Thorstein Veblen has been ranked seventh in a poll of economists on their favourite, dead, 20th century economist. He ranked behind Keynes, Friedman, Samuelson, Hayek, Schumpeter and Galbraith. His supporters were among the least liberal (in the classical sense of the word) of the survey participants. Given his approach to consumerism and the leisure class, as detailed in The Theory of the Leisure Class, this is no surprise. Following from my earlier posts on the book (here and here), I have finished reading it, with the rest of the book largely  applying Veblen’s framework to sport, religion and education.

To Veblen, sports reflected the predatory skills of the leisure class and delinquents. He disagreed with the common view that sports build temperament, and instead they involve chicanery, falsehood and browbeating. That is why we need umpires. For the industrial classes, Veblen stated that sport is more a diversion than a habit, although he might want to reassess the role of sport for the industrial class today.

Veblen considered that the temperament that inclines one to sport inclines one to religion (and vice versa). Religion, and the conspicuous leisure and consumption associated with it, change the patterns of consumption in the community and lowers its vitality. As an example, Veblen referred to the religious Southern United States. He considered that their industry was more handicraft than industrial. Their range of other habits, such as duels, cock-fighting and male sexual incontinence (shown by the presence of mulattoes) were evidence of barbarian traits.

On education, Veblen saw the alignment of education institutions with sport and religion as evidence of education’s status as a leisure class activity. Higher education has many rituals and ceremonies and encourages proper speech and spelling (conspicuous leisure), while lower schools tend to more practical. The teaching of the classics and dead languages were, in particular, conspicuous consumption.

One interesting sideline is Veblen’s view on how industrialisation has affected the status of women. Veblen considers that industrialisation allows women to revert to a more primitive type (Veblen’s primitive type being peaceful and industrial). The leisure class, however, needs to keep women in their place to show vicarious conspicuous leisure. The highest places of education were reluctant to admit women, with the more industrialised countries and institutions seeing this occur first. When the institutions did admit them, women were primarily enrolled in courses with a quasi-artistic quality, which help women in performing vicarious leisure.

Veblen also had a great shot at the link between religion and higher education:

Their putative familiarity with scientific methods and the scientific point of view should presumably exempt the faculties of these schools from animistic habits of thought; but there is still a considerable proportion of them who profess an attachment to the anthropomorphic beliefs and observances of an earlier culture.

Having finished the book, I enjoyed the interesting and still relevant discussion of signalling, conspicuous consumption and leisure. We should not ignore his assessment that people have motivations beyond maximising utility or consumption in the simplest sense. However, I was disappointed with Veblen’s use of evolutionary theory (discussed more in my second post), which was a strange mix of group selection and broad statements on inherent traits, without detailed consideration of the selection process that might have occurred. Veblen simply wanted to critique the leisure class and would use whatever tools were at his disposal.

The link to a full review is here.

The media and blogosphere has dedicated plenty of column and blog inches to a recently published study by Danziger and colleagues on how parole rates by Israeli judges vary through the day. From the abstract:

We record the judges’ two daily food breaks, which result in segmenting the deliberations of the day into three distinct “decision sessions.” We find that the percentage of favorable rulings drops gradually from ≈65% to nearly zero within each decision session and returns abruptly to ≈65% after a break. Our findings suggest that judicial rulings can be swayed by extraneous variables that should have no bearing on legal decisions.

The following chart provides a good illustration.

Of other factors to influence the judges’ decisions, only history of re-offending and the presence of a rehabilitation programme were found to have a statistically significant effect. The crime committed, time served, ethnicity or sex did not affect parole probability.

The cases were presented to the judges in effectively random order and they did not know which case was coming next. The time of the hearing was generally dependent on the time of arrival of the prisoner’s lawyer. As a result, the pattern of declining parole rates during a session was not due to easier cases being heard first.

The response in the media and blogosphere is that this is another example of people being irrational and that judges are subject to the same biases as everyone else. The authors suggest even wider implications:

[W]e suspect the presence of other forms of decision simplification strategies for experts in other important sequential decisions or judgments, such as legislative decisions, medical decisions, financial decisions, and university admissions decisions.

Having now identified the effect of this bias, what do we do? Jonah Lehrer suggested that “it’s imperative that we make judges aware of these tendencies, so that they can take steps to reduce their effects.” Ed Yong quotes Nita Farahany of Vanderbilt University as saying that “improvements in the justice system may likewise require that society acknowledge the effects of biological contributions to legal decision-making.”

Having stewed on it for a month, I am wondering whether we should simply remove the judges altogether – and replace them with a set of decision rules. This would have two effects – the first of which is that it would end the problem created by the meal breaks and hungry or tired judges.

More importantly, it could result in the right decision being made more often. In discipline after discipline, evidence is emerging that simple decision rules or algorithms can outperform expert decisions.  Take the examples in Ian Ayres’s Supercrunchers, where he talks of how decision rules have outperformed wine experts in predicting wine quality, legal experts in predicting Supreme Court decisions and doctors in predicting heart attacks. Most relevantly, Ayres discusses the increasing use of sentencing guidelines in parole decisions. As people can’t seem to let completely go of judicial discretion, there is always some space left for it. But as Ayres notes:

Parole and Civil Commitment boards that make exceptions to the statistical algorithm and release inmates who are predicted to have a high probability of violence tend time and again to find that the high probability parolees have higher recidivism rates than those predicted to have a low probability.

As an extra thought, the next time a politician seeks to legislate specific sentences instead of relying on judicial discretion, they should pull this study out and suggest that judges are not the rational people we hope they are.

I’m back on the population bandwagon today, and I wanted to define a point where economists and ecologists often appear to be talking across each other (and where I disagree with both). The best way to delineate this is by revisiting the Julian Simon-Paul Ehrlich bet.

Simon and Ehrlich entered into a wager in 1980 as to whether five metals would increase or decrease in price over the next ten years. Simon, who believed that the ultimate resource is the human mind, bet that prices would decrease as substitutes and innovation made the goods effectively less scarce. The increased population would provide solutions that more than counteract their increased demand. Ehrlich, the author of The Population Bomb, considered that population growth was outstripping growth in resources and took the other side of the bet.

As history shows, Simon won. I’ve always considered that Ehrlich was poorly advised in taking this bet (and he did seek advice). While fluctuations or temporary pressures may increase prices, the long-term price trend for most resources is down. This may not always be the case – Simon lost a bet on the price of timber – but on average, it’s right. What will oil prices be like over the next five years? I’m not sure, but I guess high. What will the oil price be in 2030? I’m reasonably confident that it will be lower in real terms than it is today.

While Ehrlich should not have entered that bet, I have more sympathy for some of Ehrlich’s other points. For example, in 1995, the San Francisco Chronicle quoted Simon as having said that:

Every measure of material and environmental welfare in the United States and in the world has improved rather than deteriorated. All long-run trends point in exactly the opposite direction from the projections of the doomsayers.

“Every measure in the world”? Following Simon’s statement, Ehrlich and Stephen Schneider sought to make a second bet on 15 environmental indicators, such as carbon dioxide levels, temperature, arable land and sulfur dioxide emissions. Simon’s response was as follows (from Miele, Frank. “Living without limits: an interview with Julian Simon.” Skeptic, vol. 5, no. 1, 1997, p.57):

Let me characterize their offer as follows. I predict, and this is for real, that the average performances in the next Olympics will be better than those in the last Olympics. On average, the performances have gotten better, Olympics to Olympics, for a variety of reasons. What Ehrlich and others says is that they don’t want to bet on athletic performances, they want to bet on the conditions of the track, or the weather, or the officials, or any other such indirect measure.

While Simon’s statement is a step back from the Chronicle quote, it highlights a difference in focus between many economists and ecologists. Simon was primarily concerned with human living conditions. Will human well-being continue to increase despite what is happening to the environment? Simon would point out that the answer is always yes.

But is this to say that the track conditions do not matter? While the performances at the next Olympics will almost certainly be better than the last, good track conditions could make them even better. I don’t expect that climate change, coral reef loss, extinctions or biodiversity destruction will affect the average developed country so much that the average person is poorer in 2050 than they are today (note my use of “average”), but they will be poorer than they could be. Ecosystems provide trillions of dollars in free services. Many people care about and get intrinsic value from these ecosystems. Improving the condition of the track could improve the outcomes that Simon cares about. Do we want to maximise these outcomes, or are we simply happy if they are better?

Belief in evolution is often considered the domain of “the left”. Apart from being true, evolutionary theory provides a ground for opposition to creationists. It is often used to argue that competition can be wasteful and that self-organising systems (such as the economy) do not always operate for the good of society. However, evolutionary psychology has not been embraced to the same extent. Ever since Gould and Lewontin led the sociobiology wars against E O Wilson and others, the concept that evolution shaped human minds has faced much opposition, even among those who otherwise accept that evolution is true.

In support of my sweeping statements, in an article published this month in the Journal of Social, Evolutionary and Cultural Psychology, Andrew Ward and his colleagues report on a study of attitudes to evolution and what the authors describe as some key tenets of evolutionary psychology (also blogged on by Robert Kurzban). Those tenets included that men are more interested than women in one night stands, men are more interested in attractiveness, and women value good financial prospects in a mate more than men do.

I feel that Ward and colleagues chose the topic of human mating specifically to get the paradoxical result. As the authors note, there would be value in also testing attitudes to evolutionary explanations for cognition, perception, or language, which I would expect would have a higher level of acceptance for many people.

Ward and colleagues tested 99 participants at a train station for their attitudes to evolution and the implications of applying evolutionary concepts to human mating. They then tested a similar set of questions (with a more generic definition of evolution) on 452 participants from a train station, a college and two churches.

In both studies, the opponents of evolution, who were generally older and more conservative, were more likely to endorse the evolutionary implications on human mating systems. Interestingly, when half of the survey respondents in the second survey were explicitly told that the evolutionary psychology questions were “based on the THEORY OF EVOLUTION, as applied to the fields of psychology and biology” (actual text from survey), it reduced the level of support from evolution opponents but made no difference to the response of evolution supporters.

The most obvious explanation for this is that the evolution supporters simply disagree that the mating differences are a consequence of evolutionary psychology and they have rationalised a reason for this. However, this only raises a follow-up question about why they would consistently create this reason, while the creationists remained happy to support the statements (although to a lesser extent), even when told that the statements were based on the theory of evolution. Further, as noted by Ward and his colleagues, it is unlikely that many of the evolution supporters that were surveyed would have actually thought about and rationalised through this process.

The slightly dissatisfying thing about this study is that, while showing an interesting paradox, it does little to explore the foundation for the paradox or whether there are any conflating factors such as education. That will be left for future studies. For now, the authors leave us holding the aphorism: “Never let the data get in the way of a good theory”.

Given the recent discussion on population that the release of Bryan Caplan’s Selfish Reason to Have Kids has triggered (my posts here, here and here), I have been contemplating some physical limits of what the ultimate human population could be. The current global population is around 6.8 billion and is growing at around 1.2 per cent per year. Let us suppose that the population growth rate persists (as I argued before, there is a case to argue that it might increase). So, how long does it take before the physical limits are reached? (I am sure other people have done this before, but as with most things, I always like to do these exercises myself)

Let’s start with an outer limit. Suppose that each person can be uploaded onto a virtual machine and each person only requires one atom to exist. There are about 10^80 atoms in the universe (most of which are hydrogen). At the current growth rate, it would take less than 14,000 years for there to be more humans than there are atoms.

However, there are a few constraints. The diameter of the observable universe is around 93 billion light years, so assuming we are roughly in the centre, it would take 46 to 47 billion years to reach all points if humans could travel at the speed of light. Yet, there are only 14,000 years before the population needs to access all the matter in the universe. It would be a fair assumption that most of the matter in the universe would be outside the potential travel distance (unless someone wants to argue that we will figure out how to travel faster than light or skip around the universe in some other way). Humans will not even be able to access all of the matter in our galaxy, which is around 100,000 light years in diameter.

How about a closer limit – the number of atoms in the solar system. I could not find a figure for this, but as the sun has more than 99 per cent of the solar system’s mass, I will use the comparative figure for the sun – around 10^57 atoms. Using our one atom per person calculation from above, there would be more people than atoms in a touch over 9,000 years. That’s still a fair bit of time, but of course, does rely on use utilising every atom in the solar system. It is perfectly plausible that humans will have travelled across the breadth of the solar system by that time. Limiting us to earth, there are around 10^50 atoms, which allows around 7,800 years. Adding Mars gets humans less than 10 extra years.

What if we don’t move to this virtual utopia, still need (or want) to be in human form and are limited to earth or the solid planets in the solar system? Again allowing every piece of matter to be used in human form (no need for land to stand on, air to breathe, a biosphere etc), giving each human an average weight of 70 kilograms and with the earth’s weight of 6*10^24 kilograms, current population growth rates can continue for around 2,500 years before hitting the physical limits. Again, Mars allows less than 10 years further population growth.

Breaking the example down further, what if humans are limited to the surface of earth or, again, the solid planets in the solar system? The earth has a surface area of 510 million square kilometres (or 510 trillion square metres), including both ocean and land area. If we assume that each human needs one square metre to provide all of their sustenance and needs, the population scenario hits the wall more quickly – in around 950 years. Mars allows around 20 extra years population growth. If we only need a square centimetre each, the population can grow for a further few hundred years.

Having said all the above, I think it is fair to say that within 10,000 years, which is less than the time since the first use of agriculture, humans will run up against hard physical population constraints, or population growth will be voluntarily constrained. Even allowing a virtual world where each human only needs an atom and there is no need for physical bodies or a biosphere, sooner or later population growth must stop.

Robert Frank has written a piece for the New York Times on why worrying is good. He writes of the well-known phenomena that after large life changes, people’s level of happiness tends to drift back to where it was before the event. Humans are also particularly bad at predicting this effect, placing far more importance on events before they occur than the later effect on happiness would warrant.

The point of Frank’s post is how much sense this makes from an evolutionary perspective. It is the miscalculation of how happy we will be if, say, we get the new job, that leads us to strive to achieve it. As Frank states:

The human brain was formed by relentless competition in the natural world, so it should be no surprise that we adapt quickly to changes in circumstances. Much of life, after all, is graded on the curve. Someone who remained permanently elated about her first promotion, for example, might find it hard to muster the drive to compete for her next one.

Emotional pain is fleeting, too. Behavioral economists often note that while people who become physically paralyzed experience the expected emotional devastation immediately after their accidents, they generally bounce back surprisingly quickly. Within six months, many have a daily mix of moods similar to their pre-accident experience.

Frank does temper the observation that large events do not change our long-term mix of emotions by noting that people can still feel regret for things that did not work out.

The reset of the level of happiness after major events presents an interesting problem for attempts to measure happiness in society. It will tend to flatten any relationship between success and happiness, with the strongest relationship being found immediately after a successful event. As humans have not evolved to be happy, and being unhappy could lead to greater success, I’ve always found this to be a gap in any studies of happiness.

One of the things I like about Frank’s writing is that when he writes of evolution, he recognises that these evolutionary drivers are individual drivers and not for the benefit of society. At the end of the article, Frank notes that people are in competition for jobs and resources, and as income grows, the acceptable level of income rises, leading to further competition for higher paying jobs. From a societal perspective, the competition driven by peoples’ worrying might be a significant waste of resources. As a result, if economists want to develop arguments that the market often delivers the best results for society (as I usually do), evolutionary theory provides a counterpoint that we should not ignore.

Following last week’s post on Thorstein Veblen’s The Theory of the Leisure Class, I’ve progressed through some more of the book (to chapter 9). It hasn’t got any easier to read, but Veblen’s interesting observations on conspicuous consumption, beauty and evolution keep flowing.

One of his more interesting perspectives is on how costliness masquerades under the name of beauty. Veblen argues that cost determines what is considered beautiful, with the marks of expensiveness becoming known as beauty. Veblen states that “beauty, in the naive sense of the word, is the occasion rather than the ground of their monopolization or of their commercial value.” It is rarity and exclusivity that determines beauty.

This leads to ideas such as imperfections in goods, which are evidence of being hand and not machine-made, becoming signs of beauty. Counterfeits lose their beauty on being identified as such. Or take fashion. Each year the fashion changes, which is wasteful – and people prefer the more recent fashions to the older ones. But suppose we showed fashion from today and ten years ago to someone from 200 years ago. Would they perceive any difference in beauty?

Veblen applies this concept to beauty in women, with tastes shifting from “women of physical presence” to a “lady” as conspicuous consumption and leisure grew. The less suited a woman is for work, the more waste and hence conspicuous consumption and the more beautiful she would be perceived.

Veblen follows his discussion of beauty with a series of evolutionary arguments on the nature of the leisure class. His line is often difficult to follow, with the boundary between social and genetic selection unclear. His underlying agenda, a critique of the leisure class, also clouds his arguments.

On social selection, Veblen notes that the fittest habits of thought will survive and that the selection of institutions affects the selection of people within society. Institutions change fast, so the selection of people cannot keep up. Further, changes which may be good for society as a whole may be bad for certain people. Veblen’s discussion provides a nice picture of a dynamic environment and selection pressures that vary with it.

Having painted this dynamic picture, Veblen then writes of how slow society is to change and how conservative society is. Veblen argues that the leisure class is able to keep society conservative through withdrawing the means of sustenance to the industrial class. As a result, the industrial class does not have the resources to invest in new ideas and habits and even if they did gain some surplus, that would be wasted on the conspicuous consumption that the leisure class has established as the societal norm.

On an individual level, Veblen considers there are two basic types – predatory and peaceful. Predatory types are violent (in certain stages of society), selfish and dishonest and are not diligent. Peaceful types are the opposite. Precisely which traits are expressed will depend on the state of society – although the spectrum of predatory to peaceful roughly coincides with the spectrum of blonde through brunette to Mediterranean ethnicities.

Veblen suggests that society progressed from a peaceful, native state, to a barbarian state, before shifting back towards the more peaceful modern society. Peaceful traits were selected for in the native state, and predatory traits selected for in the barbarian states. Veblen states, however, that selection did not eliminate all the peaceful traits in the barbarian era, allowing peaceful traits to be present in modern society.

As to how these traits are distributed, Veblen sees the leisure class as the predatory type and the industrial class of the peaceful type. The leisure class is not able to be violent in modern society, so they use more “peaceful predatory” methods, such as fraud. The industrial class is not in need of predatory habits, with Veblen suggesting that “economic man” in the sense of the selfish person (an indirect slight on Adam Smith) is useless for modern society. It is by being diligent and honest that the industrial man thrives.

Veblen’s shot at “economic man” is not particularly effective. He mixes group and individual selection and does not recognise that selfishness is required, in an evolutionary sense, for all people. The reason industrial man is diligent is because that is how he benefits. If he did not benefit, he would be selected against and disappear. The fact society benefits is the operation of Smith’s invisible hand.

Despite his categorisation of types between classes, Veblen strangely suggests that there are no broad character differences between the leisure class and the rest. He states that some predatory behaviour persists in the industrial class due to the behaviour of the leisure class. He also notes that people in the leisure class, by virtue of their resources, are not subject to harsh selection pressure, so peaceful characteristics can persist. What is most determinative of the traits in the leisure class are those traits which lead to admission to the class. While these have changed over time (say raw violence to fraud), they are generally of a predatory nature. It is not easy to gel this position of no difference with his earlier statements, and I am not sure they can be reconciled. My one suggestion is that the differences will grow if the current institutional framework continues to exist.

Although Veblen has addressed some evolutionary issues, Veblen has not addressed the questions I asked in my earlier post about the basis for the desire for reputation and status. Of the evolutionary arguments he has used, they are generally focused on the welfare of the group and society and not the specific individual’s interests. I am looking forward to seeing if he takes these ideas any further in the rest of the book.

The link to a full review is here.

The United States is one of the few developed countries in the world with a fertility rate close to the replacement rate – that is, the rate of fertility required to maintain existing population levels. The two reasons most often cited for this is are high levels of fertility in the Hispanic immigrant population and the high level of fertility of religious people. Even when you control for income and education, religious people have more children than non-religious people (on average).

The higher fertility among religious people raises a couple of questions. As religion is heritable (that is, the predisposition to be religious and not the specific religion itself), will religion spread through society and what will the consequences of this be? What will happen to the underlying alleles (alleles are the different variants of a particular gene)?

If we had a situation where the religious have higher fertility and a religious genotype is determinative, it is clear that they will eventually form the largest group in the population and the religiosity allele will dominate the gene pool. However, what if there are more complicated dynamics such as defections between groups, with the religiosity allele(s) giving a predisposition as opposed to being determinative?

Robert Rowthorn addressed this question in a paper published earlier this year in which he explored the dynamic consequences of heritable religiosity and the higher fertility of religious people. Razib at Gene Expression wrote a great post on this paper when it was first released, but as is often the case, writing a blog post myself is the best way to get my head around it.

Rowthorn noted that a natural result of defections from a high-fertility religious group is that the religious group would be smaller than it would otherwise be. However, he also points out that defection from the religious group allows the religious allele(s) to spread to and within the non-religious group. If this religiosity allele affects the number of people from the non-religious group who become religious and as a result, boosts their fertility, the religious allele may come to dominate the population regardless.

To explore this issue, Rowthorn constructed two models (one haploid, in which predisposition is determined by a single gene, one diploid, in which predisposition is determined by two genes, one from each parent). In these models, culture (religion) determined fertility, while religious predisposition has a genetic component. On becoming an adult, one can defect from their religious or non-religious group, with their underlying genotype giving the probability of switching.

Some of the outcomes of the model are unsurprising. Firstly, the pace of evolution is heavily dependent on the fertility differential between religious and non-religious types. With a differential of two or three to one, large changes in population structure occur within five to 10 generations. Where the fertility differential is 1.3 to one, it might take several hundred generations for the share of the religious gene in the population to dominate from a low base.

With defection added, there are two main results. First, the speed of the spread of the religiosity allele is reduced, although it still spreads through the population. Second, the total number of religious people in the population is reduced, possibly significantly. Defection changes the expression of religiosity, but not the eventual spread of the gene.

For high fertility sects such as the Amish, with fertility rates two to three times above the national average, this would imply that they would come to dominate the population in five to ten generations, unless there is a particularly high level of defection. If they do have a high defection rate, while reducing the size of the Amish population, the religious gene will still spread. Even with a 50 per cent defection rate, the religious gene still spread to most of the population within 20 generations in Rowthorn’s model. From this, Rowthorn notes that while secularisation might reduce the growth of high-fertility sects, the importing of the religious gene into the non-religious population results in the religious allele ultimately spreading through the entire population.

Rowthorn does not venture far into the implications of his findings beyond the spread of religion. In the last paragraph, he makes the following observation:

It is interesting to speculate how such a predisposition might manifest itself in a secular context. The findings of Koenig & Bouchard suggest that a genetic predisposition towards religion is associated with obedience to authority and conservatism. If this is correct, then the diffusion of religiosity genes into the rest of society should see an increase in the number of secular people who are genetically inclined towards such values. The implications of such a development are beyond the scope of this paper to consider.

Is the growing conservatism among youth, which seems to be a common media topic in recent years, an early reflection this effect?

Rowthorn does not specifically explore the question of overall population size. If the religious allele(s) spread through society, fertility would be expected to be higher and overall population higher. This could have significant implications for the debate on population size I have posted about in the last week (such as here, here and here).

Further, Rowthorn’s findings show the general result that any genetically based predisposition that increases fertility can be expected to spread through the population. Whether that predisposition is religion, dislike of contraception, urge to have a larger family or some other trait, the effect is the same. The alleles responsible for higher fertility spread and, barring further environmental shocks, population growth increases. The only question is how long this will take.

*As an extension to this idea, I have a working paper that examines the consequences of heritability of fertility more generally.

Like all economists, I am familiar with the concept of the tragedy of the commons. However, possibly like most economists, I had not read Garrett Hardin’s 1968 article from where we derive the phrase – that is, until yesterday. As a result, I did not understand the extent to which overpopulation concerns underpinned Hardin’s writing (HT: Daniel Rankin).

Much of Hardin’s career focussed on overpopulation. He wrote one article called Living on a Lifeboat in which he argued that the lives saved by food aid would only make life worse for later generations (a Malthusian world). He was also an advocate of allowing people to choose their own time to die – he committed suicide with his wife at age 88. Given the debate on fertility at Cato Unbound and the release of Bryan Caplan’s Selfish Reasons to Have More Kids, what Hardin wrote in The Tragedy of the Commons about population is now particularly topical.

Hardin’s concern about overpopulation stemmed from the existence of the commons. For example, in a “dog eat dog” world, if someone had too many children, it would not be a matter of public concern as these parents would leave less descendants than others. This is because they would be unable to adequately care for a large number of children. He wrote:

If each human family were dependent only on its own resources; if the children of improvident parents starved to death; if, thus, overbreeding brought its own “punishment” to the germ line—then there would be no public interest in controlling the breeding of families.

Hardin felt, however, that these conditions did not hold as society was committed to one form of commons, the welfare state. In some ways, this is a direct response to Bryan Caplan’s recent statement that:

As long as parents are financially responsible for their children, any negative effect of population on living standards is internal to the family. ….. [T]he negative externalities, if any, are intra-family.

The question is, thus, to what extent does Caplan’s condition that “as long as parents are financially responsible for their children” hold?

Beyond the welfare state example of Hardin’s, some other negative externalities come to mind. These include the raft of unpriced commons to which people still have access, positional goods, limited land (think beach front real estate) or where desperate conditions result in property rights breaking down (say, Rwanda in 1994 as family plot sizes dropped below that which could sustain a family). The high wages after the Black Death induced population plunge in the 1300s also suggest that externalities extend beyond the family.

When it comes to solving the problem of the tragedy of the commons, Hardin generally favours property rights, although he did consider that the system of private property plus inheritance was unjust. He simply did not see any other alternative.

For the issue of overpopulation and fertility, however, he was less clear. He notes the uselessness of appealing to conscience to cut fertility, as those who continue to breed despite the appeal to conscience will then dominate the population. He considered that we needed to abandon the commons in breeding and relinquish the freedom to breed. On the United Nations Declaration on Human Rights, which allows freedom of choice of family size for the family, Hardin wrote that “If we love the truth we must openly deny the validity of the Universal Declaration of Human Rights”.

How precisely Hardin proposed to curtail the right to breed, however, is not addressed in his tragedy of the commons article. I understand that he addressed specific population control measures in more detail in his later work, which might be the subject of a later post.

I have started reading Thorstein Veblen’s The Theory of the Leisure Class. The book was published in 1899 and was one of the earliest books to explore the classical economic concept that people wish to consume more.

I am finding it hard to read the book straight through (despite some classic satire), so I will break up my review into parts. This post covers the first five chapters. As I finish the book over the next week or so, I’ll post on the rest.

One of Veblen’s main contributions, forgotten by many neoclassical economists, was that people care about status, reputation and honour and that their economic behaviour will reflect this. As a result, people care about relative wealth.

To turn wealth into status and reputation, however, one needs to signal their wealth. The two signals that Veblen focuses on are conspicuous leisure and conspicuous consumption, with Veblen’s coining of the latter term being his best known claim to fame. A reading of the chapters on conspicuous consumption and conspicuous leisure suggest that Veblen has a relatively modern take on them. In particular, Veblen recognised the need for waste, which signalling theory tells us is required for the signal to be reliable.

Conspicuous leisure was something I had not thought a lot about before, but when there are few goods for conspicuous consumption, as would be the case in more primitive societies, conspicuous leisure would be a more accessible way to signal wealth. There are a number of conspicuous leisure activities that people undertake, such as reaching a level of manners and etiquette that could only be achieved through an excessive use of time, or becoming proficient at sports. Veblen also considers what he calls vicarious conspicuous leisure, whereby the head of the house employs servants (or even the housewife) in exercises that waste time.

As society advances, Veblen suggested that people move from conspicuous leisure to conspicuous consumption. Veblen’s primary explanation for this transition lies in the increasingly large circle of people with whom one associates and wishes to signal status to. In a small village, everyone is relatively familiar with each other and will note the habits of the servants and other householders carrying out the conspicuous leisure. In a larger city, however, the conspicuous waste needs to be visible, so conspicuous consumption in the nature of watches, clothing, carriages and the like are immediately obvious. Conspicuous consumption can also be vicarious, with servants dressed up in excessive livery.

Veblen considered that one major result of conspicuous consumption is that it will put to use all future growths in production and efficiency. He states:

The need of conspicuous waste, therefore, stands ready to absorb any increase in the community’s industrial efficiency or output of goods, after the most elementary physical wants have been provided for.

Veblen suggests that the use of additional production for conspicuous consumption acts as a Malthusian check on fertility. I think this point is very interesting. If signals are truly wasteful, then some of these resources will not be available for increasing the number of offspring. However, to be evolutionary stable, any reduction in conspicuous consumption by an individual would need to see them suffer a cost in the form of reputation and status, and in turn, mating opportunities. Veblen only mentioned this fertility check for the first time at the end of Chapter 5, so I am interested to see if he takes it any further.

I am also interested in whether Veblen explores the basis of the desire for status and reputation. As my previous posts suggest, I consider that it has biological foundations. From flipping through the book on previous occasions, Veblen had clearly read Darwin, although I am not sure to what use Darwin’s work has been put.

The link to a full review is here.