The most 'intelligent' species on the planet....

Big Weddings Bring Afghans Joy, and Debt:

In Afghanistan, one of the poorest countries in the world, bridegrooms are expected to pay not only for their weddings, but also all the related expenses, including several huge prewedding parties and money for the bride's family, a kind of reverse dowry.

Bill Cosby may be right about African-Americans spending a lot on expensive sneakers--but he's wrong about why:

Economists Kerwin Charles, Erik Hurst, and Nikolai Roussanov have taken up this rather sensitive question in a recent unpublished study, "Conspicuous Consumption and Race." Using data from the Consumer Expenditure Survey for 1986-2002, they find that blacks and Hispanics indeed spend more than whites with comparable incomes on what the authors classify as "visible goods" (clothes, cars, and jewelry). A lot more, in fact--up to an additional 30 percent. The authors provide evidence, however, that this is not because of some inherent weakness on the part of blacks and Hispanics. The disparity, they suggest, is related to the way that all people--black, Hispanic, and white--strive for social status within their respective communities.

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To test their theory, the authors look at how much a white family spends on conspicuous consumption when it is surrounded by white families making a similar amount of money. They find that this white family spends the same portion of its income on visible goods as a black family surrounded by other black families with similar incomes. They also find that the further a family of either race slips behind the average income of nearby households of the same race (becoming too poor to compete in the signaling game), the less it spends on these visible goods.

Once these effects are accounted for, racial disparities in visible consumption disappear. It's not that black Americans are more inclined to signal wealth; rather, poor blacks are more likely than poor whites to be a part of communities where they are relatively rich enough to participate in the signaling game.

These are the sorts of data which has resulted in my turn away from principled libertarianism; in my opinion political ideology should be grounded in the art of the possible not the yearning for what should be. The more we delve into 'human nature' the more complex and bewildering it becomes, and the less our naive reliance on the powers of human agency seems to be a wise course.

Note: I have read ethnographic literature from Southeast Asian which suggests that some communities have converted to world religions (in this case Islam and Christianity) to escape the onerous expectations of the community in regards to ritual feasts and other various customary outlays. Since these expenses are justified on religious grounds a rejection of the tribal religion is a principled "opt-out," and an integration into a universalist religion results in compensation for the social ostracism which might be incurred by the removal of oneself from the communal activities which have sacral import. That being said, I suspect this sort of behavior has only an epiphenomenal significance, because over time whole communities tend to convert to world religions. At that point the old dynamics no doubt reassert themselves as communal outlays are now justified as part of the customary tithe or zakat for the new dispensation.

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The Afghanistan article has some weird sort of political correctness embedded in it. The price of the "wedding" includes a sort of "reverse dowry" -- flip the page, and you learn it is the brideprice. The article could have been titled "Price for an Afghani female slave: $12,000" with little loss of meaning.

It'd be interesting to look at the data behind the Slate article to determine what effect, if any, the "female farming society" of much of black america has on signaling behavior.

From the article: poor blacks are more likely to live among other poor blacks than poor whites are to live among other poor whites
I was unaware of that. I didn't have strong priors against it, but I always figured economics played the largest role in housing segregation and that poor whites similarly had communities in which they predominated. Guess I just don't have that much real life experience with po' folks.

Is the visible good that whites spend money on housing?

These are the sorts of data which has resulted in my turn away from principled libertarianism
Would you describe yourself as a Jeffrey Friedman type "post-libertarian"? Also, libertarianism seems mostly focused on the relation between the state and the individual; do you think it has a flawed conception of that relationship and its possibilities or is its failing the lack of focus on concepts other than the state?

do you think it has a flawed conception of that relationship and its possibilities or is its failing the lack of focus on concepts other than the state?

the main issue what 'we' libertarians have is that we extrapolate from our own psychological priors and biases. libertarians tend to be secular men with a nerdy bent. to some extent we are less socially oriented and communitarian as a function of who we are as individuals. it is natural we focus on the state <-> individual axis because it is explicit and pretty intelligible to our cognitive outlook. but we're not modal. implicit social relations and institutions are a bigger force in many peoples' lives.

The modal human has a mind optimized for Neolithic societies. What good will it do to conform your politics to such a mold? You cannot run a society composed of millions of people with a system designed for a village.

By Caledonian (not verified) on 15 Jan 2008 #permalink

What good will it do to conform your politics to such a mold?

stop connecting dots which aren't there please!!! i didn't say anything about conforming to any specific mold. i simply said that libertarian presuppositions are shaped by the composition of the types who are attracted to that ideology.

Referring to the 2nd article

Are you Yankees livin' in ghettos? That is what it sounds like. Bugging thy neighbour policies are known to me from international economics, but here the spotlight is on a single country. Perhaps the Friedman boys ought not try so hard to iron out facts of the matter.

The route to go is not a within group comparison, but an embedded group study. How do African Americans behave amongst whites holding income constant? This is civil war! Us against them, not me against you.

Just consider another arena: the music business. The slim shady vs the slave-turned-master overdog. Just be remembered who has to stand his man.

Last but not least, if you have it, you need and want to hide it. Next time you travel Europe be mindful to observe how many Porsches you see circulating on the streets and how many you s e e parked. A stark contrast.

By Markovitz (not verified) on 16 Jan 2008 #permalink

stop connecting dots which aren't there please!!! i didn't say anything about conforming to any specific mold.

You did say "in my opinion political ideology should be grounded in the art of the possible not the yearning for what should be", and the limiting factor for what is possible with society is its lowest common denominator.

By Caledonian (not verified) on 16 Jan 2008 #permalink

It will be interesting to see how the whole eco-chic 'less is the new more' movement interacts with this.

Will the poorer folks get priced out of Goodwill? Will black families go bankrupt buying Prius's? Will folks in Oakland start pretending that their Ecuadoran bananas were really grown in San Diego?

They also find that the further a family of either race slips behind the average income of nearby households of the same race (becoming too poor to compete in the signaling game), the less it spends on these visible goods.

This the "keeping up with the Jones's" phenomenon I grew up with in the Midwest USA. I saw a lot of people derive a great deal of satisfaction from getting to play the game so I guess I would say that it was money well spent.
Dave Briggs :~)

The study is quite interesting, if not wildly surprising, it is always nice to see a fairly simple model of behavior actually work.

I'd be curious, as a follow-on, to see something on how certain things get picked out as loci of competitive signaling and others are ignored. Purely as signaling goods, it doesn't much matter what the goods are; but some signaling goods have other effects, positive or negative. Where I come from(New England Suburban) education is something of a signaling good. This does lead to a rather crazy arms race with families lining up armies of tutors, test prep programs, extra this, accelerated that, and so forth in the effort to get junior into a fancier college; and it probably leads to some suboptimal outcomes, with kids going for better schools over better fits with schools. On the whole, though, there are substantial side benefits. Keeping up with the Joneses means pushing your kids to get a good education. Spending on things like luxury cars or home theatre systems also has signaling value; but doesn't really have side benefits. I'd imagine that the level of spending on signaling goods is one factor in determining their effect on overall welfare; but what the signaling goods are would also have an important impact.

It would be interesting to look into the possibility of creating signaling goods, in the same way we create financial instruments, in order to make visible certain desirable things that can't currently be used for signaling because they are not visible. In particular, spending is very visible, saving isn't. If it were possible to make saving and accrued capital visible one might see social competition induce much sounder behavior.

It would also be interesting to see what factors influence the choice between assets as signaling goods and personal characteristics as signaling goods. In geek circles for example, possession of new toys, cool tools, rare hardware, and the like tend to confer prestige. Having the skill to do and make impressive things also confers prestige and, in some cases, actually works in opposition to the prestige provided by material objects. For every fancy device that comes out, there will be somebody who mentions that "you could do the same thing as foo device, but with more configurable options, if you just run the hacked .073SVN_alpha_withdangeroustweaks firmware on last years bar device for far less money." with the implication that the only reason to buy foo device is because one is too weak and clueless to handle bar device. I'd imagine that personal aspect based signaling goods might have markedly different economic implications than material signaling goods; because they are harder to buy, and are subject to more or less strict limits.