The Curious Preferences of Poverty

Most popular non-fiction books on development economics, foreign aid, and extreme poverty can be grouped into three broad camps. The first camp targets its analysis on state formation and institutional development. This is very much a political-philosophic approach, with major figures being Francis Fukuyama, Samuel Huntington, Amartya Sen, and more recently Daron Acemoglu and James Robinson with their wonderful new book Why Nations Fail.

The second camp blames stagnant growth and instability on "development traps": negative feedback loops that keep poor countries poor. Under this paradigm, sufficiently large doses of well-coordinated foreign aid can jolt a country out of the trap and into a virtuous cycle of autonomous growth and institution-building. Jeffrey Sachs' The End of Poverty has the best articulation of this view, with Paul Collier's The Bottom Billion deepening the theory by cataloging more structural roadblocks to development.

The third camp, in direct opposition to this "big aid push"  idea, finds little evidence for entrenched poverty trap-stricken countries. According to this approach, development assistance is often counterproductive due to the misaligned incentives and limited information of foreign aid planners. William Easterly's The White Man's Burden is the best example of this perspective.  The disagreement between camps 2 and 3 is roughly analogous to the central planning-versus-free market cleavage in political philosophy.

Poor Economics, a new book by MIT economists Abhijit Banerjee and Esther Duflo, is an aggressive attempt to buck that well-trod dichotomy and identify a novel approach. They attempt this feat by going meta, grouping camps 2 and 3 together as "grand theory" approaches and balancing them against their own "no theory" approach. In their view, studying development should involve using rigorous data (especially from randomized trials) to make limited claims about which techniques work and which ones don't.  

Photo Credit: Jim Davis

The book is structured by topic, with chapters investigating various aspects of the economic lives of poor people. Many of the specific findings are incredibly interesting: poor people often choose fewer tastier calories over more cheaper calories; parents might not encourage education for their kids for fear of losing their assistance around the house. The limited conclusions at the end of the book are equally novel: the poor bear responsibility for too many aspects of their lives compared to rich people who have many "right" decisions made for them, like chlorinated water, fortified food, automatic savings, etc.

Poor Economics is an interesting and important book, but its conceptual framing is flawed. It's filled with tons of fascinating little nuggets of information, but that's pretty much it. The attempt to go all meta and establish a new "big theory vs. little theory" framework falls into a common fallacy. Camp 3 is more critical theory than anything else, and labeling it a "big theory" just like camp 2 is akin to calling atheism a religion and 'off' a television channel. Instead, Poor Economics is most accurately viewed as merely a superb implementation of the camp 3 approach. Banerjee and Duflo, whether they admit it or not, are dutiful and committed searchers.

Obnoxious Advertising and Retaliation

I recently stumbled across this interesting quote by the graffiti artist Banksy sharing some thoughts on advertising:

"People are taking the piss out of you everyday. They butt into your life, take a cheap shot at you and then disappear. They leer at you from tall buildings and make you feel small. They make flippant comments from buses that imply you’re not sexy enough and that all the fun is happening somewhere else. They are on TV making your girlfriend feel inadequate. They have access to the most sophisticated technology the world has ever seen and they bully you with it. They are The Advertisers and they are laughing at you. You, however, are forbidden to touch them. Trademarks, intellectual property rights and copyright law mean advertisers can say what they like wherever they like with total impunity. Fuck that. Any advert in a public space that gives you no choice whether you see it or not is yours. It’s yours to take, re-arrange and re-use. You can do whatever you like with it. Asking for permission is like asking to keep a rock someone just threw at your head. You owe the companies nothing. Less than nothing, you especially don’t owe them any courtesy. They owe you. They have re-arranged the world to put themselves in front of you. They never asked for your permission, don’t even start asking for theirs."

The best way to read this quote is as a normative statement concerning the boundaries of J.S. Mill's harm principle, which basically says people should be free to do what they want as long as they're not harming other people. Mill did not consider offensive acts necessarily harmful, and didn't view coercive action to reduce mere offense as morally justified. According to Banksy, many advertisements in public spaces, by virtue of their aggressive and meddlesome nature, do violate the harm principle and thus forfeit their right to physical integrity.

Presumably Banksy thinks it's okay to deface ads in public spaces only because the economic and social policies that encourage them are morally lacking. Ideally he should want a different set of rules that match up with his conception of what a public space should look like.

Banksy's analysis comes to some foolish conclusions: by extending the boundaries of the harm principle to include offense, we're left with an almost infinitely broad rule. City dwellers are constantly looking at random stuff that has been created by other people with various purposes in mind. What separates marketing activity from other sorts of advertising, like political advertisements, notifications about public services, and marketing material for cultural events? Is a business that's offended by the signs and posters displayed by striking workers in a picket line morally justified in defacing or destroying them? Banksy would probably say no, even though they follow from the logic he sets up. Frankly speaking, our modern urban society would fall apart if everybody went around asserting ownership or control over anything that offended them. I think it's more likely that Banksy just doesn't like the aesthetics or symbolism of most corporate marketing, and he's indulging in some poorly-considered rhetorical nonsense.

So what about our system as it stands today? Could we actually have a setup now that gets pretty close to an optimal arrangement, based on the median attitude towards graffiti in public spaces? Let's think about it. If Banksy got his wish and the harm principle was extended to make retaliation for offensive ads fair game, several things would happen. First, the returns on physical advertising would collapse: anybody spending money to design and implement physical advertisements would probably see them defaced or destroyed immediately. We would likely see fewer ads in easy-to-deface places, and more ads in hard-to reach places, like buildings. This would dramatically increase the barriers to entry for smaller firms and non-commercial groups wishing to advertise--probably not the most open and democratic outcome!

Even while dramatically raising the costs of advertising for most groups, Banksy's vision would paradoxically see the costs of amateur graffiti crash to zero. In easy-to-reach areas, this would create a emphatically non-aesthetic mess of tagging and retaliatory defacing. The website 4chan is an interesting social experiment in anarchic anonymous collaboration, but I'd rather not see the same dynamics played out on corner store windows across the country.

With our current setup, graffiti is a serious enough crime as to deter most potential offenders, keeping our buildings and public surfaces relatively clean. We have ads in public spaces, but often the really terrible ones are targeted by the individuals and groups most affected--homeowners, local businesses, neighborhood groups, etc. Additionally, a certain set of die-hards will always be willing to risk getting caught defacing bad advertising in order to make their point. It seems like tweaking some regulations on the margin is the way to go if we're concerned about overly-intrusive ads in public spaces. Or maybe we could just go camping.

The Horror of Freedom

These RSA Animate videos just get better and better:

Upvote for Aggregation Innovation

When discussing the internet--a topic both accessible and interesting--most people seem to have some pet analysis that they deploy regularly, steering the conversation to a place where their favorite conversational lines can flourish. One that I hear often is that the internet has progressed along a sort of dialectic. First, early content-creators provided info for the masses. Next, as costs plummeted (due to better technology, infrastructure, and user interfaces) the masses became content-creators themselves, causing an explosion in the amount of information available on the web. I'm talking about the rise of things like social networks, blogging, and Wikipedia. The third trend, which is supposed to be happening now, is innovation in methods for sorting through that crush of information. The best example would be Pandora, but stuff like Stumbleupon and Google+'s "circles" idea also illustrates the demand for information-filtering and -structuring services.

This model is fun and useful, especially when thinking about the explosive popularity of sites like reddit. Now, any attempt to analyze, define, characterize, or label the multifarious and sublime reddit is ultimately doomed to failure, but it's a start. Reddit is possible for many reasons: the existence of free image and video sharing websites, the hyperlink navigation system, its prodigious size and diversity, its non-invasive design and style, sheer inertia and luck, etc. But the most critical ingredient in reddit's success is its total reliance on a wildly undervalued aggregation innovation: the upvote/downvote system.

Every hour of every day, thousands of people are submitting content on reddit--pictures, videos, links, discussion comments, interview questions, whatever. Every topic imaginable is represented, but for simplicity's sake let's focus on just pure humor, which plays an outsize role for most users. All of this content is presented as a massive list, with multiple nested threads. Users then vote on the material, registering approval with an upvote and disapproval with a downvote. The votes are then aggregated, pushing popular content up in the rankings, while burying unpopular content. What results is basically a hyperactive cultural laboratory driven by a sped-up Darwinian variation-and-selection process where only the best content makes the front page.

A lot of what reddit pushes to the front page is silly, but that's only because what's silly is what people want. The upvote/downvote system is just a highly effective mechanism for producing desired outcomes based on the preferences of users. In r/funny we have what is probably the single-most reliable source for high-quality humorous material in the world. In r/aww we have a shockingly effective cuteness delivery vehicle. For a subreddit with a more specific or empirical purpose, such as r/whatsthisbug, we basically have a real-time, interactive, micro-Wikipedia.

By virtue of this sped-up Darwinian selection process, reddit is a fabulous resource for social scientists: by looking for regularities in submissions that do well or poorly, we can identify interesting psychological biases or preferences in the user base. A good example of this is reddit's consistent interest in objects and animals that coincidentally take on human characteristics (i.e.machines that look like faces, animals making complex emotional expressions, etc.). Keeping in mind the long history of humans finding human-like agency in ridiculous things, reddit provides the richest dataset for testing hypotheses dealing with this question.

The consensus of scholars who study different methods of aggregation seems to be that all have certain strengths and weaknesses. We have elections, with different voting systems that favor certain types of candidates. We have wikis. We have markets, which can be understood as preference-aggregating institutions, their outcomes relying on the informational role of the price signal. Prediction markets are an interesting subset. The upvote/downvote mechanism has only just emerged as a serious alternative, yet already it has demonstrated astounding outcomes on a wide variety of topics. It is utterly devoid of any rigorous intellectual attention, but that will surely change as more and more applications are discovered and adopted by successful organizations.

Note: some might consider the rise of smartphones and the mobile internet (and thus its fusion with other technology like gps, photography, and videography) the fourth "macro-trend" in the internet's historical narrative. Perhaps, but my guess is that once some reboot of the Grafedia idea becomes fabulously successful (just wait), we'll instead see smartphones as just the first step in a more general process of blending the real world with the internet (augmented reality technology like Google Goggles is advancing rapidly).

Information Nexus

1. Six Rules For Dining Out (more here)
2. Beautiful Mathematics Documentary
3. Will Wilkinson on Health Care
4. Rap News: Yes We Kony
5. A Delicious Takedown of Senator Olympia Snow

Deep Analysis of a Silly Thing

Science fiction is really effective at presenting social and philosophical concepts to the reader in an interesting and easy-to-digest manner, and the recent spate of highly intellectual articles about The Hunger Games is a great example. Matt Yglesias evaluates that fictional world through the lenses of economic theory and political economy. Michael Lewis gets into the mathematical aspects of the lottery system, and considers the contenders' behavior via a game theoretic model. But the most provocative article concerns the social justice dimensions of the book and movie:

"The clear problem with this isn't that girls will want to hold out for a Prince, but that it might foster the illusion their value is so innately high that even without pretty clothes or a sense of agency a Prince will come find them. Sleeping Beauty and Snow White are worse: they don't even have to bother to stay alive to get their Prince. 

The Hunger Games has this same feminist problem.  Other than the initial volunteering to replace her younger sister, Katniss never makes any decisions of her own, never acts with consequence-- but her life is constructed to appear that she makes important decisions."

This agency-based critique is interesting, but sort of looses its teeth once you consider the standard it sets up. Think about most action movies, especially those starring your typical white male lead. The only reason those guys survive the whole two hours is because of constantly recurring dumb luck. What is the exciting "just-in-time" moment if not a deus ex machina? Characters in action movies are constantly making vital decisions that run counter to the probability, but always survive. The fact that action heroes succeed due to random luck and not their decisionmaking ability or personal qualities reveals the illusion of their agency also.