Is grade inflation a real problem?

Mar 4 JDN 2458182

You can’t spend much time teaching at the university level and not hear someone complain about “grade inflation”. Almost every professor seems to believe in it, and yet they must all be participating in it, if it’s really such a widespread problem.

This could be explained as a collective action problem, a Tragedy of the Commons: If the incentives are always to have the students with the highest grades—perhaps because of administrative pressure, or in order to get better reviews from students—then even if all professors would prefer a harsher grading scheme, no individual professor can afford to deviate from the prevailing norms.

But in fact I think there is a much simpler explanation: Grade inflation doesn’t exist.

In economic growth theory, economists make a sharp distinction between inflation—increase in prices without change in underlying fundamentals—and growth—increase in the real value of output. I contend that there is no such thing as grade inflation—what we are in fact observing is grade growth.
Am I saying that students are actually smarter now than they were 30 years ago?

Yes. That’s exactly what I’m saying.

But don’t take it from me. Take it from the decades of research on the Flynn Effect: IQ scores have been rising worldwide at a rate of about 0.3 IQ points per year for as long as we’ve been keeping good records. Students today are about 10 IQ points smarter than students 30 years ago—a 2018 IQ score of 95 is equivalent to a 1988 score of 105, which is equivalent to a 1958 score of 115. There is reason to think this trend won’t continue indefinitely, since the effect is mainly concentrated at the bottom end of the distribution; but it has continued for quite some time already.

This by itself would probably be enough to explain the observed increase in grades, but there’s more: College students are also a self-selected sample, admitted precisely because they were believed to be the smartest individuals in the application pool. Rising grades at top institutions are easily explained by rising selectivity at top schools: Harvard now accepts 5.6% of applicants. In 1942, Harvard accepted 92% of applicants. The odds of getting in have fallen from 9:1 in favor to 19:1 against. Today, you need a 4.0 GPA, a 36 ACT in every category, glowing letters of recommendation, and hundreds of hours of extracurricular activities (or a family member who donated millions of dollars, of course) to get into Harvard. In the 1940s, you needed a high school diploma and a B average.

In fact, when educational researchers have tried to quantitatively study the phenomenon of “grade inflation”, they usually come back with the result that they simply can’t find it. The US department of education conducted a study in 1995 showing that average university grades had declined since 1965. Given that the Flynn effect raised IQ by almost 10 points during that time, maybe we should be panicking about grade deflation.

It really wouldn’t be hard to make that case: “Back in my day, you could get an A just by knowing basic algebra! Now they want these kids to take partial derivatives?” “We used to just memorize facts to ace the exam; but now teachers keep asking for reasoning and critical thinking?”

More recently, a study in 2013 found that grades rose at the high school level, but fell at the college level, and showed no evidence of losing any informativeness as a signaling mechanism. The only recent study I could find showing genuinely compelling evidence for grade inflation was a 2017 study of UK students estimating that grades are growing about twice as fast as the Flynn effect alone would predict. Most studies don’t even consider the possibility that students are smarter than they used to be—they just take it for granted that any increase in average grades constitutes grade inflation. Many of them don’t even control for the increase in selectivity—here’s one using the fact that Harvard’s average rose from 2.7 to 3.4 from 1960 to 2000 as evidence of “grade inflation” when Harvard’s acceptance rate fell from almost 30% to only 10% during that period.

Indeed, the real mystery is why so many professors believe in grade inflation, when the evidence for it is so astonishingly weak.

I think it’s availability heuristic. Who are professors? They are the cream of the crop. They aced their way through high school, college, and graduate school, then got hired and earned tenure—they were one of a handful of individuals who won a fierce competition with hundreds of competitors at each stage. There are over 320 million people in the US, and only 1.3 million college faculty. This means that college professors represent about the top 0.4% of high-scoring students.

Combine that with the fact that human beings assort positively (we like to spend time with people who are similar to us) and use availability heuristic (we judge how likely something is based on how many times we have seen it).

Thus, when a professor compares to her own experience of college, she is remembering her fellow top-scoring students at elite educational institutions. She is recalling the extreme intellectual demands she had to meet to get where she is today, and erroneously assuming that these are representative of most the population of her generation. She probably went to school at one of a handful of elite institutions, even if she now teaches at a mid-level community college: three quarters of college faculty come from the top one quarter of graduate schools.

And now she compares to the students she has to teach, most of whom would not be able to meet such demands—but of course most people in her generation couldn’t either. She frets for the future of humanity only because not everyone is a genius like her.

Throw in the Curse of Knowledge: The professor doesn’t remember how hard it was to learn what she has learned so far, and so the fact that it seems easy now makes her think it was easy all along. “How can they not know how to take partial derivatives!?” Well, let’s see… were you born knowing how to take partial derivatives?

Giving a student an A for work far inferior to what you’d have done in their place isn’t unfair. Indeed, it would clearly be unfair to do anything less. You have years if not decades of additional education ahead of them, and you are from self-selected elite sample of highly intelligent individuals. Expecting everyone to perform as well as you would is simply setting up most of the population for failure.

There are potential incentives for grade inflation that do concern me: In particular, a lot of international student visas and scholarship programs insist upon maintaining a B or even A- average to continue. Professors are understandably loathe to condemn a student to having to drop out or return to their home country just because they scored 81% instead of 84% on the final exam. If we really intend to make C the average score, then students shouldn’t lose funding or visas just for scoring a B-. Indeed, I have trouble defending any threshold above outright failing—which is to say, a minimum score of D-. If you pass your classes, that should be good enough to keep your funding.

Yet apparently even this isn’t creating too much upward bias, as students who are 10 IQ points smarter are still getting about the same scores as their forebears. We should be celebrating that our population is getting smarter, but instead we’re panicking over “easy grading”.

But kids these days, am I right?

Stop telling people they need to vote. Tell them they need to cast informed votes.

Feb 11 JDN 2458161

I just spent last week’s post imploring you to defend the norms of democracy. This week, I want to talk about a norm of democracy that I actually think needs an adjustment.

Right now, there is a very strong norm that simply says: VOTE.

“It is our civic duty to vote.” “You are unpatriotic if you don’t vote.” “Voting is a moral obligation.” Etc.

The goal here is laudable: We want people to express the altruistic motivation that will drive them to escape the so-called Downs Paradox and actually go vote to make democracy work.

But the norm is missing something quite important. It’s not actually such a great thing if everyone just goes out and votes, because most people are seriously, disturbingly uninformed about politics.

The norm shouldn’t be that you must vote. The norm should be that you must cast an informed vote.

Best if you vote informed, but if you won’t get informed, then better if you don’t vote at all. Adding random noise or bias toward physical attractiveness and height does not improve electoral outcomes.

How uninformed are voters?

Most voters don’t understand even basic facts about the federal budget, like the fact that Medicare and Social Security spending are more than defense spending, or the fact that federal aid and earmarks are tiny portions of the budget. A couple years ago I had to debunk a meme that was claiming that we spend a vastly larger portion of the budget on defense than we actually do.

It gets worse: Only a quarter of Americans can even name all three branches of government. Almost half couldn’t identify the Bill of Rights. We literally required them to learn this in high school. By law they were supposed to know this.

But of course I’m not one of the ignorant ones, right? In a classic case of Dunning-Kruger Effect, nobody ever thinks they are. When asked to predict if they would pass the civics exam required to obtain citizenship, 89% of voters surveyed predicted they would. When they took it, only 17% actually passed it. (For the record, I took it and got a perfect score. You can try it yourself here.)

More informed voters already tend to be more politically engaged. But they are almost evenly divided between Democrats and Republicans, which means (especially with the way the Electoral College works) that elections are primarily determined by low-information voters. Low-information voters were decisive for Trump in a way that is unprecedented for as far back as we have data on voter knowledge (which, sadly, is not all that far back).

To be fair, more information is no panacea; humans are very good at rationalizing beliefs that they hold for tribal reasons. People who follow political news heavily typically have more distorted views on some political issues, because they only hear one side and they think they know but they don’t. To truly be more informed voters we must seek out information from reliable, nonpartisan sources, and listen to a variety of sources with differing views. Get your ideas about climate change from NPR or the IPCC, not from Huffington Post—and certainly not from Fox News. But still, maybe it’s worth reading National Review or Reason on occasion. Even when they are usually wrong, it is good for you to expose yourself to views from the other side—because sometimes they can be right. (Reason recently published an excellent article on the huge waste of government funds on building stadiums, for example, and National Review made some really good points against the New Mexico proposal to mandate college applications for high school graduates.)

And of course even those of us who are well-informed obviously have lots of other things we don’t know. Given my expertise in economics and my level of political engagement, I probably know more about politics than 99% of American voters; but I still can’t name more than a handful of members of Congress or really any state legislators aside from the ones who ran for my own district. I can’t even off the top of my head recall who heads the Orange County Water District, even though they literally decide whether I get to drink and take a shower. I’m not asking voters to know everything there is to know about politics, as no human being could possibly do such a thing. I’m merely asking that they know enough basic information to make an informed decision about who to vote for.

Moreover, I think this is a unique time in history where changing this norm has really become viable. We are living in a golden age of information access—almost literally anything you could care to know about politics, you could find in a few minutes of Google searching. I didn’t know who ran my water district, but I looked it up, and I do now: apparently Stephen R. Sheldon. I can’t name that many members of Congress, but I don’t vote for that many members of Congress, and I do carefully research each candidate running in my district when it comes time to vote. (In the next California state legislature election, Mimi Walters has got to go—she has consistently failed to stand against Trump, choosing her party over her constituency.)

This means that if you are uninformed about politics and yet still vote, you chose to do that. You aren’t living in a world where it’s extremely expensive or time-consuming to learn about politics. It is spectacularly easy to learn about politics if you actually want to; if you didn’t learn, it was because you chose not to learn. And if even this tiny cost is too much for you, then how about this? If you don’t have time to get informed, you don’t have time to vote.

Voting electronically would also help with this. People could, in the privacy of their own homes, look up information on candidates while their ballots are right there in front of them. While mail-in voter fraud actually does exist (unlike in-person voter fraud, which basically doesn’t), there are safeguards already in widespread use in Internet-based commerce that we could institute on electronic voting to provide sufficient protection. Basically, all we need to do is public-key signing: issue every voter a private key to sign their votes, which are then decrypted at the county office using a database of public keys. If public keys were stolen, that could compromise secret-ballot anonymity, but it would not allow anyone to actually change votes. Voters could come in person to collect their private keys when they register to vote, at their convenience weeks or months before the election. Of course, we’d have to make it user-friendly enough that people who aren’t very good with computers would understand the system. We could always leave open the option of in-person voting for anyone who prefers that.

Of course, establishing this norm would most likely reduce voter turnout, even if it did successfully increase voter knowledge. But we don’t actually need everyone to vote. We need everyone’s interests accurately represented. If you aren’t willing to get informed, then casting your vote isn’t representing your interests anyway, so why bother?

False equivalence is not centrism

False equivalence is not centrism

Feb 4 JDN 2458154

Turning and turning in the widening gyre

The falcon cannot hear the falconer;

Things fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world,

The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.

~ W.B. Yeats, The Second Coming

Centrism is not very popular these days, but I believe this is because neither its alleged adherents nor its alleged opponents actually have a clear understanding of what centrism is supposed to be. Most of what is called “centrism” in this polarized era (the US is now more politically polarized than it has been in decades) is actually false equivalence.

Most people who express pride in their “centrism” adopt a heuristic which basically amounts to taking the two positions that are most loudly proclaimed in public and averaging them. One side says “Kill all puppies”, the other side says “Don’t kill puppies”, and they proudly and self-righteously declare that the only sensible policy is to kill precisely 50% of the puppies. Anyone who says “the two parties are the same” or “liberals deny science too” is guilty of this false equivalence—and it’s all too common.

But this is not what centrism is supposed to be. A good centrist isn’t someone who looks at their existing Overton Window and chooses the mean value. A good centrist is someone who understands and appreciates Horseshoe Theory. Horseshoe Theory says that the political spectrum is not actually a straight line from left to right; it’s more of a horseshoe shape, where the far-left and the far-right curl down and toward one another. A good centrist is someone who values the top of the horseshoe, more strongly than they value whatever particular policies might move you toward the left or the right edge.

What does the top of the horseshoe represent? Democracy.

A good centrist is someone who really, truly believes in defending democracy.

What the far-left and the far-right have in common is authoritarianism:

For those on either edge of the horseshoe, people who disagree with (the collectivization of all wealth/the superiority of my master race) aren’t simply wrong, they are evil. Persuading them to vote my way is a waste of time. Freedom of speech is dangerous, because it allows them to spread their evil ideas. It would be better to suppress freedom of speech, so that only people who know the truth (read: agree with me) are allowed to speak.

Along similar lines, Slate Star Codex recently published an excellent blog post on how people seem to separate into two very broad political worldviews: There are Mistake Theorists, who think that most of the world’s problems are due to honest ignorance and error; and there are Conflict Theorists, who think that most of the world’s problems are due to the malign influence of evil enemy factions. The far-left and the far-right are overwhelmingly composed of Conflict Theorists. A good centrist is a Mistake Theorist through and through.

Being a good centrist means fighting to defend the institutions that make freedom possible. Here is a whole list of policies that neither the far-left nor the far-right particularly values that we as centrists must:

  1. Voting rights: We must fight against voter suppression and disenfranchisement wherever it occurs. We must stand up to defend the principle “one person, one vote” wherever necessary.
  2. Equality under the law: We must protect the rights of everyone to have equal representation and equal standing as citizens—including, but by no means limited to, women, racial minorities, LGBT people, and people with disabilities.

  3. Election reform: We must find ways to undermine gerrymandering, the Electoral College, and the campaign finance system that allows corporations and wealthy individuals to exert disproportionate influence.

  4. Freedom of speech: We must protect the right of everyone to speak, including those whose views we find abhorrent. Our efforts should be focused most on those who have the least representation in our discourse.

  5. Individual privacy: We must fight against the creeping rise of the surveillance state and the use of extra-legal means of intelligence gathering, particularly in domestic spying. We should be outraged that the House of Representatives voted to extend the NSA’s warrantless wiretap authority after what Edward Snowden revealed about the NSA.

  6. Demilitarization and deincarceration: We must fight to contain or reverse the expansion of military and penal force that has given the United States not only a military larger than the next ten countries combined, but also the world’s highest rate of incarceration.

On some of these issues we might find agreement with the left or (less likely) the right—but even when we don’t, we must press forward. In particular, the goal of equality under the law often aligns with the goal of left-wing social justice—but there are cases where it doesn’t, cases where hatred of White straight men or a craving for vengeance against past injustice drives the left to demand things that would violate this principle. And the atavistic joy of punching Nazis in the face must never overwhelm our sacred commitment to the principles of free speech.

This doesn’t mean we can’t also adopt detailed policy views that align with the left or the right (or both). I for one support single-payer healthcare (left), progressive taxation (left), renewable energy (left), open borders (left), zoning reform (right), reductions in corporate taxes (right), free trade (right, or so I thought?), and a basic income (both—yet strangely we can’t seem to make it happen).

But being a good centrist means that these detailed policy prescriptions are always less important to you than the core principles of democracy itself. When they find out that the rest of the country is against them on something, a leftist or a rightist starts looking for ways to undermine the public will and get the policy they want. A centrist accepts that they have been outvoted and starts looking for ways to persuade the majority that they are mistaken.

Centrism is about defending the guardrails of democracy. False equivalence is not centrism; it is an obstacle to centrism. It prevents us from seeing when one side has clearly damaged those guardrails much more than the other. So let me come out and say it: At this historical juncture, in the United States, the right wing is a far greater threat to the core principles of democracy than the left. This is not to say that the left is inherently incapable of threatening democracy, or never will do so in the future; but it is to say that right here, right now, it’s the right wing we should be worried about. Punching Nazis will never be as threatening to the core of freedom as warrantless wiretaps or the discrediting of the mainstream press.

Why is redistribution of wealth so difficult to achieve in the US?

Jan 28 JDN 2458147

Income and wealth in equality is much higher in the US than in other First World countries. Within the OECD, only Mexico, Turkey, and Chile have higher income inequality than we do. Over 60% of Americans agree that the distribution of wealth in the US is unfair. Furthermore, the majority of Americans support the use of taxes and transfers to directly redistribute wealth from the rich to the poor.

Why, then, is it so hard to actually get any meaningful wealth redistribution in the United States?

Part of it is surely partisan differences: While about 70% of Democrats favor redistributive taxes, about 70% of Republicans oppose them. So one would not expect a move toward redistribution when Republicans control all three branches of government, and indeed we have seen quite the opposite. (Then again, one would also not expect a government shutdown under one-party rule, and yet that is what we have.)

But even most Republicans say they would like to see a much more equal distribution of wealth than the one we actually have. In fact, when I as an inequality economist look at the distribution of wealth people say they want, it looks a little too equal! Even Denmark and Sweden aren’t that egalitarian! I know more or less how to get from here to Denmark; but from here to “Equalden” looks like an awful long way. So if this is really the distribution of wealth people want, we need to be doing a huge amount of wealth redistribution—but we’re hardly doing any at all.

Indeed, we didn’t actually see all that much redistribution of wealth when Democrats more or less controlled all three branches in the period from 2008-2010. We may have seen a little bit shortly thereafter, and tax policy typically does come with a delay of a year or two. But as you can see in this graph, the Great Recession did more to reduce the top 1% income share than any tax policy changes:


The biggest changes made to our tax code under Obama were actually the handling of capital gains; the increase of the top rate on capital gains from 15% to 20%, plus the 3.8% capital surtax from the Affordable Care Act raised the tax bill for the top 0.1% by tens of billions of dollars. Surprisingly, Trump’s tax cuts don’t actually remove these provisions, though they did dramatically cut the corporate tax rate, which will probably have a similar effect on the income distribution.

To be honest, I’m not as disappointed with Trump’s tax cuts as I thought I would be. Some genuinely good ideas (like the reduction of the mortgage interest deduction, tighter restrictions on carried interest, and increase of the personal standard deduction) and some reasonable but debatable ideas (like cuts to the corporate tax rate, switching to a territorial corporate tax system, limits to deductions on corporate debt payments, removal of the deduction of state taxes, and extensions of 529 savings plans to private primary and secondary schools) were mixed in with the absolutely ludicrous and terrible ideas (like eliminating the Obamacare mandate, doubling the estate tax threshold, cutting the alcohol tax, and allowing offshore drilling in Alaska [One of these things is not like the other ones….]). Some of the terrible ideas, like ending the deduction of student loan interest and tuition waivers, were actually removed in the final version of the bill. Of course, you won’t be surprised when I tell you that the overall US tax system became a lot less progressive as a result of this bill. And even if cutting the corporate tax while raising the capital gains tax is probably a good idea (as I and many economists believe), cutting the corporate tax without raising the capital gains tax probably isn’t.

(An aside: For how much they claim to be “tough on crime”, it’s always kind of baffling to see how often Republicans like to cut alcohol taxes and pollution regulations, which are pretty much the only things that have ever been empirically shown to actually reduce crime. There is some evidence that maybe more policing also helps, but if so, it does so in a far less cost-effective way—indeed, the direct cost of alcohol taxes and pollution taxes is negative. Even if they didn’t work at all, they’d still be worth it just because they raise revenue. I begin to suspect that Republicans don’t actually want to reduce crime, because they know they can use the fear of crime to win votes; they simply want to appear tough on crime, and so they press as hard as they can for more policing and incarceration in the country that already has the highest incarceration rate in the world. This may be a more general phenomenon: While Democrats want to actually solve problems, Republicans want to appear to solve problems while actually exacerbating them, thus insuring their own job security. Compare how Bush kept talking about Osama bin laden while invading Iraq, and Obama actually killed Osama bin Laden. Is this too cynical? Can anything be too cynical in the era of Trump? There were 50,000 Russian bots on Twitter trying to tilt our election! Mueller’s FBI investigation is already implicating several of Trump’s top officials! Everything that seemed like paranoia or cynicism just a few years ago is turning out to be entirely true.)

This is what seems to happen: Year after year, we raise some taxes, then we cut some taxes. Then when raise some taxes, then we cut some taxes. The tax system gets a little more progressive for a few years and inequality begins to fall, and then those changes are removed and inequality begins to rise again. Back and forth and round and round we go.

Is there some way to lock in these tax changes for a longer period of time? The only way I can see would be a change in voter behavior: Keep voting in Democrats to all branches of government consistently for 20 years, and then maybe we would see a serious reduction in income and wealth inequality. Or at least stop voting in Republicans; aside from the Democrats, there are some third parties that would also support redistribution, like the Green Party. And yes, it really is about voting behavior: As prevalent as gerrymandering has become, as terrible as the Electoral College is, as widespread as voter suppression has gotten, Trump only won because 63 million Americans voted for him. Even after everything he’s done, Trumps’ approval rating is still about 39%. As long as there are enough people in this country whose partisan loyalty so strongly outweighs any rational assessment of policy, we are going to continue to see such travesties continue.

It would certainly help if our voting system were fairer, so that third parties had a better chance at taking seats. But it’s also difficult to see how that could happen any time soon. For now, the best I can come up with is trying to show people two things:

First, most Americans favor redistribution of wealth. You’re not alone in wanting that. It’s not some fringe opinion.

Second, there is a real difference between Democrats and Republicans on this issue. The canard “The two parties are the same” is the most untrue it has been in at least twenty years.

I would even understand if there are other issues you consider more important than wealth redistribution. Ecological sustainability is the most defensible—you can’t eat GNP—though that would push you even harder toward the left. Among things that might push you right, I can understand being concerned about higher taxes hurting economic growth, and while I think the view that abortion is murder is ludicrous, given that as your belief I can understand why you would want to prioritize fighting abortion. (If I thought we were murdering millions of babies every year, I’d be pretty mad too! Of course, you should be glad, then, that the US abortion rate has been falling. Right? You know about that, right?)

What I don’t get, however, is people who thought that voting for Donald Trump would help working people. I don’t understand how you can see someone who epitomizes everything that is wrong with the billionaire rentier class and think, “Yeah, he seems like he’s definitely a populist. That guy who was born insanely rich and made even more mind-boggling amounts of money by lying and screwing people over is definitely going to look out for folks like me.”

If I understood that, maybe I would know where to go from here. But people’s political beliefs can be astonishingly intransigent to evidence. Politics is the mind-killer.

What about a tax on political contributions?

Jan 7, JDN 2458126

In my previous post, I argued that an advertising tax could reduce advertising, raise revenue, and produce almost no real economic distortion. Now I’m going to generalize this idea to an even bolder proposal: What if we tax political contributions?

Donations to political campaigns are very similar to advertising. A contest function framework also makes a lot of sense: Increased spending improves your odds of winning, but it doesn’t actually produce any real goods.

Suppose there’s some benefit B that I get if a given politician wins an election. That benefit could include direct benefits to me, as well as altruistic benefits to other citizens I care about, or even my concern for the world as a whole. But presumably, I do benefit in some fashion from my favored politician winning—otherwise, why are they my favored politician?

In this very simple model, let’s assume that there are only two parties and two donors (obviously in the real world there are more parties and vastly more donors; but it doesn’t fundamentally change the argument). Say I will donate x and the other side will donate y.

Assuming that donations are all that matter, the probability my party will win the election is x/(x+y).

Fortunately that isn’t the case. A lot of things matter, some that should (policy platforms, experience, qualifications, character) and some that shouldn’t (race, gender, age, heightpart of why Trump won may in fact be that he is tall; he’s about 6’1”.). So let’s put all the other factors that affect elections into a package and call that F.

The probability that my candidate wins is then x/(x+y) + F, where F can be positive or negative. If F is positive, it means that my candidate is more likely to win, while if it’s negative, it means my candidate is less likely to win. (If you want to be pedantic, the probability of winning has to be capped at 0 and 1, but this doesn’t fundamentally change the argument, and only matters for candidates that are obvious winners or obvious losers regardless of how much anyone donates.)

The donation costs me money, x. The cost in utility of that money depends on my utility function, so for now I’ll just call it a cost function C(x).
Then my net benefit is:
B*[x/(x+y)+F] – C(x)

I can maximize this by a first-order condition. Notice how the F just drops out. I like F to be large, but it doesn’t affect my choice of x.

B*y/(x+y)^2 = C'(x)

Turning that into an exact value requires knowing my cost function and my opponent’s cost function (which need not be the same, in general; unlike the advertising case, it’s not a matter of splitting fungible profits between us), but it’s actually possible to stop here. We can already tell that there is a well-defined solution: There’s a certain amount of donation x that maximizes my expected utility, given the amount y that the other side has donated. Moreover, with a little bit of calculus you can show that the optimal amount of x is strictly increasing in y, which makes intuitive sense: The more they give, the more you need to give in order to keep up. Since x is increasing in y and y is increasing in x, there is a Nash equilibrium: At some amount x and y we each are giving the optimal amount from our perspective.

We can get a precise answer if we assume that the amount of the donations is small compared to my overall wealth, so I will be approximately risk-neutral; then we can just say C(x) = x, and C'(x) = 1:

B*y/(x+y)^2 = 1
Then we get essentially the same result we did for the advertising:

x = y = B/4

According to this, I should be willing to donate up to one-fourth the benefit I’d get from my candidate winning in donations. This actually sounds quite high; I think once you take into account the fact that lots of other people are donating and political contributions aren’t that effective at winning elections, the optimal donation is actually quite a bit smaller—though perhaps still larger than most people give.

If we impose a tax rate r on political contributions, nothing changes. The cost to me of donating is still the same, and as long as the tax is proportional, the ratio x/(x+y) and the probability x/(x+y) + F will remain exactly the same as before. Therefore, I will continue to donate the same amount, as will my opponent, and each candidate will have the same probability of winning as before. The only difference is that some of the money (r of the money, to be precise) will go to the government instead of the politicians.

The total amount of donations will not change. The probability of each candidate winning will not change. All that will happen is money will be transferred from politicians to the government. If this tax revenue is earmarked for some socially beneficial function, this will obviously be an improvement in welfare.

The revenue gained is not nearly as large an amount of money as is spent on advertising (which tells you something about American society), but it’s still quite a bit: Since we currently spend about $5 billion per year on federal elections, a tax rate of 50% could raise about $2.5 billion.

But in fact this seriously under-estimates the benefits of such a tax. This simple model assumes that political contributions only change which candidate wins; but that’s actually not the main concern. (If F is large enough, it can offset any possible donations.)
The real concern is how political contributions affect the choices politicians make once they get into office. While outright quid-pro-quo bribery is illegal, it’s well-known that many corporations and wealthy individuals will give campaign donations with the reasonable expectation of influencing what sort of policies will be made.

You don’t think Goldman Sachs gives millions of dollars each election out of the goodness of their hearts, do you? And they give to both major parties, which really only makes sense if their goal is not to make a particular candidate win, but to make sure that whoever wins feels indebted to Goldman Sachs. (I guess it could also be to prevent third parties from winning—but they hardly ever win anyway, so that wouldn’t be a smart investment from the bank’s perspective.)

Lynda Powell at the University of Rochester has documented the many subtle but significant ways that these donations have influenced policy. Campaign donations aren’t as important as party platforms, but a lot of subtle changes across a wide variety of policies add up to large differences in outcomes.

A political contribution tax would reduce these influences. If politicians’ sole goal were to win, the tax would have no effect. But it seems quite likely that politicians enjoy various personal benefits from lobbying and campaign contributions: Fine dinners, luxurious vacations, and so on. And insofar as that is influencing politicians’ behavior, it is both obviously corrupt and clearly reduced by a political contribution tax. How large an effect this would be is difficult to say; but the direction of the effect is clearly the one we want.

Taxing donations would also allow us to protect the right to give to campaigns (which does seem to be a limited kind of civil liberty, even though the precise interpretation “money is speech” is Orwellian), while reducing corruption and allowing us to keep close track on donations that are made. Taxing a money stream, even a small amount, is often one of the best ways to incentivize close monitoring of that money stream.

With a subtle change, the tax could even be made to bias in favor of populism: All you need to do is exempt small donations from the tax. If say the first $1000 per person per year is exempt from taxation, then the imposition of the tax will reduce the effectiveness of million-dollar contributions from Goldman Sachs and the Koch brothers without having any effect on $50 donations from people like you and me. That would technically be “distorting” elections—but it seems like it might be a distortion worth making.

Of course, this is probably even less likely to happen than the advertising tax.

How can we stop rewarding psychopathy?

Oct 1, JDN 24578028

A couple of weeks ago The New York Times ran an interesting article about how entrepreneurs were often juvenile delinquents, who then often turn into white-collar criminals. They didn’t quite connect the dots, though; they talked about the relevant trait driving this behavior as “rule-breaking”, when it is probably better defined as psychopathy. People like Martin Shkreli aren’t just “rule-breakers”; they are psychopaths. While only about 1% of humans in general are psychopaths, somewhere between 3% and 4% of business executives are psychopaths. I was unable to find any specific data assessing the prevalence of psychopathy among politicians, but if you just read the Hare checklist, it’s not hard to see that psychopathic traits are overrepresented among politicians as well.

This is obviously the result of selection bias; as a society, we are systematically appointing psychopaths to positions of wealth and power. Why are we doing this? How can we stop?

One very important factor here that may be especially difficult to deal with is desire. We generally think that in a free society, people should be allowed to seek out the sort of life they want to live. But one of the reasons that psychopaths are more likely to become rich and powerful is precisely that they want it more.

To most of us, being rich is probably something we want, but not the most important thing to us. We’d accept being poor if it meant we could be happy, surrounded by friends and family who love us, and made a great contribution to society. We would like to be rich, but it’s more important that we be good people. But to many psychopaths, being rich is the one single thing they care about. All those other considerations are irrelevant.

With power, matters are even more extreme: Most people actually seem convinced that they don’t want power at all. They associate power with corruption and cruelty (because, you know, so many of the people in power are psychopaths!), and they want no part of it.

So the saying goes: “Power tends to corrupt, and absolute power corrupts absolutely.” Does it, now? Did power corrupt George Washington and Abraham Lincoln? Did it corrupt Mahatma Gandhi and Nelson Mandela? I’m not saying that any of these men were without flaws, even serious ones—but was it power that made them so? Who would they have been, and more importantly, what would they have done, if they hadn’t had power? Would the world really have been better off if Abraham Lincoln and Nelson Mandela had stayed out of politics? I don’t think so.

Part of what we need, therefore, is to convince good people that wanting power is not inherently bad. Power just means the ability to do things; it’s what you do that matters. You should want power—the power to right wrongs, mend injustices, uplift humanity’s future. Thinking that the world would be better if you were in charge not only isn’t a bad thing—it is quite likely to be true. If you are not a psychopath, then the world would probably be better off if you were in charge of it.

Of course, that depends partly on what “in charge of the world” even means; it’s not like we have a global government, after all. But even suppose you were granted the power of an absolute dictatorship over all of humanity; what would you do with that power? My guess is that you’d probably do what I would do: Start by using that power to correct the greatest injustices, then gradually cede power to a permanent global democracy. That wouldn’t just be a good thing; it would be quite literally and without a doubt the best thing that ever happened. Of course, it would be all the better if we never built such a dictatorship in the first place; but mainly that’s because of the sort of people who tend to become dictators. A benevolent dictatorship really would be a wonderful thing; the problem is that dictators almost never remain benevolent. Dictatorship is simply too enticing to psychopaths.

And what if you don’t think you’re competent enough in policy to make such decisions? Simple: You don’t make them yourself, you delegate them to responsible and trustworthy people to make them for you. Recognizing your own limitations is one of the most important differences between a typical leader and a good leader.

Desire isn’t the only factor here, however. Even though psychopaths tend to seek wealth and power with more zeal than others, there are still a lot of good people trying to seek wealth and power. We need to look very carefully at the process of how we select our leaders.

Let’s start with the private sector. How are managers chosen? Mainly, by managers above them. What criteria do they use? Mostly, they use similarity. Managers choose other managers who are “like them”—middle-aged straight White men with psychopathic tendencies.

This is something that could be rectified with regulation; we could require businesses to choose a more diverse array of managers that is more representative of the population at large. While this would no doubt trigger many complaints of “government interference” and “inefficiency”, in fact it almost certainly would increase the long-term profitability of most corporations. Study after study after study shows that increased diversity, particularly including more equal representation of women, results in better business performance. A recent MIT study found that switching from an all-male or all-female management population to a 50-50 male/female split could increase profits by as much as forty percent. The reason boards of directors aren’t including more diversity is that they ultimately care more about protecting their old boys’ club (and increasing their own compensation, of course) than they do about maximizing profits for their shareholders.

I think it would actually be entirely reasonable to include regulations about psychopathy in particular; designate certain industries (such as lobbying and finance; I would not include medicine, as psychopaths actually seem to make pretty good neurosurgeons!) as “systematically vital” and require psychopathy screening tests as part of their licensing process. This is no small matter, and definitely does represent an incursion into civil liberties; but given the enormous potential benefits, I don’t think it can be dismissed out of hand. We do license professions; why shouldn’t at least a minimal capacity for empathy and ethical behavior be part of that licensing process?

Where the civil liberty argument becomes overwhelming is in politics. I don’t think we can justify any restrictions on who should be allowed to run for office. Frankly, I think even the age limits should be struck from the Constitution; you should be allowed to run for President at 18 if you want. Requiring psychological tests for political office borders on dystopian.

That means we need to somehow reform either the campaign system, the voting system, or the behavior of voters themselves.

Of course, we should reform all three. Let’s start with the voting system itself, as that is the simplest: We should be using range voting, and we should abolish the Electoral College. Districts should be replaced by proportional representation through reweighted range voting, eliminating gerrymandering once and for all without question.

The campaign system is trickier. We could start by eliminating or tightly capping private and corporate campaign donations, and replace them with a system similar to the “Democracy Vouchers” being tested in Seattle. The basic idea is simple and beautiful: Everyone gets an equal amount of vouchers to give to whatever candidates they like, and then all the vouchers can be redeemed for campaign financing from public funds. It’s like everyone giving a donation (or monetary voting), but everyone has the same amount of “money”.

This would not solve all the problems, however. There is still an oligopoly of news media distorting our political discourse. There is still astonishingly bad journalism even in our most respected outlets, like the way the New York Times was obsessed with Comey’s letter and CNN’s wall-to-wall coverage of totally unfounded speculation about a missing airliner.

Then again, CNN’s ratings skyrocketed during that period. This shows that the problems run much deeper than a handful of bad journalists or corrupt media companies. These companies are, to a surprisingly large degree, just trying to cater to what their audience has said it wants, just “giving the people what they want”.

Our fundamental challenge, therefore, is to change what the people want. We have to somehow convince the public at large—or at least a big enough segment of the public at large—that they don’t really want TV news that spends hours telling them nothing and they don’t really want to elect the candidate who is the tallest or has the nicest hair. And we have to get them to actually change the way they behave accordingly.

When it comes to that part, I have no idea what to do. A voting population that is capable of electing Donald Trump—Electoral College nonsense notwithstanding, he won sixty million votes—is one that I honestly have no idea how to interface with at all. But we must try.

Building a wider tent, revisited

Sep 17, JDN 2458014

At a reader’s suggestion, I am expanding upon the argument I made a few weeks ago that political coalitions are strongest when they are willing to accept some disagreement. I made that argument with numbers, which is likely to convince someone like me; but I know that many other people don’t really think that way, so it may help to provide some visuals as well.

60% of this rectangle is filled in red.


This represents the proportion of the population that agrees with you on some issue. For concreteness but to avoid making this any more political than it already is, I’m going to pick silly issues. So let’s have this first issue be about which side of the road we should drive on. Let’s say your view is that we should drive on the right. 60% of people agree that we should drive on the right. The other 40% think we should drive on the left.

Now let’s consider another issue. Let’s say this one is about putting pineapples on pizza. You, and 60% of people, agree that pineapples should not be put on pizza. The other 40% think we should put pineapples on pizza.

For now, let’s assume those two issues are independent, that someone’s opinions on driving and pizza are unrelated. Then we can fill 60% of the rectangle in blue, but it should be a perpendicular portion because the two issues aren’t related:


Those who agree with you on driving but not pizza (that would include me, by the way) are in red, those who agree with you on pizza but not driving are in blue, those who agree with you on both are in purple, and those who disagree with you on both are in white. You should already be able to see that less than half the population agrees with you on both issues, even though more than half agrees on each.

Let’s add a third issue, which we will color in green. This one can be the question of whether Star Trek is better than Star Wars. Let’s say that 60% of the population agrees with you that Star Trek is better, while 40% think that Star Wars is better. Let’s also assume that this is independent of opinions on both driving and pizza.


This is already starting to get unwieldy; there are now eight distinct regions. The white region (8) is comprised of people who disagree with you on everything. The red (6), blue (4), and green (7) regions each have people agree with you on exactly one issue. The blue-green (3), purple (2), and brown (5) regions have people agree with you on two issues. Only those in the dark-green region (1) agree with you on everything.

As you can see, the proportion of people who agree with you on all issues is fairly small, even though the majority of the population agrees with you on any given issue.

If we keep adding issues, this effect gets even stronger. I’m going to change the color-coding now to simplify things. Now, blue will indicate the people who agree with you on all issues, green the people who agree on all but one issue, yellow the people who agree on all but two issues, and red the people who disagree with you on three or more issues.

For three issues, that looks like this, which you can compare to the previous diagram:


Now let’s add a fourth issue. Let’s say 60% of people agree with you that socks should not be worn with sandals, but 40% think that socks should be worn with sandals. The blue region gets smaller:


How about a fifth issue? Let’s say 60% of people agree with you that cats are better than dogs, while 40% think that dogs are better than cats. The blue region continues to shrink:


How about a sixth issue?


And finally, a seventh issue?


Now the majority of the space is covered by red, meaning that most of the population disagrees with you on at least three issues.

To recap:

By the time there were two issues, the majority of the population disagreed with you on at least one issue.

By the time there were four issues, the majority of the population disagreed with you on at least two issues.

By the time there were seven issues, the majority of the population disagreed with you on at least three issues.

This despite the fact that the majority of the population always agrees with you on any given issue!

If you only welcomed people into your coalition who agree on every single issue (the blue region), you wouldn’t win election if there were even two issues. If you only welcomed those who disagree on at most one (blue or green), you’d stop winning if there were at least four issues. And if there were at least seven issues, you couldn’t even win by allowing those who disagree on at most two issues (blue, green, yellow).

Now, this argument very much does rely upon the different opinions being independent, which in real politics is not the case. So let’s introduce some correlations and see how this changes the result.

Suppose that once someone agrees with you about driving on the right side of the road, they are 90% likely to agree on pizza, Star Trek, sandals, and cats.

That makes things look a lot better for you; by including one level of disagreement, you could dominate every election. But notice that even in this case, if you exclude all disagreement, you will continue to lose elections.

With enough issues, even with very strong correlations you can get the same effect. Suppose there are 20 issues, and if you agree on the first one, there is a 99% chance you’ll agree on each of the others. You are still only getting about half the electorate if you don’t allow any disagreement! Due to the very high correlation, if someone disagrees with you on a few things, they usually disagree with you on many things; yet you’re still better off including some disagreement in your coalition.


Obviously, you shouldn’t include people in your coalition who actively oppose its core mission. Even if they aren’t actively trying to undermine you, at some point, the disagreement becomes so large that you’ve got to cut them loose. But in a pluralistic democracy, ideological purism is a surefire recipe for electoral failure. You need to allow at least some disagreement.

This isn’t even getting into the possibility that you might be wrong about some issues, and by including those who disagree with you, you may broaden your horizons and correct your mistakes. I’ve thus far assumed you are completely correct and in the majority on every single issue, and yet you still can’t win elections with complex policy mixes unless you include people who disagree with you.