Signaling vs. certification at Harvard

Harvard will be teaching solely on-line this fall (with some students in residence), yet charging full tuition rates.  Many commentators are thus suggesting this supplies evidence for the signaling theory of education.

But not exactly.  The signaling theory, taken quite literally, is that education is a very difficult set of hurdles to surmount, and if you can get through Harvard you must be really really smart and hard-working.  Caltech maybe, but Harvard like Stanford and many other top schools makes it pretty easy to get through with OK enough grades.

The hard part about Harvard is getting in.  By selecting you, Harvard certifies you (as long as you are not part of “the 43% percent,” legacy, athletes, etc…but wait that counts too!).

Why isn’t there a service that just certifies you directly?  Surely you could run a clone of the Harvard admissions department pretty cheaply.

Perhaps the logical conclusion is that both the “social connections/dating” services of Harvard and the certification services of Harvard are strong complements.  If you are certified by Harvard, but live on a desert island, or carry a contagious disease, that certification is worth much less.  So it is hard to unbundle the services and sell the certification on its own, without the associated social networks.  Nor is it so worthwhile to sell the social connections on their own.  Harvard grads are socially connected to their dry cleaning workers as it stands, but that does not do those workers much good.

It takes a good deal more work to get signaling to enter this story.  In the signaling story, you can’t tell who is high quality without actually running the tournament, and that is more or less the opposite of the certification story.

Keep also in mind that the restricted Harvard services are probably only for one year (or less), so most students will still get three years or more of “the real Harvard,” if that is what they value.  And they can use intertemporal substitution to do more networking in the remaining three years.  It’s like being told you don’t get to watch the first quarter of a really great NBA game.  That is a value diminution to be sure, but there will still be enough people willing to buy the fancy seats.  Most viewers in the arena don’t watch more than three quarters of the game to begin with.

*False Alarm*, the new book by Bjorn Lomborg

The subtitle is How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.

I agree with the author’s claim that climate change is not an existential risk for humanity.  Still, both the title and subtitle bother me.  The alarm does not seem to be a false one, even if many of the worriers make grossly overstated claims about the end of the earth.  And right now “climate change panic” is not costing us “trillions,” rather virtually all countries are failing to reduce their carbon emissions and most are not even trying very hard.

There should be more of a focus on the insurance value of avoiding the worst plausible scenarios, which are still quite bad.  There is no argument in this book which overturns the Weitzman-like calculations that preventive measures are desirable.

I can report that the author endorses a carbon tax, more investment in innovation, and greater adaptation, with geoengineering as a back-up plan, more or less the correct stance in my view.

There is much in this book of value, and the criticisms of the exaggerated worriers are mostly correct.  Still, the oppositional framing of the material doesn’t seem appropriate these days, and Lomborg will have to choose whether he wishes to be “leader of the opposition,” or “provider of the best possible message.”  Or has he already chosen?

Monday assorted links

What I’ve been reading

1. Yukio Mishima, The Sailor Who Fell From Grace With the Sea.  Yes compelling, and a sufficiently influential book that you should read it.  But aren’t you ever tempted to ask: has anyone ever behaved like that?

2. Rutger Bregman, Humankind: A Hopeful History.  An elegantly written book, offering an optimistic take on human nature and cooperativeness.  I am not sure there is anything fundamentally new in here, but I did in fact read and finish it.

3. Juan Williams, Thurgood Marshall: American Revolutionary.  A very good and readable biography of exactly what it promises, also manages to avoid hagiography.

4. R. James Breiding, Too Small to Fail: Why some small nations outperform larger ones and how they are reshaping the world.  A very useful book expanding on the theme that smaller nations have the potential to be much better governed and thus to have smarter policy and greater accountability.

I have not yet read Steven Johnson, Enemy of All Mankind: A True Story of Piracy, Power, and History’s First Global Manhunt, but in general I enjoy his works and find them smart.

There is also Jim Tankersley, The Riches of This Land: The untold, true story of America’s middle class.

Richard W. Hamming, The Art of Doing Science and Engineering: Learning to Learn is the latest Stripe Press blockbuster.  Here is more information about the book.

Signaling virtuous victimhood as indicators of Dark Triad personalities

We investigate the consequences and predictors of emitting signals of victimhood and virtue. In our first three studies, we show that the virtuous victim signal can facilitate nonreciprocal resource transfer from others to the signaler. Next, we develop and validate a victim signaling scale that we combine with an established measure of virtue signaling to operationalize the virtuous victim construct. We show that individuals with Dark Triad traits—Machiavellianism, Narcissism, Psychopathy—more frequently signal virtuous victimhood, controlling for demographic and socioeconomic variables that are commonly associated with victimization in Western societies. In Study 5, we show that a specific dimension of Machiavellianism—amoral manipulation—and a form of narcissism that reflects a person’s belief in their superior prosociality predict more frequent virtuous victim signaling. Studies 3, 4, and 6 test our hypothesis that the frequency of emitting virtuous victim signal predicts a person’s willingness to engage in and endorse ethically questionable behaviors, such as lying to earn a bonus, intention to purchase counterfeit products and moral judgments of counterfeiters, and making exaggerated claims about being harmed in an organizational context.

That is a new paper by E. Ok, et.al, via a loyal MR reader.  Here are various versions of the paper.

Alcohol is again the culprit

It is “crystal clear” drunk people can’t – or won’t – socially distance, a police chief has warned after scenes showed huge crowds packed into Soho in central London.

John Apter, chair of the Police Federation, said he witnessed “naked men, happy drunks, angry drunks, fights and more angry drunks” while on shift in Southampton – and there were similar scenes across the rest of England.

Chris Whitty, England’s chief medical officer, had warned reopening pubs was a “high risk” for spreading coronavirus ahead of the easing of lockdown restrictions which also saw restaurants, cinemas, hairdressers and museums open their doors on what was dubbed “Super Saturday”.

Here is the article (no further reason to click), via Matt Yglesias.

Sunday assorted links

1. “Belgium was the worst-hit country per capita in Europe. They did systematic testing for #SARSCoV2 in long-term care facilities, just reported…o symptoms were reported in 6,244 *(74.8%)* of 8,343 people who tested positive”  Link here.

2. Scott Sumner on Joseph Conrad.

3. “On a per-capita basis, of the European majors only Germany has done better than the US in death rate”  Link here.

4. The WHO was (and is) wrong about the virus being airborne (NYT).  A remarkable story about an unfathomable error of great import.

5. Georgia Tech professors revolt over reopening.

6. Why the German anti-vaccine movement is robust.

7. Colonizing the sun?

On some limitations of personality psychology

…Big Five Conscientiousness was not found to correlate with mask wearing in a sample of thousands in Spain during the coronavirus epidemic (Barceló & Sheen, 2020). This was not treated by the authors as any kind of falsification of the Big Five, or even evidence against it. The abstract noun “conscientiousness” has a rich meaning, only part of which is captured by the Big Five, and only a tinier part of which is captured by the two-question methodology used here (“does a thorough job” and “tends to be lazy”). But Conscientiousness is often correlated to health behaviors, and is often said to predict them with various strengths, even though the questions in the survey focus on job performance and tidiness.

Here is the full essayby a literal banana,” interesting throughout.

“The purchasing power of money is the same everywhere”

Didn’t Mises insist on that proposition in his Theory of Money and Credit?  The claim always bugged me, as it is true only tautologically.  Here is one counterexample:

In a remote area of Papua’s Pegunungan Bintang regency, purchasing staple commodities will put a far bigger dent in your wallet than in most other areas of Indonesia.

For a sack of rice, typically weighing 10 kilograms, people in the traditional gold mining area of Korowai have to spend at least Rp 2 million (US$138.5), similar to the cost of a low-end smartphone.

For comparison, in Jakarta, 1 kilogram of rice costs Rp 10,000 to Rp 11,000, meaning 10 kg of rice costs people in the capital around Rp 110,000.

The massive price discrepancies are not limited to rice. A box of instant noodles costs Rp 1 million in Korowai. Sometimes, people even pay with two grams of gold.

“A pack of instant noodles costs Rp 25,000,” said Hengki Yaluwo, an administrator of a cooperative in Korowai’s Mining Area 33 on Wednesday.

“Ten kilograms of rice costs four grams of gold. If you pay with cash, you need Rp 2 million,” he said.

One can of fish typically costs Rp 150,000, while a cell phone could cost 10 to 25 grams of gold, Hengki said.

As for arbitrage:

Reaching Korowai is difficult. People must take a helicopter from Bovel Digoel regency, and then continue by longboat, traveling along the Boven Digoel river for one day. After this, they must travel by foot for two days before finally arriving at the Korowai mining area.

Here is the full story, via Shaffin Shariff.  Here are photos of the Korowai people, ignore the text.  Here is a more sober and probably more accurate Wikipedia article.

The NBA’s reopening is a warning sign

There’s only one problem: An increasing number of players do not seem very interested in being guinea pigs in this experiment. At first the secessions were a trickle. Now they are picking up steam.

Davis Bertrans, arguably the second-best active player on my home team the Washington Wizards, will not play because he doesn’t want to risk injury and endanger his prospects as a free agent next season. [TC: Bradley Beal has since announced his indecision.]  That’s an entirely reasonable excuse, and more and more players are finding them…

These players will still be paid, but they are lowering their future market value by expressing less than a full commitment to the team. And it is hard to imagine that many other workplace environments can be made much safer than the planned NBA bubble.

One has to wonder how many other players are planning to drop out, or perhaps hoping that the decision will be made for them: Maybe they will get an injury during training camp, say, or worsening conditions in Florida will require cancellation of the season, or it will become more socially acceptable not to play. In the meantime, the dominant strategy may simply be to wait and root against the resumption of play.

Here is the rest of my Bloomberg column on this topic.  The broader point of course is this: if players being paid millions, and put into a highly regulated bubble, and tested regularly, feel this way, what about the broader work force?

The merit of Mount Rushmore

I went there once, I think in 1988.  To me it was a nightmare, aesthetically and otherwise.  The art of the monument was “not even as good as fascism.”  (Various Soviet-era memorials are far superior as well.)  I am not into the whole cancelling thing, but I didn’t feel I needed to pay additional homage to a bunch of well-known presidents.  The surrounding food scene appeared quite mediocre, although probably that has improved.  Overall it was crowded, tacky, and unpleasant, with absolutely nothing of value to do.

The main value of the scene was to liberate space and ease congestion in other parts of the universe, so I certainly hope they never abolish it.

Megan McArdle on Patrick Collison on China

By the time someone gets to be chief executive of a successful firm, they have generally been trained out of saying anything surprising in public. So I was positively astonished Monday when I saw Patrick Collison, the CEO of payments firm Stripe, tweet that “As a US business (and tech) community I think we should be significantly clearer about our horror at, and opposition to, the atrocities being committed by the Chinese government against its own people.”

On first read, that sentiment might seem banal. Of course we should clearly oppose China’s intensifying political repression. But is easier to list American business leaders who have cravenly excused the inexcusable than to name those such as Collison, who have been brave enough to state the obvious. When it comes to China’s human rights abuses, the position of the American business community is prone…

“It must be possible,” Collison tells me, “to acknowledge the basic facts — for example, that concentration camps and forced sterilization programs are reprehensible evils. If it becomes de facto unacceptable to do so, as part of some kind of self-perpetuating silence, it really seems to me that that’s a positive feedback loop that we should hurry to break.”

There is much more at the link, definitely recommended.

What should I ask Nicholas Bloom?

I will be doing a Conversation with him, so what should I ask?  Here is part of his official bio:

Nicholas (Nick) Bloom is the William Eberle Professor of Economics at Stanford University, a Senior Fellow of SIEPR, and the Co-Director of the Productivity, Innovation and Entrepreneurship program at the National Bureau of Economic Research. His research focuses on management practices and uncertainty. He previously worked at the UK Treasury and McKinsey & Company.

Is there anyone whose name is on more important/interesting papers over the last ten years?  Here is a sampling.

So what should I ask him?

Deconvexifying the car, car feature markets in everything

…BMW is planning to move some features of its new cars to a subscription model, something it announced on Wednesday during a briefing for the press on the company’s digital plans.

…now the Bavarian carmaker has plans to apply that model to features like heated seats. BMW says that owners can “benefit in advance from the opportunity to try out the products for a trial period of one month, after which they can book the respective service for one or three years.” The company also says that it could allow the second owner of a BMW to activate features that the original purchaser declined.

In fact, BMW has already started implementing this idea in some markets, allowing software unlocking of features like adaptive cruise control or high-beam assist (in the United States, those options are usually standard equipment). Other features are more whimsical, like having a Hans Zimmer-designed sound package for your electric BMW or adaptive suspension for your M-car. Indeed, the company says that its forthcoming iNext will “expand the opportunities for personalization.” I’m sure y’all can’t wait.

Here is the full story, via the excellent Samir Varma.  In the standard theory of bundling, bundling enables more price discrimination, as for instance with the cable TV bundle.  But if most consumers really don’t value the add-ons at all, which perhaps is the case here, a’la carte may maximize revenue after all.