros didn’t start circulating until 1999. Is that an aggregate of the franc and the deutsche mark and whatever else? The Euro itself has never had double-digit inflation—ever.)
But it’s always a little surreal for me to see how panicked people in the US and UK get when our inflation rises a couple of percentage points. There seems to be an entire subgenre of economics news that basically consists of rich people saying the sky is falling because inflation has risen—or will, or may rise—by two points. (Hey, anybody got any ideas how we can get them to panic like this over rises in sea level or aggregate temperature?)
Hyperinflation is a real problem—it isn’t what put Hitler into power, but it has led to real crises in Germany, Zimbabwe, and elsewhere. Once you start getting over 100% per year, and especially when it starts rapidly accelerating, that’s a genuine crisis. Moreover, even though they clearly don’t constitute hyperinflation, I can see why people might legitimately worry about price increases of 20% or 30% per year. (Let alone 60% like Argentina is dealing with right now.) But why is going from 2% to 6% any cause for alarm? Yet alarmed we seem to be.
I can even understand why rich people would be upset about inflation (though the magnitudeof their concern does still seem disproportionate). Inflation erodes the value of financial assets, because most bonds, options, etc. are denominated in nominal, not inflation-adjusted terms. (Though there are such things as inflation-indexed bonds.) So high inflation can in fact make rich people slightly less rich.
But why in the world are so many poor people upset about inflation?
Inflation doesn’t just erode the value of financial assets; it also erodes the value of financial debts. And most poor people have more debts than they have assets—indeed, it’s not uncommon for poor people to have substantial debt and no financial assets to speak of (what little wealth they have being non-financial, e.g. a car or a home). Thus, their net wealth position improves as prices rise.
The interest rate response can compensate for this to some extent, but most people’s debts are fixed-rate. Moreover, if it’s the higher interest rates you’re worried about, you should want the Federal Reserve and the Bank of England not to fight inflation too hard, because the way they fight it is chiefly by raising interest rates.
I admit, I question the survey design here: I would answer ‘yes’ to both questions if we’re talking about a theoretical 10,000% hyperinflation, but ‘no’ if we’re talking about a realistic 10% inflation. So I would like to see, but could not find, a survey asking people what level of inflation is sufficient cause for concern. But since most of these people seemed concerned about actual, realistic inflation (85% reported anger at seeing actual, higher prices), it still suggests a lot of strong feelings that even mild inflation is bad.
So it does seem to be the case that a lot of poor and middle-class people really strongly dislike inflation even in the actual, mild levels in which it occurs in the US and UK.
The main fear seems to be that inflation will erode people’s purchasing power—that as the price of gasoline and groceries rise, people won’t be able to eat as well or drive as much. And that, indeed, would be a real loss of utility worth worrying about.
But in fact this makes very little sense: Most forms of income—particularly labor income, which is the only real income for some 80%-90% of the population—actually increases with inflation, more or less one-to-one. Yes, there’s some delay—you won’t get your annual cost-of-living raise immediately, but several months down the road. But this could have at most a small effect on your real consumption.
To see this, suppose that inflation has risen from 2% to 6%. (Really, you need not suppose; it has.) Now consider your cost-of-living raise, which nearly everyone gets. It will presumably rise the same way: So if it was 3% before, it will now be 7%. Now consider how much your purchasing power is affected over the course of the year.
For concreteness, let’s say your initial income was $3,000 per month at the start of the year (a fairly typical amount for a middle-class American, indeed almost exactly the median personal income). Let’s compare the case of no inflation with a 1% raise, 2% inflation with a 3% raise, and 5% inflation with a 6% raise.
If there was no inflation, your real income would remain simply $3,000 per month, until the end of the year when it would become $3,030 per month. That’s the baseline to compare against.
If inflation is 2%, your real income would gradually fall, by about 0.16% per month, before being bumped up 3% at the end of the year. So in January you’d have $3,000, in February $2,995, in March $2,990. Come December, your real income has fallen to $2,941. But then next January it will immediately be bumped up 3% to $3,029, almost the same as it would have been with no inflation at all. The total lost income over the entire year is about $380, or about 1% of your total income.
If inflation instead rises to 6%, your real income will fall by 0.49% per month, reaching a minimum of $2,830 in December before being bumped back up to $3,028 next January. Your total loss for the whole year will be about $1110, or about 3% of your total income.
Indeed, it’s a pretty good heuristic to say that for an inflation rate of x% with annual cost-of-living raises, your loss of real income relative to having no inflation at all is about (x/2)%. (This breaks down for really high levels of inflation, at which point it becomes a wild over-estimate, since even 200% inflation doesn’t make your real income go to zero.)
This isn’t nothing, of course. You’d feel it. Going from 2% to 6% inflation at an income of $3000 per month is like losing $700 over the course of a year, which could be a month of groceries for a family of four. (Not that anyone can really raise a family of four on a single middle-class income these days. When did The Simpsons begin to seem aspirational?)
But this isn’t the whole story. Suppose that this same family of four had a mortgage payment of $1000 per month; that is also decreasing in real value by the same proportion. And let’s assume it’s a fixed-rate mortgage, as most are, so we don’t have to factor in any changes in interest rates.
With no inflation, their mortgage payment remains $1000. It’s 33.3% of their income this year, and it will be 33.0% of their income next year after they get that 1% raise.
With 2% inflation, their mortgage payment will also fall by 0.16% per month; $998 in February, $996 in March, and so on, down to $980 in December. This amounts to an increase in real income of about $130—taking away a third of the loss that was introduced by the inflation.
With 6% inflation, their mortgage payment will also fall by 0.49% per month; $995 in February, $990 in March, and so on, until it’s only $943 in December. This amounts to an increase in real income of over $370—again taking away a third of the loss.
Indeed, it’s no coincidence that it’s one third; the proportion of lost real income you’ll get back by cheaper mortgage payments is precisely the proportion of your income that was spent on mortgage payments at the start—so if, like too many Americans, they are paying more than a third of their income on mortgage, their real loss of income from inflation will be even lower.
And what if they are renting instead? They’re probably on an annual lease, so that payment won’t increase in nominal terms either—and hence will decrease in real terms, in just the same way as a mortgage payment. Likewise car payments, credit card payments, any debt that has a fixed interest rate. If they’re still paying back student loans, their financial situation is almost certainly improved by inflation.
This means that the real loss from an increase of inflation from 2% to 6% is something like 1.5% of total income, or about $500 for a typical American adult. That’s clearly not nearly as bad as a similar increase in unemployment, which would translate one-to-one into lost income on average; moreover, this loss would be concentrated among people who lost their jobs, so it’s actually worse than that once you account for risk aversion. It’s clearly better to lose 1% of your income than to have a 1% chance of losing nearly all your income—and inflation is the former while unemployment is the latter.
Indeed, the only reason you lost purchasing power at all was that your cost-of-living increases didn’t occur often enough. If instead you had a labor contract that instituted cost-of-living raises every month, or even every paycheck, instead of every year, you would get all the benefits of a cheaper mortgage and virtually none of the costs of a weaker paycheck. Convince your employer to make this adjustment, and you will actually benefit from higher inflation.
So if poor and middle-class people are upset about eroding purchasing power, they should be mad at their employers for not implementing more frequent cost-of-living adjustments; the inflation itself really isn’t the problem.
One of the central insights of cognitive and behavioral economics is that understanding the limitations of our own rationality can help us devise mechanisms to overcome those limitations—that knowing we are not perfectly rational can make us more rational. The usual term for this is a somewhat vague one: behavioral economists generally call it simply sophistication.
For example, suppose that you are short-sighted and tend to underestimate the importance of the distant future. (This is true of most of us, to greater or lesser extent.)
It’s rational to consider the distant future less important than the present—things change in the meantime, and if we go far enough you may not even be around to see it. In fact, rationality alone doesn’t even say how much you should discount any given distance in the future. But most of us are inconsistent about our attitudes toward the future: We exhibit dynamic inconsistency.
For instance, suppose I ask you today whether you would like $100 today or $102 tomorrow. It is likely you’ll choose $100 today. But if I ask you whether you would like $100 365 days from now or $102 366 days from now, you’ll almost certainly choose the $102.
This means that if I asked you the second question first, then waited a year and asked you the first question, you’d change your mind—that’s inconsistent. Whichever choice is better shouldn’t systematically change over time. (It might happen to change, if your circumstances changed in some unexpected way. But on average it shouldn’t change.) Indeed, waiting a day for an extra $2 is typically going to be worth it; 2% daily interest is pretty hard to beat.
Now, suppose you have some option to make a commitment, something that will bind you to your earlier decision. It could be some sort of punishment for deviating from your earlier choice, some sort of reward for keeping to the path, or, in the most extreme example, a mechanism that simply won’t let you change your mind. (The literally classic example of this is Odysseus having his crew tie him to the mast so he can listen to the Sirens.)
If you didn’t know that your behavior was inconsistent, you’d never want to make such a commitment. You don’t expect to change your mind, and if you do change your mind, it would be because your circumstances changed in some unexpected way—in which case changing your mind would be the right thing to do. And if your behavior wasn’t inconsistent, this reasoning would be quite correct: No point in committing when you have less information.
But if you know that your behavior is inconsistent, you can sometimes improve the outcome for yourself by making a commitment. You can force your own behavior into consistency, even though you will later be tempted to deviate from your plan.
Yet there is a piece missing from this account, often not clearly enough stated: Why should we trust the version of you that has a year to plan over the version of you that is making the decision today? What’s the difference between those two versions of you that makes them inconsistent, and why is one more trustworthy than the other?
The biggest difference is emotional. You don’t really feel $100 a year from now, so you can do the math and see that 2% daily interest is pretty darn good. But $100 today makes you feel something—excitement over what you might buy, or relief over a bill you can now pay. (Actually that’s one of the few times when it would be rational to take $100 today: If otherwise you’re going to miss a deadline and pay a late fee.) And that feeling about $102 tomorrow just isn’t as strong.
We tend to think that our emotional selves and our rational selves are in conflict, and so we expect to be more rational when we are less emotional. There is some truth to this—strong emotions can cloud our judgments and make us behave rashly.
Yet this is only one side of the story. We also need emotions to be rational. There is a condition known as flat affect, often a symptom of various neurological disorders, in which emotional reactions are greatly blunted or even non-existent. People with flat affect aren’t more rational—they just do less. In the worst cases, they completely lose their ability to be motivated to do things and become outright inert, known as abulia.
Emotional judgments are often less accurate than thoughtfully reasoned arguments, but they are also much faster—and that’s why we have them. In many contexts, particularly when survival is at stake, doing something pretty well right away is often far better than waiting long enough to be sure you’ll get the right answer. Running away from a loud sound that turns out to be nothing is a lot better than waiting to carefully determine whether that sound was really a tiger—and finding that it was.
With this in mind, the cases where we should expected commitment to be effective are those that are unfamiliar, not only on an individual level, but in an evolutionary sense. I have no doubt that experienced stock traders can develop certain intuitions that make them better at understanding financial markets than randomly chosen people—but they still systematically underperform simple mathematical models, likely because finance is just so weird from an evolutionary perspective. So when deciding whether to accept some amount of money m1 at time t1 and some other amount of money m2 at time t2, your best bet is really to just do the math.
But this may not be the case for many other types of decisions. Sometimes how you feel in the moment really is the right signal to follow. Committing to work at your job every day may seem responsible, ethical, rational—but if you hate your job when you’re actually doing it, maybe it really isn’t how you should be spending your life. Buying a long-term gym membership to pressure yourself to exercise may seem like a good idea, but if you’re miserable every time you actually go to the gym, maybe you really need to be finding a better way to integrate exercise into your lifestyle.
There are no easy answers here. We can think of ourselves as really being made of two (if not more) individuals: A cold, calculating planner who looks far into the future, and a heated, emotional experiencer who lives in the moment. There’s a tendency to assume that the planner is our “true self”, the one we should always listen to, but this is wrong; we are both of those people, and a life well-lived requires finding the right balance between their conflicting desires.
It’s an appealing sentiment: Since we all have different skill levels, rather than be held to some constant standard which may be easy for some but hard for others, we should each do our best. This will ensure that we achieve the best possible outcome.
Yet it turns out that this advice is not so easy to follow: What is “your best”?
Is your best the theoretical ideal of what your performance could be if all obstacles were removed and you worked at your greatest possible potential? Then no one in history has ever done their best, and when people get close, they usually end up winning Nobel Prizes.
Is your best the performance you could attain if you pushed yourself to your limit, ignored all pain and fatigue, and forced yourself to work at maximum effort until you literally can’t anymore? Then doing your best doesn’t sound like such a great thing anymore—and you’re certainly not going to be able to do it all the time.
Is your best the performance you would attain by continuing to work at your usual level of effort? Then how is that “your best”? Is it the best you could attain if you work at a level of effort that is considered standard or normative? Is it the best you could do under some constraint limiting the amount of pain or fatigue you are willing to bear? If so, what constraint?
How does “your best” change under different circumstances? Does it become less demanding when you are sick, or when you have a migraine? What if you’re depressed? What if you’re simply not feeling motivated? What if you can’t tell whether this demotivation is a special circumstance, a depression system, a random fluctuation, or a failure to motivate yourself?
There’s another problem: Sometimes you really aren’t good at something.
A certain fraction of performance in most tasks is attributable to something we might call “innate talent”; be it truly genetic or fixed by your early environment, it nevertheless is something that as an adult you are basically powerless to change. Yes, you could always train and practice more, and your performance would thereby improve. But it can only improve so much; you are constrained by your innate talent or lack thereof. No amount of training effort will ever allow me to reach the basketball performance of Michael Jordan, the painting skill of Leonardo Da Vinci, or the mathematical insight of Leonhard Euler. (Of the three, only the third is even visible from my current horizon. As someone with considerable talent and training in mathematics, I can at least imagine what it would be like to be as good as Euler—though I surely never will be. I can do most of the mathematical methods that Euler was famous for; but could I have invented them?)
In fact it’s worse than this; there are levels of performance that would be theoretically possible for someone of your level of talent, yet would be so costly to obtain as to be clearly not worth it. Maybe, after all, there is some way I could become as good a mathematician as Euler—but if it would require me to work 16-hour days doing nothing but studying mathematics for the rest of my life, I am quite unwilling to do so.
With this in mind, what would it mean for me to “do my best” in mathematics? To commit those 16-hour days for the next 30 years and win my Fields Medal—if it doesn’t kill me first? If that’s not what we mean by “my best”, then what do we mean, after all?
Perhaps we should simply abandon the concept, and ask instead what successful people actually do.
This will of course depend on what they were successful at; the behavior of basketball superstars is considerably different from the behavior of Nobel Laureate physicists, which is in turn considerably different from the behavior of billionaire CEOs. But in theory we could each decide for ourselves which kind of success we actually would desire to emulate.
Another pitfall to avoid is looking only at superstars and not comparing them with a suitable control group. Every Nobel Laureate physicist eats food and breathes oxygen, but eating food and breathing oxygen will not automatically give you good odds of winning a Nobel (though I guess your odds are in fact a lot better relative to not doing them!). It is likely that many of the things we observe successful people doing—even less trivial things, like working hard and taking big risks—are in fact the sort of thing that a great many people do with far less success.
Upon making such a comparison, one of the first things that we would notice is that the vast majority of highly-successful people were born with a great deal of privilege. Most of them were born rich or at least upper-middle-class; nearly all of them were born healthy without major disabilities. Yes, there are exceptions to any particular form of privilege, and even particularly exceptional individuals who attained superstar status with more headwinds than tailwinds; but the overwhelming pattern is that people who get home runs in life tend to be people who started the game on third base.
But setting that aside, or recalibrating one’s expectations to try to attain a level of success often achieved by people with roughly the same level of privilege as oneself, we must ask: How often? Should you aspire to the median? The top 20%? The top 10%? The top 1%? And what is your proper comparison group? Should I be comparing against Americans, White male Americans, economists, queer economists, people with depression and chronic migraines, or White/Native American male queer economists with depression and chronic migraines who are American expatriates in Scotland? Make the criteria too narrow, and there won’t be many left in your sample. Make them instead too broad, and you’ll include people with very different circumstances who may not be a fair comparison. Perhaps some sort of weighted average of different groups could work—but with what weighting?
Or maybe it’s right to compare against a very broad group, since this is what ultimately decides our life prospects. What it would take to write the best novel you (or someone “like you” in whatever sense that means) can write may not be the relevant question: What you really needed to know was how likely it is that you could make a living as a novelist.
The depressing truth in such a broad comparison is that you may in fact find yourself faced with so many obstacles that there is no realistic path toward the level of success you were hoping for. If you are reading this, I doubt matters are so dire for you that you’re at serious risk of being homeless and starving—but there definitely are people in this world, millions of people, for whom that is not simply a risk but very likely the best they can hope for.
The question I think we are really trying to ask is this: What is the right standard to hold ourselves against?
Unfortunately, I don’t have a clear answer to this question. I have always been an extremely ambitious individual, and I have inclined toward comparisons with the whole world, or with the superstars of my own fields. It is perhaps not surprising, then, that I have consistently failed to live up to my own expectations for my own achievement—even as I surpass what many others expected for me, and have long-since left behind what most people expect for themselves and each other.
I would thus not exactly recommend my own standards. Yet I also can’t quite bear to abandon them, out of a deep-seated fear that it is only by holding myself to the patently unreasonable standard of trying to be the next Einstein or Schrodinger or Keynes or Nash that I have even managed what meager achievements I have made thus far.
Of course this could be entirely wrong: Perhaps I’d have achieved just as much if I held myself to a lower standard—or I could even have achieved more, by avoiding the pain and stress of continually failing to achieve such unattainable heights. But I also can’t rule out the possibility that it is true. I have no control group.
In general, what I think I want to say is this: Don’t try to do your best. You have no idea what your best is. Instead, try to find the highest standard you can consistently meet.
Hypocrisy isn’t a good thing, but it isn’t nearly as bad as most people seem to think. Often accusing someone of hypocrisy is taken as a knock-down argument for everything they are saying, and this is just utterly wrong. Someone can be a hypocrite and still be mostly right.
Often people are accused of hypocrisy when they are not being hypocritical; for instance the right wing seems to think that “They want higher taxes on the rich, but they are rich!” is hypocrisy, when in fact it’s simply altruism. (If they had wanted the rich guillotined, that would be hypocrisy. Maybe the problem is that the right wing can’t tell the difference?) Even worse, “They live under capitalism but they want to overthrow capitalism!” is not even close to hypocrisy—let alone why, how would someone overthrow a system they weren’t living under? (There are many things wrong with Marxists, but that is not one of them.)
But in fact I intend something stronger: Hypocrisy itself just isn’t that bad.
There are currently two classes of Republican politicians with regard to the COVID vaccines: Those who are consistent in their principles and don’t get the vaccines, and those who are hypocrites and get the vaccines while telling their constituents not to. Of the two, who is better? The hypocrites. At least they are doing the right thing even as they say things that are very, very wrong.
There are really four cases to consider. The principles you believe in could be right, or they could be wrong. And you could follow those principles, or you could be a hypocrite. Each of these two factors is independent.
If your principles are right and you are consistent, that’s the best case; if your principles are right and you are a hypocrite, that’s worse.
But if your principles are wrong and you are consistent, that’s the worst case; if your principles are wrong and you are a hypocrite, that’s better.
In fact I think for most things the ordering goes like this: Consistent Right > Hypocritical Wrong > Hypocritical Right > Consistent Wrong. Your behavior counts for more than your principles—so if you’re going to be a hypocrite, it’s better for your good actions to not match your bad principles.
Obviously if we could get people to believe good moral principles and then follow them, that would be best. And we should in fact be working to achieve that.
But if you know that someone’s moral principles are wrong, it doesn’t accomplish anything to accuse them of being a hypocrite. If it’s true, that’s a good thing.
Here’s a pretty clear example for you: Anyone who says that the Bible is infallible but doesn’t want gay people stoned to death is a hypocrite. The Bible is quite clear on this matter; Leviticus 20:13 really doesn’t leave much room for interpretation. By this standard, most Christians are hypocrites—and thank goodness for that. I owe my life to the hypocrisy of millions.
Of course if I could convince them that the Bible isn’t infallible—perhaps by pointing out all the things it says that contradict their most deeply-held moral and factual beliefs—that would be even better. But the last thing I want to do is make their behavior more consistent with their belief that the Bible is infallible; that would turn them into fanatical monsters. The Spanish Inquisition was very consistent in behaving according to the belief that the Bible is infallible.
Here’s another example: Anyone who thinks that cruelty to cats and dogs is wrong but is willing to buy factory-farmed beef and ham is a hypocrite. Any principle that would tell you that it’s wrong to kick a dog or cat would tell you that the way cows and pigs are treated in CAFOs is utterly unconscionable. But if you are really unwilling to give up eating meat and you can’t find or afford free-range beef, it still would be bad for you to start kicking dogs in a display of your moral consistency.
And one more example for good measure: The leaders of any country who resist human rights violations abroad but tolerate them at home are hypocrites. Obviously the best thing to do would be to fight human rights violations everywhere. But perhaps for whatever reason you are unwilling or unable to do this—one disturbing truth is that many human rights violations at home (such as draconian border policies) are often popular with your local constituents. Human-rights violations abroad are also often more severe—detaining children at the border is one thing, a full-scale genocide is quite another. So, for good reasons or bad, you may decide to focus your efforts on resisting human rights violations abroad rather than at home; this would make you a hypocrite. But it would still make you much better than a more consistent leader who simply ignores all human rights violations wherever they may occur.
In fact, there are cases in which it may be optimal for you to knowingly be a hypocrite. If you have two sets of competing moral beliefs, and you don’t know which is true but you know that as a whole they are inconsistent, your best option is to apply each set of beliefs in the domain for which you are most confident that it is correct, while searching for more information that might allow you to correct your beliefs and reconcile the inconsistency. If you are self-aware about this, you will know that you are behaving in a hypocritical way—but you will still behave better than you would if you picked the wrong beliefs and stuck to them dogmatically. In fact, given a reasonable level of risk aversion, you’ll be better off being a hypocrite than you would by picking one set of beliefs arbitrarily (say, at the flip of a coin). At least then you avoid the worst-case scenario of being the most wrong.
There is yet another factor to take into consideration. Sometimes following your own principles is hard.
Considerable ink has been spilled on the concept of akrasia, or “weakness of will”, in which we judge that A is better than B yet still find ourselves doing B. Philosophers continue to debate to this day whether this really happens. As a behavioral economist, I observe it routinely, perhaps even daily. In fact, I observe it in myself.
I think the philosophers’ mistake is to presume that there is one simple, well-defined “you” that makes all observations and judgments and takes actions. Our brains are much more complicated than that. There are many “you”s inside your brain, each with its own capacities, desires, and judgments. Yes, there is some important sense in which they are all somehow unified into a single consciousness—by a mechanism which still eludes our understanding. But it doesn’t take esoteric cognitive science to see that there are many minds inside you: Haven’t you ever felt an urge to do something you knew you shouldn’t do? Haven’t you ever succumbed to such an urge—drank the drink, eaten the dessert, bought the shoes, slept with the stranger—when it seemed so enticing but you knew it wasn’t really the right choice?
We even speak of being “of two minds” when we are ambivalent about something, and I think there is literal truth in this. The neural networks in your brain are forming coalitions, and arguing between them over which course of action you ought to take. Eventually one coalition will prevail, and your action will be taken; but afterward your reflective mind need not always agree that the coalition which won the vote was the one that deserved to.
The evolutionary reason for this is simple: We’re a kludge. We weren’t designed from the top down for optimal efficiency. We were the product of hundreds of millions of years of subtle tinkering, adding a bit here, removing a bit there, layering the mammalian, reflective cerebral cortex over the reptilian, emotional limbic systemover the ancient, involuntary autonomic system. Combine this with the fact that we are built in pairs, with left and right halves of each kind of brain (and yes, they are independently functional when their connection is severed), and the wonder is that we ever agree with our own decisions.
Thus, there is a kind of hypocrisy that is not a moral indictment at all: You may genuinely and honestly agree that it is morally better to do something and still not be able to bring yourself to do it. You may know full well that it would be better to donate that money to malaria treatment rather than buy yourself that tub of ice cream—you may be on a diet and full well know that the ice cream won’t even benefit you in the long run—and still not be able to stop yourself from buying the ice cream.
Sometimes your feeling of hesitation at an altruistic act may be a useful insight; I certainly don’t think we should feel obliged to give all our income, or even all of our discretionary income, to high-impact charities. (For most people I encourage 5%. I personally try to aim for 10%. If all the middle-class and above in the First World gave even 1% we could definitely end world hunger.) But other times it may lead you astray, make you unable to resist the temptation of a delicious treat or a shiny new toy when even you know the world would be better off if you did otherwise.
Yet when following our own principles is so difficult, it’s not really much of a criticism to point out that someone has failed to do so, particularly when they themselves already recognize that they failed. The inconsistency between behavior and belief indicates that something is wrong, but it may not be any dishonesty or even anything wrong with their beliefs.
I wouldn’t go so far as to say you should stop ever calling out hypocrisy. Sometimes it is clearly useful to do so. But while hypocrisy is often the sign of a moral failing, it isn’t always—and even when it is, often as not the problem is the bad principles, not the behavior inconsistent with them.
Think for a moment about the last time you changed your mind on something important. If you can’t think of any examples, that’s not a good sign. Think harder; look back further. If you still can’t find any examples, you need to take a deep, hard look at yourself and how you are forming your beliefs. The path to wisdom is not found by starting with the right beliefs, but by starting with the wrong ones and recognizing them as wrong. No one was born getting everything right.
If you remember changing your mind about something, but don’t remember exactly when, that’s not a problem. Indeed, this is the typical case, and I’ll get to why in a moment. Try to remember as much as you can about the whole process, however long it took.
If you still can’t specifically remember changing your mind, try to imagine a situation in which you would change your mind—and if you can’t do that, you should be deeply ashamed and I have nothing further to say to you.
Thinking back to that time: Why did you change your mind?
It’s possible that it was something you did entirely on your own, through diligent research of primary sources or even your own mathematical proofs or experimental studies. This is occasionally something that happens; as an active researcher, it has definitely happened to me. But it’s clearly not the typical case of what changes people’s minds, and it’s quite likely that you have never experienced it yourself.
The far more common scenario—even for active researchers—is far more mundane: You changed your mind because someone convinced you. You encountered a persuasive argument, and it changed the way you think about things.
In fact, it probably wasn’t just one persuasive argument; it was probably many arguments, from multiple sources, over some span of time. It could be as little as minutes or hours; it could be as long as years.
Probably the first time someone tried to change your mind on that issue, they failed. The argument may even have degenerated into shouting and name-calling. You both went away thinking that the other side was composed of complete idiots or heartless monsters. And then, a little later, thinking back on the whole thing, you remembered one thing they said that was actually a pretty good point.
This happened again with someone else, and again with yet another person. And each time your mind changed just a little bit—you became less certain of some things, or incorporated some new information you didn’t know before. The towering edifice of your worldview would not be toppled by a single conversation—but a few bricks here and there did get taken out and replaced.
Or perhaps you weren’t even the target of the conversation; you simply overheard it. This seems especially common in the age of social media, where public and private spaces become blurred and two family members arguing about politics can blow up into a viral post that is viewed by millions. Perhaps you changed your mind not because of what was said to you, but because of what two other people said to one another; perhaps the one you thought was on your side just wasn’t making as many good arguments as the one on the other side.
Now, you may be thinking: Yes, people like me change our minds, because we are intelligent and reasonable. But those people, on the other side, aren’t like that. They are stubborn and foolish and dogmatic and stupid.
And you know what? You probably are an especially intelligent and reasonable person. If you’re reading this blog, there’s a good chance that you are at least above-average in your level of education, rationality, and open-mindedness.
But no matter what beliefs you hold, I guarantee you there is someone out there who shares many of them and is stubborn and foolish and dogmatic and stupid. And furthermore, there is probably someone out there who disagrees with many of your beliefs and is intelligent and open-minded and reasonable.
This is not to say that there’s no correlation between your level of reasonableness and what you actually believe. Obviously some beliefs are more rational than others, and rational people are more likely to hold those beliefs. (If this weren’t the case, we’d be doomed.) Other things equal, an atheist is more reasonable than a member of the Taliban; a social democrat is more reasonable than a neo-Nazi; a feminist is more reasonable than a misogynist; a member of the Human Rights Campaign is more reasonable than a member of the Westboro Baptist Church. But reasonable people can be wrong, and unreasonable people can be right.
You should be trying to seek out the most reasonable people who disagree with you. And you should be trying to present yourself as the most reasonable person who expresses your own beliefs.
This can be difficult—especially that first part, as the world (or at least the world spanned by Facebook and Twitter) seems to be filled with people who are astonishingly dogmatic and unreasonable. Often you won’t be able to find any reasonable disagreement. Often you will find yourself in threads full of rage, hatred and name-calling, and you will come away disheartened, frustrated, or even despairing for humanity. The whole process can feel utterly futile.
Ironically I think that the biggest reason people underestimate the effectiveness of rational argument is the availability heuristic: We can’t call to mind any cases where we changed someone’s mind completely. We’ve never observed a pi-radian turnaround in someone’s whole worldview, and thus, we conclude that nobody ever changes their mind about anything important.
But in fact most people change their minds slowly and gradually, and are embarrassed to admit they were wrong in public, so they change their minds in private. (One of the best single changes we could make toward improving human civilization would be to make it socially rewarded to publicly admit you were wrong. Even the scientific community doesn’t do this nearly as well as it should.) Often changing your mind doesn’t even really feel like changing your mind; you just experience a bit more doubt, learn a bit more, and repeat the process over and over again until, years later, you believe something different than you did before. You moved 0.1 or even 0.01 radians at a time, until at last you came all the way around.
It may be in fact that some people’s minds cannot be changed—either on particular issues, or even on any issue at all. But it is so very, very easy to jump to that conclusion after a few bad interactions, that I think we should intentionally overcompensate in the opposite direction: Only give up on someone after you have utterly overwhelming evidence that their mind cannot ever be changed in any way.
I can’t guarantee that this will work. Perhaps too many people are too far gone.
But I also don’t see any alternative. If the truth is to prevail, it will be by rational argument. This is the only method that systematically favors the truth. All other methods give equal or greater power to lies.
I haven’t been able to find the quote, but I think it was Kahneman who once remarked: “Putting locks on donation boxes shows that you have the correct view of human nature.”
I consider this a deep insight. Allow me to explain.
Some people think that human beings are basically good. Rousseau is commonly associated with this view, a notion that, left to our own devices, human beings would naturally gravitate toward an anarchic but peaceful society.
The question for people who think this needs to be: Why haven’t we? If your answer is “government holds us back”, you still need to explain why we have government. Government was not imposed upon us from On High in time immemorial. We were fairly anarchic (though not especially peaceful) in hunter-gatherer tribes for nearly 200,000 years before we established governments. How did that happen?
And if your answer to that is “a small number of tyrannical psychopaths forced government on everyone else”, you may not be wrong about that—but it already breaks your original theory, because we’ve just shown that human society cannot maintain a peaceful anarchy indefinitely.
Other people think that human beings are basically evil. Hobbes is most commonly associated with this view, that humans are innately greedy, violent, and selfish, and only by the overwhelming force of a government can civilization be maintained.
This view more accurately predicts the level of violence and death that generally accompanies anarchy, and can at least explain why we’d want to establish government—but it still has trouble explaining how we would establish government. It’s not as if we’re ruled by a single ubermensch with superpowers, or an army of robots created by a mad scientist in a secret undergroud laboratory. Running a government involves cooperation on an absolutely massive scale—thousands or even millions of unrelated, largely anonymous individuals—and this cooperation is not maintained entirely by force: Yes, there is some force involved, but most of what a government does most of the time is mediated by norms and customs, and if a government did ever try to organize itself entirely by force—not paying any of the workers, not relying on any notion of patriotism or civic duty—it would immediately and catastrophically collapse.
What is the right answer? Humans aren’t basically good or basically evil. Humans are basically varied.
I would even go so far as to say that most human beings are basically good. They follow a moral code, they care about other people, they work hard to support others, they try not to break the rules. Nobody is perfect, and we all make various mistakes. We disagree about what is right and wrong, and sometimes we even engage in actions that we ourselves would recognize as morally wrong. But most people, most of the time, try to do the right thing.
But some people are better than others. There are great humanitarians, and then there are ordinary folks. There are people who are kind and compassionate, and people who are selfish jerks.
And at the very opposite extreme from the great humanitarians is the roughly 1% of people who are outright psychopaths. About 5-10% of people have significant psychopathic traits, but about 1% are really full-blown psychopaths.
I believe it is fair to say that psychopaths are in fact basically evil. They are incapable of empathy or compassion. Morality is meaningless to them—they literally cannot distinguish moral rules from other rules. Other people’s suffering—even their very lives—means nothing to them except insofar as it is instrumentally useful. To a psychopath, other people are nothing more than tools, resources to be exploited—or obstacles to be removed.
The vast majority of people are not psychopaths, and most people don’t even have any significant psychopathic traits. Yet psychopaths have an enormously disproportionate impact on society—nearly all of it harmful. If psychopaths did not exist, Rousseau might be right after all; we wouldn’t need government. If most people were psychopaths, Hobbes would be right; we’d long for the stability and security of government, but we could never actually cooperate enough to create it.
This brings me back to the matter of locked donation boxes.
Having a donation box is only worthwhile if most people are basically good: Asking people to give money freely in order to achieve some good only makes any sense if people are capable of altruism, empathy, cooperation. And it can’t be just a few, because you’d never raise enough money to be useful that way. It doesn’t have to be everyone, or maybe even a majority; but it has to be a large fraction. 90% is more than enough.
But locking things is only worthwhile if some people are basically evil: For a lock to make sense, there must be at least a few people who would be willing to break in and steal the money, even if it was earmarked for a very worthy cause. It doesn’t take a huge fraction of people, but it must be more than a negligible one. 1% to 10% is just about the right sort of range.
Hence, locked donation boxes are a phenomenon that would only exist in a world where most people are basically good—but some people are basically evil.
And this is in fact the world in which we live. It is a world where the Holocaust could happen but then be followed by the founding of the United Nations, a world where nuclear weapons would be invented and used to devastate cities, but then be followed by an era of nearly unprecedented peace. It is a world where governments are necessary to reign in violence, but also a world where governments can function (reasonably well) even in countries with hundreds of millions of people. It is a world with crushing poverty and people who work tirelessly to end it. It is a world where Exxon and BP despoil the planet for riches while WWF and Greenpeace fight back. It is a world where religions unite millions of people under a banner of peace and justice, and then go on crusadees to murder thousands of other people who united under a different banner of peace and justice. It is a world of richness, complexity, uncertainty, conflict—variance.
It is not clear how much of this moral variance is innate versus acquired. If we somehow rewound the film of history and started it again with a few minor changes, it is not clear how many of us would end up the same and how many would be far better or far worse than we are. Maybe psychopaths were born the way they are, or maybe they were made that way by culture or trauma or lead poisoning. Maybe with the right upbringing or brain damage, we, too, could be axe murderers. Yet the fact remains—there are axe murderers, but we, and most people, are not like them.
So, are people good, or evil? Was Rousseau right, or Hobbes? Yes. Both. Neither. There is no one human nature; there are many human natures. We are capable of great good and great evil.
When we plan how to run a society, we must make it work the best we can with that in mind: We can assume that most people will be good most of the time—but we know that some people won’t, and we’d better be prepared for them as well.
Set out your donation boxes with confidence. But make sure they are locked.
Human Economics 