Powerful second-order effects

I started reading Scott Adams’ new book yesterday. One of his main points struck a chord with me. Adams makes a big deal about managing one’s attitude and energy. These factors are so powerful that improving them will lead to cascade effects of benefits throughout one’s life. The best part is there are neat tricks (in the BuzzFeed sense) one can use to control these knobs. Things like exercising, faking a positive mood, eating well, etc. The power of these mechanisms, in my eyes, comes from second-order effects, i.e. the direct result of the result of a change. Often times, first-order effects dominate for a given action and so we can safely ignore higher levels as insignificant or unpredictable. But when you can identify actions that have powerful and predictable second-order effects, especially when they overwhelm seemingly negative first-order effects, you have identified a power move. Taking advantage of these can make you seem like a superhero to others that are not aware of these mechanisms.

Consider a simple one such as not eating simple carbs (an example cited by Adams). The hungrier we get, the more we crave simple carbs. It would seem intuitive that eating them would sate us and resolve the hunger. Anecdotally, this doesn’t seem to be the case. Eating simple carbs seems to make us even more hungry, sooner, than other sources of calories. Not to mention the deleterious effects on body and brain function from the insulin spike. On the other side, you have something like exercise. Intuitively one could reason that exercise requires energy and time, and hence will drain one’s ability to perform afterward. In practice, it seems that exercise, or perhaps the consequences of exercising regularly, increases our overall energy level, focus, etc.

Adams provides a list of the simple, obvious actions that have predictable and powerful second-order effects that we can all take advantage of. What is fascinating is this concept can likely be extended to higher levels of decision making and coordination. Consider something like unwanted immigration, especially by low skilled laborers. The first order effects seem relatively straightforward and negative: the immigrants replace citizens in low skilled jobs, increasing unemployment, the load on the welfare system and sparking racial/cultural tensions. But what about second order effects? From the economics literature, it seems almost unanimous that immigration is net beneficial in the long run for the recipient state. New, better jobs are created and wealth increases; everyone is better off. The second-order effects, of positive outcomes, overwhelm the first-order negative effects. Is the effect powerful and reliable enough? Maybe. It is possible that the research is flawed or there are other caveats. But one can also imagine a world where policy makers become aware of and confident in this mechanism, and others.

Even you value privacy

If you have nothing to hide uses some extreme examples to show that everyone values privacy. At least to some extent. If there is anything about you that you would not want publicly known, then you have a desire for privacy.

Scott Adams often writes about what potential worlds with minimal privacy would look like. The benefits sound appealing, but I fear are utopian. The problem seems to be that a privacy-free world is a fragile system. It generally will work pretty well, and everyone will benefit. But it can fail catastrophically when a bad actor is able to leverage it.

3m_privacy_hoodie

Consider a low-privacy world. A diverse set of information about our lives is accessible with little effort by many parties. An adversary only needs to discover an unforeseen malicious use of this data in order to cause damage. In a high-privacy world, such an adversary faces another hurdle. He must go through the trouble of obtaining the data. Ideally with the data stored in a secure, distributed fashion. As an extreme example, only in people’s heads. The high-privacy world is less likely to experience widespread attacks on social infrastructure.

I posit that we are better off as a society if we build anti-fragile institutions and policies. But this is hard to do. It requires sacrificing potential short term, tangible gains in return for long term survival. It is difficult to jump from one equilibrium to the other.

The Logic of Buddhist Philosophy

Beyond true and false provides a high level overview of non-classical logic. With origins from Buddhist philosophy, they hint at something more utilitarian than mathematical constructs. Paradox is fundamental to our model of the world. Many states can exist beyond the simple true and false. Claims can be Both true AND falseNeither true NOR false, or ineffable. Or potentially any combination of the above. It is also fair to assume that we have not identified all possible combinations.

catuskoti-4-638

Freeing yourself from a true/false constraint is a powerful advancement in mindset. The hard part about thinking is asking the right questions. We have the idea that properly posing a question can quickly reveal a solution. Consider that depending on how you pose a question, it may not have an answer. Perhaps your time is better spent on a reframe.

The language we use frames our conventional reality (our Lebenswelt, as it is called in the German phenomenological tradition)

As a thought experiment, consider a typically politicized question or topic. Is it answerable? Can one theorize a data set and empirical model which would yield an answer that all sides could agree to? If not, the core issue is likely something else.

Old vs New, Mindfulness and Innovation

It seems like there is an inherent calm to studying the Old. Be it an old novel, the writings of a philosopher of past eras, or an analysis of historical events. Time and psychological distance awards us a context in which to situate these things. We gain a better sense of knowing them. There is an inherent quality filter as new creations overwhelm the weaker of the old. A Darwinism of thought. What remains tends to be the more valuable thinking and writing. This is useful for understanding a particular person or time. It also seems to help with tackling the problems of the future.

Zen stones in water

The best of the old is packaged wisdom. Wisdom feels nice; it affords a sense of security and solidity. Something that we can build upon. It can also provide us with tools and frameworks for dealing with the new. New problems which are reframes of old, new inventions which leverage past advances.

Seeking mindfulness, especially through meditation, feels like manufacturing a sort of internal wisdom. One seeks a steady, stable, quiet state. Cultivating such a state lends a feeling of comfort and calm. This is useful and feels especially necessary when the outside world is noisy. Advertisement assaults our attention. The news cycle induces anxiety. Technology doesn’t seem to be helping, at least not yet.

Singular focus on inner calm feels nice, but it hides a side effect that also arises with pursuit of wisdom. When one moves inwards or backwards, one can develop a disconnect with the outside (aka the real). This may feel fine psychologically, but it seems there is some sense of selfishness. Finding inner stability is good, but having a positive external impact is even better.

The outside, the new, is where innovation happens. Social, scientific and practical. Yesterday’s Game of Thrones episode, the latest published physics research and the hot tech startup. The outside is new and full of noise. It is anxiety inducing but also exciting. And without it, humanity stagnates. Finding wisdom and inner peace is a great goal, and an even better one is to extend that outwards.

Post-capitalism Links 7.23.2015

  1. Pope Francis leading a socialist revolution?
  2. The end of capitalism has begun – As the world economy becomes primarily information based, will we see reduced reliance on centralized corporate entities and monetary systems in favor of decentralized trust mechanisms and electronically mediated barter of labor time?
    1. La’Zooz: The Decentralized, Crypto-Alternative to Uber
    2. Bliive: Brazilian barter website turns time into money

Bonus: Price stickiness is not a mystery, and it is not psychology – Corporate and household debt priced in nominal terms as a primary driver for wage stickiness, and hence unemployment. Does pricing debt in non-monetary terms, such as labor time, eliminate this effect?

Ethics and [Effective] Altruism Links 7.20.2015

  1. The Logic of Effective Altruism
    1. Catherine Tumber Responds – Parallels drawn with Carnegie are interesting. Although I think a major counterpoint here is that raw economic growth has alleviated the majority of poverty within the last 20 years alone.
  2. Other People’s Mothers – Critique of Singer and utilitarianism as too reductionist. Theory vs practice of applying his concepts of Person-hood and altruism as prescribed. Not particularly damning of Effective Altruism, other than touching on the idea that adding just a bit of uncertainty to a toy model can completely throw off cost/benefit intuitions
  3. The Copenhagen Interpretation of Ethics – Emphasizes how difficult it can be to do a little bit of good rather than some idea of optimal (from a publicity perspective). Touches on the idea of how hard it is to analyze social cost/benefits of an act. To me, this suggests caution in following EA (effective altruism) arguments that suggest things like donating malaria nets being clearly more beneficial than Arts/Humanities charity.

The problem with mocking the “backwards right-wing guy”

Obviously gay marriage is OK, and obviously racism is bad. These things seem so obvious that it’s easy to get frustrated and angry with people that disagree. How could they not see how wrong they are? Well, one’s ethical opinions (amongst other things) are predicated by one’s culture. It seems obvious that individual rights are the most important thing; nothing is more important than an individual’s choice to do stuff that doesn’t harm others, right? Well, that wasn’t always the case. Nor, I venture a guess, will it always be the case. Societies have valued all kinds of stuff above and beyond individual rights; whether it be sanctity, the glory of the state, or what have you.

It is hard to reason from first principles, just as it is hard to see how one’s culture could not be the “one true way”. The confederate flag guy who doesn’t like black people, and the pastor who thinks gays are evil: they have their own cultures. They are just as convinced of their viewpoints as you are. Your viewpoints just happen to have the winds of progress at their back (for the moment).

Take it easy on the high road, because almost certainly you hold beliefs right now, today, that will be mocked with equal vigor sometime in your lifetime.

Optimization functions of firms – Benevolence vs Profit

The space of things that corporations optimize for can be viewed as a trade-off between profitability and positive externalities, typically in the form of monetary gift and/or social impact. We tend to find firms gravitating towards one of two extremes. Typically, for-profit corporations optimize for profitability, whereas nonprofit organizations will be loss-making in order to allocate resources towards their benevolent cause of choice.

  
The problem with typical NPOs is two-fold. Firstly, because they are loss making, they are reliant on external donations in order to operate and grow. This forces firms to expend resources and align their actions in order to attract donor dollars rather than focus on most efficiently achieving their stated philanthropic goals. While ideally donor dollars would be allocated based on measures of efficacy, this does not seem to happen in practice (see research from GiveWell.org). Secondly, because NPOs typically pick their own metrics of success which are potentially not particularly relevant or are hard to measure accurately, and donor dollars are relatively detached from metrics anyway, they will tend to do a poor job accomplishing optimization: the never-ending process of increasing efficiency and innovating, accelerated by market pressures, which for-profit firms are forced to do. As a result, the aggregate impact of NPOs is limited relative to that of pure profit-focused ventures.

However, it is clear that for-profit firms vary in terms of their impact outside of their wealth creation for stakeholders. They can donate some of their profit to NPOs as well as directly steer their own behavior (the profit engine) towards more benevolent ends. The problem with the donatation-centric approach is it falls prey to the NPO problems mentioned above, and on top of that it is probably exacerbated by the fact that for-profit firms making donations are even more inclined to be looking for signalling opportunities rather than finding the most efficient use of their donor dollars.

The most scalable and effective approach seems to be a for-profit firm which is able to generate positive externalities as part of its normal operations, either directly (profiting from other things along the way, as in Parent Earth) or indirectly as a by-product of capacity and capabilities (as in Microsoft giving away software).

Conspicuous Corporate Altruism

It seems that running a for-profit corporation with a large, well-publicized, altruistic component could serve as a viable competitive advantage. The economic rationale here is that altruism can be viewed as an expense with a variety of benefits: consumer mindshare, lower labor costs (employees willing to get paid less when working for such a company), the direct expense itself as a write-off, charging more for a product by presenting it as a [altruism-conscious] status signal, etc. For some of the firms that have built themselves around such a model, it seems to be relatively successful (Toms is an obvious example). My guess is there will be a growing trend of mainstream firms looking at the explicit tradeoffs of such altruistic efforts vs. plain old marketing and ad spend. I wonder how sustainable the benefits are if competitors take on a similar approach, or if it becomes a race to the bottom with no net mindshare increase for any single player.

How beneficial such acts of altruism are to humanity is a separate question altogether. I don’t think the questions of consumer motivation are particularly relevant, since on the margin the typical tradeoff an individual faces is do something or do nothing rather than optimizing what is done. Rather, it comes down to the tricky development economics issues raised by doing things like giving away shoes: probably better than giving money to the governments, but probably not as beneficial as giving mosquito nets.

Demonization of consumerism

There seems to be a general consensus within my cultural echo chamber that consumerism is objectively bad. It is easy to agree with this sentiment, but after stepping back and breaking down the concept I’m not so sure it is valid.

With demonization of consumerism comes the sanctification of its opposite. The evil twin called minimalism. One of the core tenets of minimalism is the idea that by having less you can better enjoy what remains. In other words, a state of Epicurean-like asceticism can make it easier to extract pleasure from experiences and things. For human beings, this is probably objectively true.

But is this concept so different from consumerism? Consumerism is a result of, and largely lives within, the game of capitalism. In this game, people tend to sacrifice their time and energy in return for tokens which allow for acquisition of goods and services to sustain life and provide pleasure.

While the means are different, the ends are similar. The consumerist is able to enjoy his marginal iPhone purchase as a complement to the hours spent at the office doing sometimes unenjoyable things. The minimalist is able to enjoy his marginal daily cup of tea as a complement to the rest of the day spent without the tea. And just as the minimalist learns to enjoy the physical thirst for tea before quenching it, the consumerist can learn to sublimate his desire for goods into productive labor in order to quench the thirst of material desire.