Author Archives: Arnold Kling

Systems invite gaming

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Back in March, Zack Kanter wrote,

Amazon has opened itself up to inevitable ‘gaming’ by sellers. Another way of saying this: as soon as a system’s rules are understood, it will be gamed according to the rules that have been created.

Pointer from Tyler Cowen.

He alleges that Amazon is allowing sellers to buy or manipulate their way into top spots in Amazon’s rankings. There is much more in Kanter’s essay, but I will just focus on the issue of gaming the system.

Any system invites gaming. If you run a sales force and give bonuses based on a formula, your sales people will game the system. If you reward volume, they will make concessions on price. If you reward sales revenue this year, they will invest less in building long-term relationships. If it costs you more to service some customers than others, then unless you can figure out how to build that into the sales formula, they will sell more to the high-maintenance accounts.

Government regulations invite gaming. I have often used risk-based capital requirements for banks as an example.

Search engines invite gaming. The phrase “search engine optimization” still grates on my nerves.

All rating systems invite gaming. Don’t think that we won’t see bots writing book reviews and product reviews, if that isn’t happening already.

There are many stories and jokes about gaming under central planning. If the planners reward the number of nails manufactured, they get a lot of little nails. If they reward the weight of nails manufactured, they get one giant nail.

Systems for compensating doctors will be gamed. If you reward them for seeing many patients, then they won’t spend time on the hard cases. If you reward them for doing certain procedures, then they will do more of those procedures. If you reward them based on outcomes, they will select patients that they know will recover easily. Etc.

If you have ever wondered why your organization rolls out a new compensation system every few years, gaming is the reason. When a system is new, it usually takes employees a while to figure out how to game it. After it has been around awhile, they have become experts at getting the maximum reward for the minimum effort. So the organization revamps its compensation system to try to induce more constructive effort and less gaming.

Negative interest rates

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The WSJ reported,

there is more than $15 trillion in government debt around the world with negative yields. That means, essentially, that savers holding these bonds are paying the government to store their money.

I find this totally baffling. Why wouldn’t you rent a safe deposit box, exchange your government bonds for currency, and store the currency in the safe deposit box?

Actually, you should just invest in securities issued by the private sector, which offer higher returns and in some cases lower risk. Government debt is only risk-free as long as the consensual hallucination makes it so.

Progressive Puritans

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Curtis YarvinMaureen Dowd writes,

The progressives are the modern Puritans. The Massachusetts Bay Colony is alive and well on the Potomac and Twitter.

Indeed, New England Puritanism persisted, with or without churches. The descendants of the Puritans crusaded against slavery. They crusaded against liquor. They crusaded against large corporations.

You can take the Yankees out of organized religion. But it’s hard to take the religion out of the Yankees.

Reminder: Now would be a good time to order the latest edition of The Three Languages of Politics.

Ideology in academia

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Phillip W. Magness writes,

Faculty growth on the political left comes at the direct expense of conservatives, who dropped from 22 percent of the academy as recently as 1995 to only 12 percent today. Furthermore, faculty who identify as “far left”—a category that usually includes Marxists, socialists, and derivative ideologies in Critical Theory—provided the main impetus of this shift. Far leftists more than doubled in number during this same period, going from a small minority of only 4 percent to 12 percent today

…Turning to administrative ranks, we quickly find several indicators of a leftward shift that has paralleled the faculty. Although polling data on administrator ideology only recently became available, a 2018 survey of student-facing administrators—typically the lower-level ranks of student affairs and university life personnel—found that 71 percent identified on the political left. Conservatives comprised only 6 percent, indicating that this segment of university administration sits even further to the left than the faculty at large.

Again, this stories is one of a series on the academic hard left.

Reminder: Now would be a good time to pre-order the latest edition of The Three Languages of Politics.

Gramscian damage watch

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Williamson M. Evers writes,

Capitalism is described as a “form of power and oppression,” alongside “patriarchy,” “racism,” “white supremacy” and “ableism.” Capitalism and capitalists appear as villains several times in the document.

The document to which he refers is an “ethnic studies model curriculum” proposed for California public schools. Read the whole piece.

Looking ahead, I see several posts scheduled where I link to stories of the academic hard left and the backlash that is forming against it.

Probability and mass shootings

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E. Fuller Torrey writes,

there are now some one million people with serious mental illness living among the general population who, 60 years ago, would have been treated in state mental hospitals. Multiple studies have reported that, at any given time, between 40% and 50% of them are receiving no treatment for their mental illness.

He blames de-institutionalization for the problem of mass murders.

Ordinarily, I try to avoid commenting on the stories that dominate the news for short periods of time. I have a lot of doubts about going ahead with this post, but here goes.

I have a problem with every policy proposal that I have seen for dealing with mass shootings. The problem comes from Bayes’ theorem, which says that the probability of A given B is not the same as the probability of B given A.

When I taught AP statistics, I often used the 9/11 attacks as an example. Nearly all of the terrorists were Saudi nationals. But only a tiny percentage of Saudi nationals are terrorists. So a policy based on the assumption that Saudi nationals are the problem is going to involve a lot of costs relative to potential terrorist acts prevented.

The same thinking applies to guns. Guns account for 100 percent of mass shootings. But only a small percentage of guns are involved in such shootings. If guns provide a benefit to the people who do not use them for mass shootings, then trying to get at mass shootings by going after guns is going to involve a high ratio of costs to benefits.

The same probabilistic reasoning also applies to mental illness. Suppose that people with untreated mental illness account for 100 percent of mass shootings. There are still half a million untreated mentally ill who are not mass shooters. If the cost of mandatory treatment for them is high, then that may not be a good strategy for trying to reduce mass shootings.

Perhaps there are other social benefits to forced institutionalization of those who are mentally ill. That might improve the benefit/cost analysis for such a policy. But even so, it would be difficult to defend from a humanitarian or libertarian viewpoint.

As long as mass shootings remain rare relative the causal factors that are most often cited, it will be hard to come up with a cost-effective solution. This RAND meta-analysis supports my view.

Ben Thompson writes,

it was on 8chan — which was created after complaints that the extremely lightly-moderated anonymous-based forum 4chan was too heavy-handed — that a suspected terrorist gunman posted a rant explaining his actions before killing 20 people in El Paso. This was the third such incident this year: the terrorist gunmen in Christchurch, New Zealand and Poway, California did the same; 8chan celebrated all of them.

Hence, he supports censorship of 8chan. I disagree, although I find it a close call. My thoughts:

1. Correlation does not imply causation. The fact that terrorists were active on 8chan could mean that 8chan attracts individuals who are inclined toward violence, but it does not necessarily increase their propensity toward violence.

2. As a test, you may substitute “radical Islamic preacher” or “Palestinian primary school that teaches kids to hate Jews” for 8chan, and see whether you support the step of absolutely shutting down their right to speak. Maybe you do. I do not.

3. Probably the most effective way to use censorship to reduce mass shootings would be to refuse to allow the media to cover them. As it is, the mainstream media are giving mass shooters the notoriety that seems to be their main motivation. Sometimes there are suggestions that the media voluntarily exercise restraint, for instance in not naming the shooter. But as far as I know nobody wants to impose censorship on the mainstream media, even though they appear to be at least as guilty of aiding and abetting mass shooters as are the dark-web media.

4. Ultimately, censorship gives power to the censors. As time passes, the trend will be for censors to exercise more and more power with less and less wisdom, objectivity, and discretion. I think it is best to stay off the slippery slope altogether.

UPDATE: a commenter points to a very similar post by Craig Pirrong, aka the Streetwise Professor. Note that the first comment on that post repeats my point 3.

On Tom Wolfe, Ken Kesey, and LSD

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Scott Alexander writes,

The best I can do in making sense of this story is to think of Kesey as having unique innate talents that made him a potential cult leader, combined with the sudden rise in status from being a famous author and the first person in his social scene with access to LSD. Despite the connotations of “cult leader”, Kesey was overall a good person, genuinely wanted to help people’s spiritual development, and genuinely thought LSD could do this. LSD formed the content of his cult, the same way Messianic Judaism formed the content of Jesus’ cult. It also made his life easier because of the drug’s natural tendency to make people think they are having important insights. When he, attempting to genuinely discover a spiritual path, decided to change the content and go beyond LSD, he lost that crutch, his people betrayed him, he became less confident in himself, and eventually he gave up.

My interpretation of Kesey is a bit different. He could only depict the power struggle between Nurse Ratched and Randle McMurphy because he understood the strengths of both. (Note that more than one pundit has seen an echo in the contest between Hillary Clinton and Donald Trump.) So he had a natural sense of personal power, but I think in the end he did not want it. Maybe it bored him. Maybe having a cult following even turned him off after a while. These days, you can watch Jordan Peterson and suspect that he sometimes longs to retire to a life of isolation and anonymity, which is what Kesey did.

When I was in high school, I read and re-read Jack Kerouac’s On the Road, Kesey’s One Flew Over the Cuckoo’s Nest, and Tom Wolfe’s The Electric Kool-Aid Acid Test. Alexander gives a good plot summary of the latter. Of the three, I would say that Cuckoo’s Nest holds up the best, followed by Acid Test.

I recommend Alexander’s whole post. The key paragraph:

One of two things must be true. Either psychedelics are a unique gateway to insight and happiness, maybe the most powerful ever discovered. Or they have a unique ability to convince people that they are, faking insight as effectively as heroin fakes happiness. Either one would be fascinating: the first for obvious reasons, the second because it convinces some pretty smart people. If the insight of LSD were fake, its very convincingness could tell us a lot about the mind and about how rationality works.

My money is on the latter.

A treatise on conservatism

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My review of George Will’s The Conservative Sensibility.

For Will, the apotheosis of the first phase of liberalism was the American Founding, with a capital F. Madison and the other Founders took at as given that human nature made us sufficiently equal to deserve identical treatment under the law, sufficiently different to benefit from liberty and autonomy, sufficiently bellicose to require a government that could resolve disputes peacefully, and sufficiently factional that preventing one coalition from dominating the rest required a system of checks and balances.