21 July 2013

Status Games

askblog | Arnold Kling | Education, Status Goods, and Economics

Rory Sutherland makes a valid point about education.
while we may want everyone else to be equally healthy (bee), we want our children to receive a better education than our neighbour’s children (chimp). If parents were more honest about their chimp heritage, they might also admit that, when choosing a school, they care less about the staff or the facilities (something government might solve) than about placing their children within an appropriate peer-group (something it can’t).
... However, Sutherland goes overboard in his description of life as “Darwinist.” He focuses on status as a zero-sum game. The point that economists make is that while this game is going on, there is also a positive-sum game, involving trade, innovation, and growth.
Kling's point is an important one. The existence of a zero-sum game does not preclude the existence contemporaneous positive-sum game as well.

So what do we do about the zero-sum status game? Our political class either asserts it doesn't exist, or is willing to move heaven and earth to rig the game. And no, these two responses don't map as neatly on to the Red Team and Blue Team as you might think. Witness the grotesque farm bill we got from the GOP recently. This is a particularly foul subspecies of reaction which revolves around willfully misidentifying who the winners and losers in the game are.

The state puts it's thumb on the scales of the status game in one of two main ways: prevent people at the top from winning too much, and distributing extra resources to people at the bottom to give them a leg up.

You are familiar with all of the standard libertarian objections to this: it curtails freedom, it perverts incentives, it silences signals, it engenders moral hazard, it's inefficient, it's ineffective, etc. You've heard these arguments and their counters before. I'll give you two objections I wish were made more frequently.

The first problem with trying to disrupt the results of the status game is that people just change the game. They find new ways to measure status, new ways to compete, new dimensions to rank themselves on. For example, the last century has seen an epochal shift from determining status by what we consume to determining it by what we produce.

Sutherland mentions the status jockeying that plays out by parents via their children's education. I think one of the reasons we see so much competitiveness in this is because adults no longer have much room to compete directly. We fight proxy wars through our children. It's vulgar to brag that you are the best Foo, but it's still polite to boast that your progeny is the best Baz.

The second problem with trying to rig the competition in a status game is that it reinforces the implied importance of the status game.

If Jimmy is pitching a fit because Betty got more candy on Halloween you don't tell him "Oh no! You're right Jimmy, that's so unfair! You're a victim! I wish we could take some of Betty's candy and give it to you." That's only going to make Jimmy feel his relative loss more acutely. What you do is remind him that even though Betty has more candy than him, he's still holding a sack of free candy. We expect six year olds to be able to handle that kind of moral reasoning, but somehow we don't expect it out of the American electorate.

I'm not holding my breath for politicians to stop harping on about voters' relative rankings. That's bread and butter for them. But I do expect better from civic leaders, and especially religious figures. (I'm staring at you, Roman Catholic Church.)

Does society have zero-sum competitions? Yes. Are they important? Yes, sometimes. Should we make sure the rules are fair? Yup. Can we help people on the losing end of these competitions? Sure. But let's not forget one of the best ways to help people is to remind people that there is more to life than their relative standing in the herd.

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