Seth's Blog

My theory of human evolution posits that many features of human nature began because they increased specialization and trade. One is language. Language began with single words, I assume. The use of single words began and grew because they helped the two sides of trade find each other. The first language, in other words, was the first advertising. Advertising has two sides: (a) saying what you have too much of and (b) saying what you have too little of.

Single words are still used this way. Stores are often adorned with single words that say what they sell. When you go to an unfamiliar store, you may use single words to find what you want (“thermometers?”). The use of single words to convey desires is clear in a paper by Alexander Graham Bell, which I learned about from Electric Universe by David Bodanis. Bell (the inventor of the telephone) was a teacher of the deaf and wrote a paper about teaching deaf children language. His method involved labeling objects around the house with their names. One of his students was a five-year-old boy:

One morning he came downstairs in high spirits, very anxious to play with his doll. He frantically beat his shoulder with his hands, but I could not understand what he meant. I produced a toy-horse; but that was not what he wanted. A table; still he was disappointed. . . . At last, in desperation, he went to the card-rack, and, after a moment’s consideration, pulled out the word “doll” and presented it to me.

For a different view of why language evolved, see this paper by Hauser, Chomsky and Fitch.

I wrote this five years ago. Perhaps it is a holiday tradition to repost old posts about the deadweight loss of gifts.

In a kitchenware store a few years ago I came across the Rotary Nutcracker, a futuristic-looking device that cracks nuts in a new way. The girl at the cash register gave me a few walnuts to test it. It didn’t crack any of them. This was a curious product, I thought. Who would buy it? The salesperson told me that they’d stocked it for less than a year. I was the first person to test it. It had sold well during holiday season. Now I understood: people didn’t buy it for themselves, they bought it as a gift. As a gift, it mattered much less how well it worked — “it’s the thought that counts.” No wonder I was the first to test it.

Here, I saw, was my theory of human evolution in . . . well, a nutshell. Part of it. Humans are the only animals with occupational specialization — we specialize, and trade. It started with hobbies. Hobbies became part-time jobs. Part-time jobs became full-time jobs. To support full-time jobs — to generate enough demand for the products of this or that specialization — there has to be enough expertise, which builds up slowly. To build up expertise, our brains changed so as to cause creation of special events like Christmas, Japanese New Year, Spring Festival (in China), and a thousand other examples around the world. Such events increase the demand for high-end craftsmanship, thus helping the most skilled craftsmen — the ones most likely to advance the state of their art — make a living. Christmas increases the demand for Christmas cards (fine printing) and Christmas-tree ornaments, for example. Traditional gift-giving has the same effect: It increases demand for “the better things in life.” Most gifts, if you follow the usual norms, are (a) not something you would buy for yourself and (b) not something the recipient would buy. (As Alex Tabarrok has noticed.) They are harder to make — and thus reward skilled craftsmen more — than the stuff we buy for ourselves, just as Christmas ornaments are harder to make than common household objects and Christmas-card printing is more difficult than most printing. Weddings, with the gifts, finery, invitations, etc., are another example. The Rotary Nutcracker didn’t work in my tests but it almost worked. If enough people bought it as a gift, that would finance the research needed to improve it.

Marginal Revolution and James Surowiecki have recently written about the “deadweight loss of Christmas” — about how gifts tend to be worth less than their cost. I think they see this as bad thing but I see it as a good thing — at least, in our evolutionary past it was a good thing. Deadweight loss = research grant. Likewise, the denizens of The Devil Wears Prada appear slightly defensive about the social value of fashion. They seem to believe that fashion is less useful than “curing cancer” (by which they mean doing research to learn how to cure cancer). Actually, high fashion, with its hard-to-make skirts, belts, and accessories, is the same as curing cancer — they’re two ways of increasing the human skill set. Art is the old Science.

• Harvard professors behaving badly: Alan Dershowitz. “In a phone interview Dershowitz denied writing to the Governor [of California], declaring, “My letter to the Governor doesn’t exist.” But when pressed on the issue, he said, “It was not a letter. It was a polite note.”" Dershowitz wrote the Governor of California to try to keep the University of California Press from publishing Beyond Chutzpah by Norman Finkelstein, which calls The Case for Israel by Dershowitz “among the most spectacular academic frauds ever published on the Israel-Palestine conflict”. Finkelstein’s book says nothing about whether Dershowitz actually wrote it. According to a statement from the UC Press, “[Finkelstein] wondered why Alan Dershowitz, in recorded appearances after [The Case For Israel] was published, seemed to know so little about the contents of his own book.”
• Umami Burger takes Manhattan.
• The trouble with measuring students on only one dimension: South Korea
• Why do twins differ? Both twins have autism spectrum disorder, but one has the disorder much more than the other. Guess which one  was “given powerful drugs to battle an infection”?

All cultures, as far as I know, have festivals and special celebratory days. At least they are extremely widespread — harvest festivals, for example. I believe they have a genetic basis. The underlying genes evolved because they increased sales of high-end “useless” stuff. This helped skilled artisans — a big source of technological innovation — make a living. Economists speak of the “deadweight loss” of Christmas because people buy stuff that would otherwise not be bought.

China retail giant Taobao (like Ebay, except better) has shown a shrewd understanding of the festival/shopping link. On Chinese campuses since the 1970s there has been a joke holiday called Singles Day (11-11). For people who are not in a relationship. In 2010 Taobao started having a sitewide sale on that day. This year total sales were $500 million. One retailer, one day. (For comparison, all US online retail sales for the 2010 holiday season were $33 billion.) No crowds, no difficulty parking, no long lines. Still stressful, yes, but in a good way: “This is so exciting – a war and a carnival at the same time,” said one shopper.

A lovely article by Michael Lewis about Daniel (“Danny”) Kahneman, my former Berkeley colleague, emphasizes his indecision whether to write a popular book about his work. Should I or shouldn’t I? He doesn’t like what he’s written so far. Finally he decides to pay some experts for their opinion:

He called a young psychologist he knew well and asked him to find four experts in the field of judgment and decision-making, and offer them $2,000 each to read his book and tell him if he should quit writing it. “I wanted to know, basically, whether it would destroy my reputation,” he says. He wanted his reviewers to remain anonymous, so they might trash his book without fear of retribution. The endlessly self-questioning author was now paying people to write nasty reviews of his work. The reviews came in, but they were glowing.

Uh, why would anonymous experts trash his book? They gain in two ways from having it published: 1. It draws attention to their field, making them more important. 2. They can use it as a textbook. I love that Michael Bailey wrote The Man Who Would Be Queen (pdf). It allows me to assign my students a book I admire.

I think Danny has raised two great questions here:

1. How can we set up a situation so that others will tell us the truth (= what they actually think)?
2. How can we tell if we’ve succeeded — if they’ve told the truth?

The answers aren’t obvious, at least to me. The best answer I can give to Question 1 (what situation?) is write a blog. I take positive and negative comments to be what their authors actually think.  Variations on Question 1 are common. Robin Hanson’s blog is about how bias distorts what we say and do. Hot or Not provides truthful answers to how attractive you are. CureTogether tries to get truthful answers about health care. The best answer I can give to Question 2 (how to assess) is do a test. Wear something ugly. Do your friends say you look great in it? Why do I think the comments on my blog are truthful? Well, my recent post about E-Cat was  poorly-informed (unintentionally). The comments quickly and overwhelmingly said so. That supports my belief. In contrast to Question 1, Question 2 is rare.

The last time I talked to Danny was in the 90s. I was thinking of writing a book based on my introductory psychology lectures. I wrote a sample chapter based on my possessiveness lecture. The center of that lecture was the endowment effect (we value what we possess much more than the same thing when we do not possess it). Danny had written about it and loss aversion is part of prospect theory. By then Danny was at Princeton. I spoke to him on the phone. Does the endowment effect affect your everyday life? Does it affect what you do?  I asked. He thought about it.  No, he said. Or at least he couldn’t think of examples. In contrast, Richard Thaler chatted happily about the everyday implications.

One everyday sign of the endowment effect is a car in front of a big garage. The car isn’t in the garage because the garage is full of “junk”. Another is garage sales (also called yard sales). Such sales are held when the clutter becomes unbearable. They illustrate the everyday relevance of the effect. My point isn’t that Danny was unobservant, it’s the difference between his answer and Thaler’s. There is definitely room for two answers to my question. Humans are traders. We specialize and trade. This is central to economic life. Early papers about the endowment effect (I haven’t looked at recent papers) didn’t notice the problem/puzzle. How can we both (a) hold on to stuff tightly (= the endowment effect, loss aversion) and (b) trade easily?  John List noticed.

My friend Michel Cabanac, whose research was behind the Shangri-La Diet, has criticized Danny. In a book (p. 140), Michel wrote:

At a lecture in Jerusalem on January 19, 2001, he [Danny] was kind enough to inform the audience that the recent reorientation of his research toward what he calls “experienced utility,” which he acknowledged to be a synonym of pleasure, had been inspired by my 1993 lecture at Princeton University and by previous readings of my publications on pleasure.

In an email he elaborated:

However the “lecture” [at Princeton] was a only an invited seminar in his laboratory with an audience limited to him and his team. If I remember well, he reimbursed my travel and housing expenses. Yet, the Jerusalem mentioning of my contributions was only verbal [i.e., spoken], as I failed and still fail to find reference to Cabanac in his publications.

Michel’s whole research career has centered on the idea that pleasure guides our actions,  including “cognitive” ones. Faced with an arithmetic problem (2 + 7 = ?), for example, some answers will seem more pleasant than others. (2 + 7 = 9 is more pleasant than 2 + 7 = 10, not just more familiar.) He has especially stressed that changes in pleasure — the same events become more or less pleasant — help us self-regulate. We stop eating when food becomes unpleasant, for example. The food stays the same, we change. No one has understood the role of pleasure — which is at the center of all human decision making  — better than Michel.

When I get a copy of Danny’s new book, Thinking Fast and Slow, I will be curious to see what he says about the endowment effect, loss aversion, and Michel Cabanac.

More  Via scrbd, I have found that Danny’s new book does reference Michel — see p. 488. And, in a chapter about the endowment effect, I found this: “Knetsch, Thaler, and I set out to design an experiment that would highlight the contrast between goods that are held for use and for exchange.”  He goes on to discuss List’s research. I am unable to find anything like the phrase “the contrast between goods that are held for use and for exchange” in the paper that the three of them wrote about the effect. Jack Knetsch began to study the effect because different ways of trying to establish the value of the environment (e.g., clean water) produced enormously different answers. The endowment-effect chapter is weak on everyday examples — nothing about garage sales — but does include an unsourced quote: “She didn’t care which of the two offices she would get, but a day after the announcement was made, she was no longer willing to trade. Endowment effect!”

Thanks to Dave Lull, who suggested online searching.