The Survival Fallacy

Posted: October 28, 2011 in Braak, crotchety ranting, Politics
Tags: , ,

I am no economist, as anyone who knows me knows, and I’m barely able to form a cogent sentence on my best days, relying instead on a sort of cobbled-together-grammar made of coffee and old quotes that I read in magazines.  But sometimes I get ideas in my head, and here is a place where I write about the ideas in my head, so I figure I might as well.

Today it’s something I’m calling The Survival Fallacy.

Now, I’m sure real economists aren’t prey to this, but you get regular people asserting it every once in a while:  “But why would [X] do [Y] if they wanted to survive?”  (Alternately, “But [X] wouldn’t do [Y] if they wanted to survive.)  In this case X is a person, business, or otherwise some kind of actor in an economic exchange, and Y is some kind of action that is detrimental to X’s survival.  I am bringing it up because of a comment on a Gawker article — about a freelance web producer who was fired for being glimpsed at an Occupy Wall Street protest — that said something to the effect of “The person’s boss was probably just looking for an excuse to fire her for poor work.  He never would have fired her if she were a valued employee.”

The underlying assumption there is obvious, right?  No boss would ever fire someone who was a worthwhile contributor to his business because “Why would [THE BOSS] [FIRE SOMEONE GOOD] if he wanted to survive?”

It’s an argument that’s used to justify a lot of things, like why we don’t need the FDA:  “Why would [KETCHUP COMPANIES] [PUT LEAD PAINT IN THEIR KETCHUP] if they want to survive?”  (That is, why would they knowingly poison their customers if they wanted to nurture a long-term customer base?) Or, “Why would [BUSINESS OWNERS] [DISCRIMINATE AGAINST BLACK PEOPLE] if they want to survive?”  The implication being that alienating a portion of your customer base is detrimental to your long-term survival strategy.  Or, “Why would [THE FISHING INDUSTRY] [CATCH ALL THE TUNA FISH] if they want to survive?” — a perfectly sensible response to the Fisherman’s Dilemma (apparently also called the Tragedy of the Commons?  I don’t know, I read that in a magazine somewhere), for instance.

And as far as it goes, “actors in an economic exchange are going to take steps to ensure their survival” is fine, especially for a thought experiment, or if you’re creating a computer model that you’re going to compare to a bunch of OTHER computer models in order to try to predict certain kinds of outcomes.

The problem with it, though, is that “People will take steps to ensure their survival” isn’t just ONE assumption, it’s THREE assumptions, and they’re three pretty big ones. The Survival Proposition is based on these three sub-propositions:

1.  That no one cares about anything more than their own survival.

2.  That everyone recognizes when that survival is being threatened.

3.  That everyone is able to select the best strategy to ensure that survival.

And the problem with these sub-propositions isn’t just that they’re assumptions, but also that we’ve got plenty of evidence to show that they aren’t always true.

Consider the idea that no one cares about anything more than their own survival.  Now, we could put together notions about suicide bombers as obvious examples to the contrary — those are plainly people who care more about an abstract idea than they do about their own lives.  But we can also posit them as exceptions that are gradually being winnowed out of the system — every time a suicide bomber martyrs himself, that’s one less person who doesn’t fit the model, thus making it more accurate (there’s problems with this notion, but I’m not even going to get into it now).

Instead, let’s look at a place where that kind of thinking has actually devastated an entire people:  Easter Island, for example.  Here we’ve got a society that values face and reputation more than they value survival — that isn’t to say that they don’t CARE about surviving, but we’re still looking at a culture that prioritizes that survival lower than it prioritizes reputation:  so, when the Rapa Nui natives are thinking about cutting down some more trees to build a gigantic Moai statue, their first thought isn’t, “I should save some of these trees, so we have some for next year”, it’s “Oh, man, I am going to build the BIGGEST FUCKING MOAI STATUE EVER.”

The consequence is that you’ve got a culture where everyone is perpetually trying to outdo each other with monumental constructions, and then they annihilate the ecosystem that they need in order to survive.  This is a real-life Tragedy of the Commons, which (apparently?  Something else I read in a magazine) most economists think doesn’t really happen in the actual world.

That’s not the only problem, though.  If you look at the second assumption, that people know when their survival is at risk, that’s another problem.  Let’s go back to the ketchup issue — did you know, for instance, that prior to the creation of the FDA, ketchup companies used to put lead paint in their ketchup in order to make it red?  Now, we had a pretty good idea that lead paint wasn’t good for you back in those days — maybe we didn’t know a lot about lead poisoning, but I’ll bet you twenty bucks that if you asked a 19th century dude whether or not he wanted to eat lead paint, he’d say “No way, Josiah.”

The problem is that lead poisoning takes a while to hurt you.  And in a scenario in which there are no laws requiring food companies to list the ingredients of their food, by the time you’ve been correctly diagnosed with lead poisoning (assuming that you even were, which is another issue), you’ve got no way of knowing what you’ve been eating that has lead in it — or even that it was a food that you got it from, as opposed to pipes or fumes or something.  There’s no way to malign the reputation of the ketchup company (thus causing them to either a) go out of business, or b) stop putting paint in their fucking ketchup) because how do you even know it was the ketchup that’s the problem?  Lead poisoning takes long enough to affect you that you might have actually stopped eating ketchup five years ago and STILL be messed up from it.

Nowadays, of course, we live in an era in which we’ve got an enormous amount of information available to us — but we’d still have a problem if ketchup companies were allowed to put paint in their ketchup, because on the internet I can say that anything has ANYTHING in it, and unless you’re a chemist, you’ve got no way to know for sure whether or not I’m full of shit.  This suggests that even IF you know that lead paint is bad for you, the information-saturated 21st century (and the much less information-saturated 19th century) still doesn’t automatically offer a great set of tools for figuring out just what IS essential to your survival.

Finally, there’s the issue of knowing what the best thing to do for your survival is, and history is littered with examples of this.  It’s part of the issue of information transmission — consumers don’t have some kind of preternatural sense for what’s good for them, any more than businesses have any sense what’s good for *them*.  Consider, from the consumer angle:  most parents have a pretty good idea that they don’t want their kids to have autism — it’s neither in their children’s interests, nor in their own interests.  What they DON’T know is that vaccines have nothing to do with autism, so to them, “avoiding vaccines” makes perfect sense as a survival strategy — despite the fact that “avoiding vaccines” does not make any OBJECTIVE sense as a survival strategy.  In fact, it’s counter-productive as a survival strategy, because not only does it not prevent autism, but it also makes your kids vulnerable to Rubella.  That’s one of those diseases that’s so rare that we assume it’s not even around anymore, which gets us back to issue 2, but the irony is that the only reason it’s rare is because of all the fucking vaccines against it.

The thing is that if any of these three sub-propositions are wrong, then it destroys the “economic actors are all trying to survive” model, because it makes the behaviors essentially unpredictable (except in instances where we can predict it, because we’ve seen humanity hunt dozens of species to extinction, and also sell ketchup with lead paint, and also avoid vaccines due to fears of autism — so, past experience).

If we go back to that initial comment, the idea that this manager must have been looking for an excuse to fire his web-producer — a relatively reasonable theory on the surface — is actually full of holes.  This is a journalistic profession, after all; is it possible that he cares more about journalistic ethics than he does about the success of his business? Maybe he’s an old guy; does he not know how essential a strong web presence is to his business?  Or maybe he mistakenly believes that the world is flush with talented web producers (maybe he rightly believes that, but the point is that he could very easily believe something that has no basis in reality).  And you know, maybe he’s just an idiot — maybe he doesn’t realize how bad this makes him look, or the advantages that he could exploit by having this person on his team.

The notion is flush with other problems, too.  If you look at, say, Borders, and consider all the things that Borders did to ensure it’s survival — in retrospect they’re all mostly terrible ideas.  Though, at the time, all of the people working at Borders thought they were terrible ideas — so how did it happen that Borders, as an aggregate entity, did NOT take steps to ensure it’s survival?  Well, because the person making all of the executive decisions had a completely different notion of what “survival” means:  while the sales associates at Borders were trying to survive by selling books, the CEO was trying to survive by getting as much money as he could.  It’s the same in the Fisherman’s Dilemma — there’s an essential disconnect between the people who are doing the work (surviving-by-fishing) and the people who are making the decisions (surviving-by-making-a-huge-amount-of-money).

Furthermore, “success” isn’t binary, it’s relative.  Maybe this manager that fired his web-producer is wrong to put ethics above success in business — but the fact that he did doesn’t mean he’s going to fail.  If the consequence of his actions is just that he’s going to be less successful than he hypothetically might have been if he HADN’T done that, then his strategy is going to still seems like a good one.  Similarly, Rand Paul can assert that business economics would have eventually ended segregation, because hypothetically there’s no value in alienating a portion of your customer base — unless, of course, there’s a higher percentage of people that you’d alienate by ending segregation (see the Sneetch Experiment for more nonsense on that subject).  In that case, while you’re not as successful as you hypothetically could be, you’re still relatively more successful than the alternative case.

Consider the vaccine question, too:  let’s just say, for the sake of argument, that autism is caused by something other than vaccines, and that its incidence remains lower than the incidence of Rubella would be, even if no one were vaccinated.  Let’s say 1 in 1000 for Autism, and 1 in 100 for Rubella, just to make the math easy for me.  Now, this still means that in a population of one million people, ten thousand kids are going to die from Rubella if nobody gets a vaccination — I think we can all agree that’s a negative consequence.

The problem is that the number of kids who DON’T get autism is going to be much higher — 99.9% of kids won’t get autism, which only reinforces the notion that anti-vaccination is doing what it’s supposed to be doing.  A thousand kids dying from Rubella is going to seem like a relatively successful proposition compared to 999,000 kids not getting autism; and it’s a notion that can potentially persist indefinitely as a consequence, because of our access to information:  if every parent whose kid gets Rubella starts a blog where they talk about how bad Rubella is, but only a third of the parents whose kids don’t get autism start blogs about how bad vaccinations are, then there still going to be 300 times as many blogs about vaccinations than there are blogs about Rubella.

So, anyway.  All of which is to say 1) the notion of “[X] would do [Y] in order to survive” is, practically speaking, such a sketchy proposition that I’m not sure it should ever be raised outside of economic thought experiments.  And 2) the idea of “market success” still needs to justify the fact that there are 26 movies featuring Marlon Wayons.  I mean, seriously, how the shit does that even happen?  I don’t know.

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Comments
  1. Moff says:

    For simplicity’s sake, I like to just boil it down to “People act irrationally all the goddamn time (and even a cursory review of the empirical evidence available will demonstrate this).” It saves a lot of trouble.

  2. braak says:

    It’s true that this is simpler, but I think it’s also misleading, because we tend to dismiss irrationality out of hand — and the truth is that people *aren’t* acting irrationally. Even people who make seemingly irrational decisions are actually making rational decisions based on an unknown set of criteria.

    I think it’s important, because if we just say, “People act irrationally,” then the response is, “Well, what the hell are supposed to do, fuck those guys then.” But if we say, “It seems like it doesn’t make any sense, but really it’s just that I don’t see the sense of it,” it encourages us to try and investigate the sense.

  3. John Jackson says:

    Yes, yes, yes and more so yes this:
    “the idea of “market success” still needs to justify the fact that there are 26 movies featuring Marlon Wayons. I mean, seriously, how the shit does that even happen?”

    See, it’s funny, if that web producer was covering the protest, he’d be cherished for his initiative, but if he’s an active force in it, he loses his unbiased nature that journalists *should* cherish. I’m sure it’s even more complicated than that, and you could even pass it off as undercover investigative journalism. Also, if he/she wasn’t active in the protest, but merely there, that’s total bullshit. He/she could just be there to see what it’s about.

    The Fisherman’s dilemma is the tragedy of the commons, and it’s based on the hypothetical issue of one man’s sheep destroying the common land around a specific village, thus causing all the village’s sheep to starve eventually. I believe even the feudal powers wrote regulations to keep this from happening, it wasn’t some collective decision by the farmers to not do this, but an overlord saying ‘fucking idiots, stop.’ Granted, that’s a Norman England hypothetical/realistic dichotomy, not one from before that time. As for the fishing problem, well, there is no one authority to regulate it, so it doesn’t get regulated. The EU has started trying, but that’s only one segment of the North Atlantic, but soon enough we’ll all be eating sardines as that’ll be all that’s left, even if they’re left. As for the market’s irrationality and Keynesian Animal Spirits, very few people have bothered thinking about them since the sixties.

    “Rationality is contextual, it is bounded, to use the correct term. Which is to say, the rational course of action changes based on our situation and how much we know and understand about the consequences of our actions, there is no straightforward dichotomy between rational and irrational.”

    http://gssideblog.blogspot.com/2011/08/essay-on-financial-crisis-notes-for.html

    It is a long and economic read, but worth it if you’ve felt like you don’t know enough to talk about what’s going on. (I’ve always thought those who believe they don’t know enough to talk authoritatively are the ones who should be talking, if only they could find an easy way to learn what they need to.)

  4. Moff says:

    @braak: Sure, exactly. I should have clarified: I meant, “People act irrationally” is a convenient shorthand that reminds me not to post internet comments imputing motives to people I don’t know.

  5. redeni says:

    Rationality may be the wrong concept to describe the reasoning of people. Bernard Williams put it this way: only motivations motivate. But motivations may take many different shapes, and ways of reasoning take different shapes. I’m not saying here that we simply cannot understand the reasoning of others — we often can. There are some basic and commonly shared concepts of what good reasoning is, e.g. if you act, consider the consequences. So that’s what makes someone able to explain his reasoning and makes us able to understand his explanation. If we don’t understand an explanation there’s often some unspoken premise, more often than wrong of irrational reasoning.

  6. braak says:

    I’ll accept that “rational” isn’t necessarily the best descriptor. I think what’s interesting is a kind of ambiguity that we run into with the notion of something “making sense.” “Making sense” can me both that something seems intuitive, but it can ALSO mean that something makes logical sense. Consequently, we tend to conflate the two notions in a way that’s counter-productive: what you’re doing doesn’t seem intuitive to me, there for it doesn’t make logical sense.

    My experience has been that logical sense or rationality is always something that we figure out in retrospect; but hardly anyone does something that doesn’t, according to what they know and what they’re trying to achieve, seem intuitive.

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