All posts tagged status

Book review: Leadership and Self-Deception: Getting out of the Box, by the Arbinger Institute.

In spite of being marketed as mainly for corporate executives, this book’s advice is important for most interactions between people. Executives have more to gain from it, but I suspect they’re somewhat less willing to believe it.

I had already learned a lot about self-deception before reading this, but this book clarifies how to recognize and correct common instances in which I’m tempted to deceive myself. More importantly, it provides a way to explain self-deception to a number of people. I had previously despaired of explaining my understanding of self-deception to people who hadn’t already sought out the ideas I’d found. Now I can point people to this book. But I still can’t summarize it in a way that would change many people’s minds.

It’s written mostly as a novel, which makes it very readable without sacrificing much substance.

Some of the books descriptions don’t sound completely right to me. They describe people as acting “inside the box” or “outside the box” with respect to another person (not the same as the standard meaning of “thinking outside the box”) as if people normally did one or the other, we I think I often act somewhere in between those two modes. Also, the term “self-betrayal”, which I’d describe as acting selfishly and rationalizing the act as selfless, should not be portrayed as if the selfishness automatically causes self-deception. If people felt a little freer to admit that they act selfishly, they’d be less tempted to deceive themselves about their motives.

The book seems a bit too rosy about the benefits of following it’s advice. For instance, the book leaves the reader to imagine that Semmelweis benefited from admitting that he had been killing patients. Other accounts of Semmelweis suggest that he suffered, and the doctors who remained in denial prospered. Maybe he would have done much better if he had understood this book and been able to adopt its style. But it’s important to remember that self-deception isn’t an accident. It happens because it has sometimes worked.

Book review: Drive: The Surprising Truth About What Motivates Us, by Daniel H. Pink.

This book explores some of the complexities of what motivates humans. It attacks a stereotype that says only financial rewards matter, and exaggerates the extent to which people adopt that fallacy. His style is similar to Malcolm Gladwell’s, but with more substance than Gladwell.

The book’s advice is likely to cause some improvement in how businesses are run and in how people choose careers. But I wonder how many bosses will ignore it because their desire to exert control over people outweighs their desire to create successful companies.

I’m not satisfied with the way he and others classify motivations as intrinsic and extrinsic. While feelings of flow may be almost entirely internally generated, other motivations that he classifies as intrinsic seem to involve an important component of feeling that others are rewarding you with higher status/reputation.

Shirking may have been a been an important problem a century ago for which financial rewards were appropriate solutions, but the nature of work has changed so that it’s much less common for workers to want to put less effort into a job. The author implies that this means standard financial rewards have become fairly unimportant factors in determining productivity. I think he underestimates the importance they play in determining how goals are prioritized.

He believes the changes in work that reduced the importance of financial incentives was the replacement of rule-following routine work with work that requires creativity. I suggest that another factor was that in 1900, work often required muscle-power that consumed almost as much energy as a worker could afford to feed himself.

He states his claims vaguely enough that they could be interpreted as implying that broad categories of financial incentives (including stock options and equity) work poorly. I checked one of the references that sounded like it might address that (“When performance-related pay backfires”), and found it only dealt with payments for completing specific tasks.

His complaints about excessive focus on quarterly earnings probably have some value, but it’s important to remember that it’s easy to err in the other direction as well (the dot-com bubble seemed to coincide with an unusual amount of effort at focusing on earnings 5 to 10 years away).

I’m disappointed that he advises not to encourage workers to compete against each other without offering evidence about its effects.

One interesting story is the bonus system at Kimley-Horn and Associates, where any employee can award another employee $50 for doing something exceptional. I’d be interested in more tests of this – is there something special about Kimley-Horn that prevents abuse, or would it work in most companies?

Book review: Hierarchy in the Forest: The Evolution of Egalitarian Behavior, by Christopher Boehm.

This book makes a good argument that a major change from strongly hierarchical societies to fairly egalitarian societies happened to the human race sometime after it diverged from Chimpanzees and Bonobos. Not due to any changes in attitudes toward status, but because language enabled low-status individuals to cooperate more effectively to restrain high-status individuals, and because of he equalizing effects of weapons. Hunter-gatherer societies seem rather consistently egalitarian, and the partial reversion to hierarchy in modern times may be due to the ability to accumulate wealth or the larger size of our societies.

He provides a plausible hypothesis that this change enabled group selection to become more powerful than in a typical species, but that doesn’t imply that group selection became as important as within-group selection, and he doesn’t have a good way of figuring out how important the effect was.

He demonstrates that humans became more altruistic, using a narrow biological definition of altruism, but it’s important to note that this only means agreeing to follow altruistic rules. He isn’t able to say much about how well people follow those rules when nobody notices what they’re doing.

Much of the middle of the book recounting anthropological evidence can be skipped without much loss – the most important parts are chapters 8 and 9.

Book review: Happiness from the Inside Out: The Art and Science of Fulfillment by Robert Mack.

This easy to read book describes many of the approaches I’ve used to make myself happier. That makes me somewhat tempted to believe the rest of his advice, but he seems to exaggerate enough that I have some doubts.

Being less concerned about what others think of me is an important part of his advice. But it seems implausible that I can be completely unharmed by other peoples opinions of me. He seems to believe that it’s possible to have a romantic relationship without risking being disappointed by one’s partner. I can somewhat reduce my emotional reaction to a partner not acting as I expected, but complete detachment would seem to make it hard for me to sympathize with a partner when appropriate.

There’s plenty of peer pressure for people to claim to be less susceptible to peer pressure than they actually are, so many people will be unaware of how to reduce those influences. This book’s focus on optimism is likely to distract people from such unflattering insights. You should look elsewhere for awareness of your desires for status, and choose wisely which status hierarchies you want to care about.

His paints a misleadingly gloomy picture of long-term happiness trends in the U.S., by selective evidence such as rising teen suicide rates, but not the fact that overall suicide rates are lower than a few decades ago.

His discussion of the genetic influence on happiness is unnecessarily discouraging. He mentions height as a stereotypical trait influenced by genes. I suggest thinking about hair color – it’s probably more influenced by genes than happiness, yet people who decide their hair should be purple often succeed quickly.

His claim that “Happiness is a particularly personal journey and no amount of data or research can tell you what will bring you happiness” is somewhat misleading – see the book Stumbling on Happiness for a very different perspective.


Book review: Impro: Improvisation and the Theatre, by Keith Johnstone.

This book describes aspects of the human mind and social interactions which actors often need to analyze more explicitly than others, because actors need to be aware of the differences between various roles/personalities that they play, whereas unconscious understanding is adequate for people who only interact as a single personality.

The best chapter is about status, and emphasizes the important role that status games play in most social situations and how hard it is to be aware of one’s status-related behavior.

One disturbing claim he makes is that “acquaintances become friends when they agree to play status games together”. I’m very tempted to deny that I do that (as he predicts most people will deny acting). But I know there’s more happening in social interactions than I’m aware of, so I’m hesitant to dismiss his claim.

The chapter on spontaneity has apparently important insights about the role self-censorship plays in spontaneity and creativity. But I find it hard enough to change my behavior in response to those insights that I can’t be confident he’s correct.

He has the insight that “personality” functions as a public-relations department for the mind. Personality doesn’t seem like quite the right word here, but this is remarkably similar to an idea that Geoffrey Miller later developed from evolutionary theory in his excellent book The Mating Mind.

The chapter on masks and trance is strange and hard to evaluate.

Book review: Finding Alpha: The Search for Alpha When Risk and Return Break Down by Eric Falkenstein.

This book presents mostly convincing arguments that refute the basic principle of CAPM that riskier investments are rewarded with higher returns, and the relation between risk and returns is better explained by modeling investors as wanting high returns relative to other investors rather than high absolute returns. But the quality of the arguments is quite variable. Much of the book assumes a good understanding of finance theory. If you don’t understand the importance of a Sharpe ratio, you’re not in his target audience.

I was not convinced by his most heavily emphasized empirical claim, that returns on equities are unrelated to beta because controlling for size eliminates the apparent relation. There’s enough connection between size and risk that this raises many questions he doesn’t answer (e.g. JB Berk, A critique of size-related anomalies). But later on he devotes a chapter to a wide variety of evidence that overcomes these concerns, and somewhat supports his claim that for riskier investments, the correlation between risk and return is negative (for the safest investments, it’s positive). And the authoritative Fama and French paper has more convincing evidence about beta – even without controlling for size, the correlation between beta and returns vanished during the 1963 to 1990 period.

He claims that the equity risk premium is effectively zero for a typical investor. His attempt to add up the different adjustments is confusing. He concludes with a table showing size adjustments to that standard estimate that add up to a mind-boggling 15 percent, which would result in a “premium” of -9 percent or so. But adding them is clearly wrong – the tax adjustment assumes the absence of some of the other adjustments. Still, the arguments he assembles from other researchers imply a good chance that the sign of the equity risk premium varies with the time period over which it’s measured.

He suggests some strategies to invest more wisely as a result of the ideas he presents, which he aptly summarizes as “selling hope relative to the market” (i.e. treating volatile stocks as overpriced due to a hope premium). But claiming this produces “superior returns, with less risk however measured” is too strong. Financial risk is not the only relevant measure of risk. Following his advice has social risks that he hints at elsewhere. Being invested in boring stocks in a bubble impairs your ability to engage in some interesting conversations, and you won’t make up for that by mentioning how you outperform the market in times when other want to avoid remembering their investments. Is it possible to minimize both kinds of risks by investing token amounts in ways that trendy folks are talking about, and investing most of your money to maximize your Sharpe ratio? Or does that require too much cognitive dissonance?

The book encourages pessimism, especially about the effects of people wanting relative wealth, and makes disturbing claims such as “Envy is necessary for compassion”.

He provides a number of other good ideas about investing, such as the possibility that the internet bubble adds a big anomaly to many data sets used for backtesting.

Book review: Counting Sheep: The Science and Pleasures of Sleep and Dreams by Paul Martin.
This book makes convincing claims that most people give too little thought to an activity that occupies a large fraction of our life.
It has lots of little pieces of information which can be read as independent essays. Here are some claims I found interesting:

  • “sleepiness is responsible for far more deaths on the roads than alcohol or drugs”.
  • Tired people rate their abilities higher than people who slept well do.
  • Poor sleep contributes to poor health a good deal more than medical diagnoses suggest, but hospitals are designed in ways that hinder patients’ sleep.
  • Idle time was apparently a status symbol up to a century ago, now being busy is a status symbol. This should have economic implications that someone ought to explore in depth.
  • People in a vegetative state have REM sleep. This sounds like cause to re-evaluate the label we apply to that state.

While the book has many references, it doesn’t connect specific claims to references, and I’m sometimes left wondering why I should believe a claim. How can boredom be a modern concept? When he says “no person has ever gone completely without sleep for more than a few days”, how does he know he can dismiss people who claim to have not slept for years?

There has been a fair amount of research suggesting that beyond some low threshold, additional money does little to increase a person’s happiness.
Here’s a research report (see also here) indicating that the effect of money has sometimes been underestimated because researchers use income as a measure of money, when wealth has a higher correlation with happiness.
There’s probably more than one reason for this. Wealth produces a sense of security that isn’t achieved by having a high income but spending that income quickly. Also, it’s possible that people with high savings rates tend to be those who are easily satisfied with their status, whereas those who don’t save when they have high incomes are those who have a strong need to show off their incomes in order to compete for status (and since competition for status is in some ways a zero sum game, many of them will fail).

Book review: Envy: A Theory of Social Behavior by Helmut Schoeck
This book makes a moderate number of interesting claims about envy and its economic effects, interspersed with some long boring sections. The claims are mostly not backed up by strong arguments. It was written 40 years ago, and it shows – his understanding of psychology seems more Freudian than modern.
His most interesting claim is that many societies have more envy than ours, and that prevents them from escaping poverty. An extreme example are the Navaho, who reportedly have no concept of luck or of “personal achievement”, and believe that one person’s success can only come at another’s expense. This kind of attitude is pretty effective at discouraging people in such a society from adopting a better way of growing crops, etc.
Unfortunately, his evidence is clearly of the anecdotal kind that, even if I were to track down the few sources he cites for some of them and convinced myself they were reliable, his examples are too selective for me to believe that he knows whether envy and poverty are correlated. His hypothesis sounds potentially important, and I hope someone finds a way to rigorously analyze it.
He describes a few attempts to create non-envious societies, with kibbutzim being the clearest example. He gives adequate but unsurprising explanations of why they’ve had mixed success.
He claims “The victims claimed by a revolution or a civil war are incomparably more numerous among those who are more gifted and enterprising”, but shows no sign that he knows whether this is true. He might be right, but it’s easy to imagine that he’s been mislead by a bias toward reporting that kind of death more often than the death of a typical person.
He mentions that tax returns have been public in some jurisdictions. I wish he did a better job of examining the costs and benefits of this (one nice example he gives is that people sometimes overreport income in order to appear more credit-worthy than they are).
On page 82, he describes Nazis as having “an almost equally fanatical attachment to the principle of equality”. He seems there to be referring to when they were in power, but somewhere else he implies they moved away from this belief when they gained power. He was born in Austria in 1922, and studied in Munich from 1941 to 1945, which gives him a perspective that we don’t hear much these days. How much of the difference in perspectives is due to his flaws, and how much of it is due to our focus on the worst aspects of Nazism? There’s probably a hint of truth to his position, in that hatred of the Jews partly started with an egalitarian disapproval of their success.
I found a number of other strange claims. E.g. “The incest taboo alone makes possible the co-operative and stable family group.”; “Lee Harvey Oswald’s central motive was envy of those who were happy and successful”; “In 1920 President Woodrow Wilson predicted class warfare in America that would be sparked off by the envy of the many at the sight of the few in their motor cars.”.
He says “No society permits totally uninhibited promiscuity. In every culture there are definite rights of ownership in the sexual sphere, for no society could function unless it had foreseeable and predictable rules as regards selection of the sexual partner.” I’m not sure how close-minded that would have sounded in 1966, but there are cultures today which discredit it fairly well.
If you read this book, I suggest reading only these chapters: 1,3,5,8,13,17,21,22.
Update: Mike Linksvayer has a better review of the book.

Bryan Caplan has a good post arguing democracy produces worse results than rational ignorance among voters would explain.
However, one aspect of his style annoys me – his use of the word irrationality to describe what’s wrong with voter thinking focuses on what is missing from voter thought processes rather than what socially undesirable features are present (many economists tend to use the word irrationality this way). I hope his soon-to-be-published book version of this post devotes more attention to what voters are doing that differs from boundedly rational attempts at choosing the best candidates (some of which I suspect fall into what many of us would call selfishly rational motives even though economists usually classify them as irrational). Some of the motives that I suspect are important are the desire to signal one’s group membership, endowment effects which are one of the many reasons people treat existing jobs as if they were more valuable than new and more productive jobs that can be created, and reputation effects where people stick with whatever position they had in the past because updating their beliefs in response to new evidence would imply that their original positions weren’t as wise as they want to imagine.
Alas, his policy recommendations are not likely to be very effective and are generally not much easier to implement than futarchy (which I consider to be the most promising approach to dealing with the problems of democracy). For example:

Imagine, for example, if the Council of Economic Advisers, in the spirit of the Supreme Court, had the power to invalidate legislation as “uneconomical.”

If I try hard enough, I can imagine this approach working well. But it would take a lot more than Caplan’s skills at persuasion to get voters to go along with this, and it’s not hard to imagine that such an institution would develop an understanding of the concept of “uneconomical” that is much less desirable than Caplan’s or mine.