Votes vs. $

Carlos Cruz writes:

The other day on Twitter my friend shared this paper by Ellen Evers and Michael O’Donnell…

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959609

Here’s the abstract…

“A fundamental contribution of consumer behavior research is to help marketing scholars develop an understanding of how people think about and express their preferences. In this report we find that two commonly used preference elicitation procedures, willingness-to-pay and choices, are consistently associated with different expressed preferences. Specifically, choices are associated with a relatively greater preference for hedonic goods while WTP is associated with a relatively greater preference for utilitarian goods. We find that this is caused, in part, by the greater reliance on deliberation in determining WTP values, while preferences in choices are determined by an affect heuristic. Unlike other choices and WTP preference reversals, we find that this effect is not caused by mechanical determinants such as scale compatibility, as the effect persists with continuous scale measures that rely on affect and with choice-based scale measures that rely on determining valuation.”

It’s a little confusing that they used the word “choice” to refer to decisions made without WTP. But basically WTP makes us think harder, so we consider more information, which results in us prioritizing things differently. Here’s a pretty good paragraph…

“Thus far, we have found that participants who indicate preferences in a choice context are more likely to choose a hedonically pleasing, affectively arousing good than when indicating preferences in a WTP context. We expect this pattern occurs because choosing between two goods can be a relatively low effort, fairly intuitive process. Each day consumers have to make an innumerable amount of choices such as, what to wear, what to have for breakfast, or which brand of cereal to buy, having one’s feelings inform the decision is a sensible and cognitively cheap heuristic which most of the time will lead to a satisfactory outcome. For WTP, however, merely relying on one’s feelings is insufficient and may even feel inappropriate. Features such as quality, amount, and cost should be taken into account. If choices are inherently less thoughtful than WTP, inducing participants to deliberate by asking them to consider the value of acquiring each good should influence subsequent choices more than it influences willingness to pay. After all, indicating willingness-to-pay is already expected to cause participants to think about the value of the options under consideration, whereas choices are expected to mostly reflect gut feelings.”

The authors didn’t bring up the fact that voting doesn’t involve WTP. I plan on e-mailing them.

After I e-mailed you about spending versus voting I visited your blog to see if you had posted the entry. I also read some of your older entries, one of which led me to believe that your posting system is somewhat different. This was confirmed when I saw this post

I scrolled and scrolled and eventually found “$ vs. votes” in November. [It appeared here. — AG.] My first thought was whether suspense had ever truly killed anybody. Then I wanted to email you to see if you’ve ever blogged a justification for your system. Lastly I decided not to question the hand that is offering to feed my brain. When I learned of the paper I decided that it is relevant enough to share with you. And I figured that, since I was emailing you anyways, I might as well combine the intellectual ingredients and make a nutritious pot pie.

It seems like you’re simply ordering the future entries chronologically. First come first served. It certainly wouldn’t be “fair” for my topic to cut in line. But would it be “efficient”? Naturally I think that my topic is far more important than all the other topics combined. So from my perspective, it would be very efficient for my topic to be moved to the front of the line. The issue is that my perspective is extremely limited. Everybody’s perspective is extremely limited. But, everybody’s perspective is also different, which means that all our perspectives aren’t equally limited. This is exactly why two heads are better than one. When people put their heads together they create a combined perspective that is less limited than their individual perspectives. The more heads that are put together, the less limited the collective perspective.

Voting and spending both make it easy for lots of people to put their heads together. It’s theoretically possible for all your readers to vote and/or donate for the most important future entries. Unlike voting, donating is a matter of WTP, so it would prioritize your future entries very differently. Would they be better prioritized? I think the paper supports this conclusion. I think that this conclusion is supported by a LOT of things.

Earlier in the month I found this relevant paragraph in The Atlantic…

“What is God? It is only a subject that has inspired some of the finest writing in the history of Western civilization — and yet the first two pages of Google results for the question are comprised almost entirely of Sweet’N Low evangelical proselytizing to the unconverted. (The first link the Google algorithm served me was from the Texas ministry, Life, Hope & Truth.) The Google search for God gets nowhere near Augustine, Maimonides, Spinoza, Luther, Russell, or Dawkins. Billy Graham is the closest that Google can manage to an important theologian or philosopher. For all its power and influence, it seems that Google can’t really be bothered to care about the quality of knowledge it dispenses. It is our primary portal to the world, but has no opinion about what it offers, even when that knowledge it offers is aggressively, offensively vapid.” — Franklin Foer, The Death of the Public Square https://www.theatlantic.com/technology/archive/2018/07/the-death-of-the-public-square/564506/

Foer, like everyone, ranks some thinkers higher than others. What he doesn’t understand though is that Google is a democracy. Each link to a page counts as a vote for it. The more votes a page receives, the higher its ranking. The rankings would be very different if voting was replaced with donating. So Foer’s real issue is with democracy.

Imagine if you went on Reddit and created a subreddit for your blog. Whenever anybody emailed you a potential topic for you to blog about, you could recommend that they share the potential topic in your subreddit. Everybody could vote the potential topics up or down and we’d all see and know the popularity of the potential topics. According to the paper, because WTP wouldn’t be a factor in the rankings, the more “hedonistic” topics would tend to outrank the more “utilitarian” topics. In my email to you I didn’t use these two words. I’m not exactly sure about them. What do you think about them? In the paper the authors used the example of chocolate bars versus granola bars. In this case it’s unhealthy versus healthy. It’s delicious versus nutritious.

Is superficial (“sexy”) versus substantial a better framing? Anyways, if you also gave all your readers the opportunity to donate for the topics that match their preferences then, thanks to WTP, the more substantial topics would rise to the top. In theory.

Some time after emailing you I found some additional examples of donations being used to rank things. Here are some cats/photos ranked by donations…

https://my.360photocontest.com/catwelfare2019calendarcontest/photos?order=Rank

The top ranked kitty isn’t very pretty. I’m not sure how many people donated for this cat/photo… but I’m pretty sure that it wouldn’t be so highly ranked if voting had been used instead of spending. Out of curiosity I clicked on the photo and found this…

“Don’t let his looks fool you, he is a WHOLE lot of cat, just missing a few parts. Once a stray, now an indoorsman. Not only my best friend, but my family’s as well. Cat Welfare helped bring him into our lives as a forever home. He’s been through a lot, as you can see. Looks aren’t everything! His character is tough, loving, and sporadic. We can’t thank CW enough for the support. Mr. Minx is a force to be reckoned with… as well as a great cuddler!”

It’s true that looks aren’t everything. At dog shows the dogs are ranked by a small handful of judges. A committee determines the relative importance of the dogs. This is the same thing as socialism. What if the dogs were ranked by voters? Then it would be a democracy. And if the dogs were ranked by donors, then it would be a market.

It’s hard for me to wrap my mind around the fact that a dog show can be used to safely and effectively test the difference between socialism, democracy and markets. Paul Krugman could easily do this. So why hasn’t he?

Do you regularly allocate any attention to Evonomics? I do, which is where I learned that Nicholas Gruen said this…

Krugman [is] about the most brilliant and useful economist we have. But his most brilliant work wasn’t useful, and his most useful work isn’t brilliant”

Paul Krugman: Nobel Prize or Academy Award?

Krugman responded and had this to say in his defense…

“But one thing new trade theory certainly didn’t do was lend support to really bad ideas, or induce policy paralysis. And another thing it didn’t do was divert trade economists away from studying the real world. On the contrary, trade has become a far more empirical, open-minded field than it was when I first entered it.” https://www.nytimes.com/2018/06/27/opinion/uses-and-abuses-of-economic-formalism-wonkish-and-self-referential.html

Thanks to Steve Sailer’s comment on this entry of yours…

…I learned of this pretty great talk by Krugman… http://www.mit.edu/~krugman/evolute.html

I’m not exactly sure if I like it more than his great article about sweatshops…

http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html

From my perspective, the previous Krugman was a lot more useful than the current Krugman. No man steps in the same river twice.

Krugman won his Nobel because some committee ranked him higher than other economists. How differently would he have been ranked by voting and donating? How would he rank now if all your readers could use their donations to rank economists?

When I looked over your older topics I naturally did a bit of searching for the economic ones. Here’s a relevant one that I found…

“Larry also writes of “Paul Krugman’s socialist bullshit parading as economics.” That’s another example of defining away the problem. I think I’d prefer to let Paul Krugman (or, on the other side, Greg Mankiw) define his approach. For better or worse, I think it’s ridiculous to describe what Krugman (or Mankiw) does as X “parading as economics,” for any X. Sorry, but what Krugman and Mankiw do is economics. They’re leading economists, and if you don’t like what they do, fine, but that just means there’s some aspect of economics that you don’t like. It’s silly to restrict “economics” to just the stuff you like. Just to shift sideways for a moment, I hate the so-called Fisher randomization test, and I also can’t stand the inverse-gamma (0.001, 0.001) prior distribution—but I recognize that these are part of statistics. They’re just statistical methods that I don’t like. For good reasons. I’m not saying that my dislike of these methods (or Larry’s dislike of Krugman’s economics) is merely a matter of taste—we have good reasons for our attitudes—but, no, we don’t have the authority to rule that a topic is not part of economics, or not part of statistics, just because we don’t like it.

Oddly enough, I don’t really have a problem with someone describing Krugman’s or Mankiw’s writing as “bullshit” (even though I don’t personally agree with this characterization, at least not most of the time) as with the attempt to define it away by saying it is “parading as economics.” Krugman’s and Mankiw’s writing may be bullshit, but it definitely is economics. No parading about that.” http://statmodeling.stat.columbia.edu/2014/01/16/22571/

I kind of agree with you. Consider this quote…

“However well balanced the general pattern of a nation’s life ought to be, there must at particular times be certain disturbances of the balance at the expense of other less vital tasks. If we do not succeed in bringing the German army as rapidly as possible to the rank of premier army in the world…then Germany will be lost! ”— Adolf Hitler (1936)

Only allowing one person to rank all the public goods is certainly economics… but anybody who advocates for this type of economic system is a very bad economist. The problem with this economic system is very very very simple. No matter how smart or knowledgeable a person is, their perspective is extremely limited. But again, everybody’s perspective is different, which is why it’s so beneficial to combine perspectives.

“Kolata’s article is excellent but I do have one complaint: every expert quoted in the article is a doctor. The topic is medical research, so, sure, doctors are experts. But these questions are not just medical: they involve statistics, they involve economics, they involve politics too. So I don’t think docs should be the only people interviewed.” http://statmodeling.stat.columbia.edu/2018/04/02/ones-important-better-analyze-cancer-drug-trials-using-multilevel-models/

Getting back to the dog show example, I’m hardly a dog expert. But I certainly rank some dogs a lot higher than others. Given the opportunity to vote for my favorite dog I probably would, after all, it’s not like it would cost me anything to do so. But it’s obviously a different story if we’re talking about donating. In this case, every dollar that I donated to help elevate my favorite dog is a dollar that I couldn’t donate to help elevate my favorite economist. From my perspective the opportunity cost would be very high. Therefore, I’d happily sacrifice my influence over the dog rankings in order to have more influence over the economist rankings.

“Moreover, men’s desires when left to achieve their own satisfactions, follow the order of decreasing intensity and importance: the essential ones being satisfied first. But when, instead of aggregates of desires spontaneously working for their ends, we get the judgments of governments, there is no guarantee that the order of relative importance will be followed, and there is abundant proof that it is not followed.” – Herbert Spencer, An Autobiography

Is this theory falsifiable? Here’s what you wrote…

“From the standpoint of the philosophy of science, pop economics or neoclassical economics is, like Freudian theory, unfalsifiable. Any behavior can be explained as rational (motivating economists’ mode 1 above) or as being open to improvement (motivating economists’ mode 2 of reasoning). Economists can play two roles: (1) to reassure people that the current practices are just fine and to use economic theory to explain the hidden benefits arising from seemingly irrational or unkind decisions; or (2) to improve people’s lives through rational and cold but effective reasoning (the famous “thinking like an economist”). For flexible Freudians, just about any behavior can be explained by just about any childhood trauma; and for modern economists, just about any behavior can be interpreted as a rational adaptation—or not. In either case, specific applications of the method can be falsified—after all, Freudians and neoclassical economists alike are free to make empirically testable predictions—but the larger edifice is unfalsifiable, as any erroneous prediction can simply be explained as an inappropriate application of the theory.” http://statmodeling.stat.columbia.edu/2018/04/26/quick-rule-thumb-someone-seems-acting-like-jerk-economist-will-defend-behavior-essence-morality-someone-seems-something-nice/

I disagree that the “larger edifice” is unfalsifiable. Like I said, it would be relatively easy for Krugman to use a dog show to test socialism, democracy and markets.

“It’s a frustrating thing that this sort of careful, policy-relevant work (I haven’t read the paper carefully so I can’t comment on the quality of the analysis, one way or another, but it certainly seems careful and policy-relevant) doesn’t get so much attention compared to headline-bait like pizzagate or himmicanes or gay genes or whatever. And I’m part of this! A careful quantitative analysis . . . what can I say about that? Not much, without doing a bunch of work.” http://statmodeling.stat.columbia.edu/2018/04/27/economic-growth-healthy-kids/

“Fake social science crap in the NYT, NPR, Ted, etc., sucks away attention from real issues.” http://statmodeling.stat.columbia.edu/2018/05/16/no-no-epidemic-loneliness-dog-bites-man-david-brooks-runs-another-column-based-fake-stats/

Socialism, democracy and markets are three very different allocation systems. Each system is going to allocate attention very differently. They aren’t going to allocate the same amount of attention to “loneliness epidemics” or pizzagate. In this sense, economic systems can be falsified.

“Huh? We should be complaining because a company is suboptimally allocating resources? I don’t get it. We can laugh at them, but why complain?” http://statmodeling.stat.columbia.edu/2018/04/24/words-words-twitters-280-experiment/

“I agree that one of the duties of academic research is service, and part of this can be discharged by communication to general audiences. On the plus side, if you can communicate to the general public, then you’re reaching more people who can uncover flaws in your ideas. So one of the benefits of public exposure is that you can get some valuable critiques from the outside.” http://statmodeling.stat.columbia.edu/2018/07/16/carl-sagan-effect/

Twitter uses the democratic economic system to allocate attention. I complain about this because, in theory, it’s misallocating a massive amount of society’s precious attention. My friend’s tweet has only been retweeted twice and it’s only received three hearts

My retweet/heart really doesn’t accurately reflect my valuation of the tweet/paper. Does my estimate of this content’s importance matter? I sure think it does.

From my perspective I’ve discovered a fundamental flaw in Twitter’s idea. All bugs are shallow given enough eyeballs (Linus’s Law). But it’s not like Twitter is going to listen to me. I’m not Paul Krugman.

Twitter’s idea is flawed, which means its priorities are flawed. I shouldn’t need to be a Nobel economist to help improve Twitter’s priorities. Right now everybody has the opportunity to use voting to help improve phpBB’s priorities… https://www.phpbb.com/community/ideas/ The world would be a much better place if everybody was free to use donating to help improve phpBB’s priorities, and Twitter’s priorities and the priorities of each and every organization.

If you get a chance, you should allocate some attention to this economic timeline….

https://docs.google.com/document/d/14g6lyjm2BsAmv_J7Yj-8evb2VJC3QR7oFanUZLGdn1E/edit?usp=sharing

Wow! That’s a long email. This dude should have his own blog.

All I have to say is to remind people of the distinction between willingness-to-pay and ability-to-pay. Economists often say “willingness to pay” when they really mean “ability to pay.” Also The K Foundation burns Cosma’s turkey.