Monday, May 25, 2009

Hey Baby, What's Your Signal?

"Signaling" is relatively new, relatively obscure part of economics (hat tip to Bryan Caplan for this). The idea is, instead of some concrete objective some of our actions are done for the purpose of increasing our status in the perceptions of other people.

The literature on this typically deals with education as the canonical case. Ie, the utility of a Harvard doesn't necessarily depend on anybody learning anything there. Employers want to hire people who can get in to Harvard, applicants want to demonstrate they can get in, and they may want to associate with them too.

In the political world there's a couple of important things that are best understood in terms of signaling. First the bad news: the GOP has been bleeding highly-educated, wealthier coastal voters for two decades. Normally this shows up in public opinion surveys as referenda on social or environmental issues. They believe in gay marriage, the Republicans don't. They believe in global warming, the Republicans don't. But these are mostly signals. Most of the time, these issues don't affect those who claim to care about them. But, caring about them is an important signal of higher social status those who care about monster truck rallies. Suffice to say, it's not good for the GOP that there's a significant number of voters whose primary political motivation is to disassociate themselves from your political base.

On the other hand, the Republicans can also use signaling to their benefit. Most of the time the political actors try to promise various benefits to the voters, with the hope of getting political support in return. This is a difficult game for the GOP at the moment, among other reasons because they are so far out of power that they can't deliver on whatever they promise. But, their is a substantial tradition in America that people who want to earn their own living and mind their own business vote Republican. So, let's point that out and make it a signal. Joe Candidate (R, Podunk) can say "Hey, I don't know what can be accomplished if I am elected. Among other things, that will depend on how many of us there are. But, I want America to be a place where we get rewards for success instead of bailouts for failure. If that's what you want, vote for me."

Tuesday, May 19, 2009

Me to California: Drop Dead, pt III

Between democracy, immigration and big government, you can choose any two. You can't have all three. - Eddy Elfenbein

Me to California: Drop Dead, pt II

Hat tip to Steve Sailer for this one, not that it's any big secret by now. And let's also note that the money spigot still hasn't been turned off. Nobody's writing any new subprime loans, but public-sector pensions, entitlements, and various other forms of pork-barrelling are still going strong.