Tuesday, March 25, 2014

Social Status and the Vertical Quality Model

This Stanford Anthropologist argues that Facebook makes us miserable.  She advances an interesting hypothesis that until people are connected to the Web that they are blissfully unaware of how little fun and status they are achieving relative to everyone else.  It is easy to "Keep up with The Joneses" when you don't know they exist.  Facebook confronts you with those smooth, attractive Joneses and the low ranked monkeys get depressed.  One study focused on this topic is discussed here.

A few thoughts;

1.  Facebook is an "opt in" technology. You can choose not to spend time on Facebook so establishing the causal effects of spending time on Facebook is tricky because the researcher must disentangle selection effects from treatment effects.

2.  Implicit in Dr. Luhrmann's analysis is a view of the world that people believe in a vertical model of quality.  For hundreds of years, economists have talked about comparative advantage rather than focusing on absolute advantage.  In an absolute advantage model, Mike Tyson is a better boxer than me, he is a better economist than me, he is funnier than me, he is more handsome than me, he cooks better than me, he is a better father than me.  Are you getting the picture here?  In the absolute advantage model, there is a single index of a person's quality (such as IQ) and we can sort people from the highest monkey to the lowest ranked monkey.

Economists reject this vision.  The comparative advantage model views people and nations as multidimensional. We make choices over what we study in college and what we focus our scarce time on.  Such investments increase your skill at one task (such as blogging) and you sell these services to the market while buying stuff that others have a relative advantage in producing.  

In a world that recognizes that there are many different skills (dancing, kissing, debating, writing, cooking, thinking, boxing); we can all be the star at something!  When I taught at Harvard I saw this first hand, Harvard had the best student in each of these subtasks and they were all delighted with themselves because they knew they were great at what they cared about.  The key here to keep your self respect and your sanity is to promote comparative advantage.   An economist is who is a good researcher and a great teacher can take pride that she is mentoring the next generation rather than thinking depressed thoughts that she won't win a Nobel Prize.  While REPEC ranks us on a vertical quality index, economics researchers ranked #2000 and higher can think of a variety of ways that makes them "better" than the #1 Dude on the list.