Is Love a Positional Good? (A Belated Valentine's Post)

February 21, 2017
Posted by Jay Livingston

Decisions, decisions.

Which world would you rather live in,  A or B World A: You have 2 weeks of vacation; others have 1 week. World B: You have 4 weeks of vacation; others have 8 weeks.

It’s a no-brainer, right? Four weeks vacation is better than two. No surprise that 85-90% of us choose World B. Now try this one.

World A: You earn $110,000 per year, others earn $200,000 World B: You earn $100,000 per year, others earn $85,000 The income figures represent real purchasing power. Thus your higher income in World A would enable you to purchase a house that is 10 percent larger than the house you would be able to afford in World B, 10 percent more restaurant meals, and so on. Faced with a once-for-all choice between these two worlds, which would you choose? (From Frank and Sunstein, here.)

This question doesn’t get the same kind of consensus.  Somewhere between a third and a half of us choose the lower income, $100,000 rather than $110,000. Why leave $10,000 on the table?

Apparently, how much your income is worth depends on its position in relation to others. Income is a “positional good.” I’ll let Sheldon Cooper explain.



How you feel about your $100,000 income depends on how much others are making. When it comes to things that employers or governments can provide, income is a positional good. What’s important is the position of your income in relation to what others are making. But vacation time is non-positional. Four weeks is better than two weeks, regardless of anyone else’s deal. Robert Frank and Cass Sunstein, who have written extensively on the topic, identify  other non-positional goods: “health care, safety, parental leave, and leisure time, are largely or primarily non-positional goods, valued for their own sake and more independently of what others have.”

This distinction closely parallels the research on happiness, which advises you to spend your money on experiences rather than objects. The happiness that a new gadget or piece of jewelry brings fades more quickly than what you would get from travel or a concert. That’s probably because as your phone or couch or sneakers grow a bit older, you start thinking about newer ones, comparing objects in the same way that people compare their incomes with those of others. We’re especially likely to compare upwards, keeping our eyes on the next and more expensive object or on the higher income. But with experiences, we’re less likely use other people’s experiences as a baseline for evaluating our own.

Besides, experiences are unique to the individual. You really can’t compare them on some universalistic scale in the same way that money allows us to compare Apples and Androids. That’s the point of all those MasterCard “Priceless” commercials. It’s the things that you can’t put a price on that are most important. They are also non-positional.

So love and relationships should be non-positional. The joke in the “Big Bang Theory” video is that some people can turn even love, or at least a girlfriend, into a positional good. The excerpt is funny because Howard admits to making the comparison downward, admitting that Raj’s being alone and miserable is “a perk.”

Comparison upwards is less funny – the Have-nots comparing themselves to the Haves and, like Raj, feeling miserable. It’s also probably more common. Think of the people who were unpaired last week on Valentine’s day. Or go to Google Images and search for “single on Valentines,” and you’ll see many variations on the alone-and-miserable theme, most of them a transparent, defensive denial. They make the same positional point: These people would not have felt so bad if it weren’t for knowing that so many others were coupled up in the world of roses and chocolates. The images also echo the message from research on happiness: positional goods (car parts!) are a poor substitute for personal, non-positional relationships.

No Evidence

February 10, 2017
Posted by Jay Livingston

The federal appeals court considering Trump’s travel ban said that the administration had provided no evidence that people from the seven countries had committed terrorist acts in the US.

Trump of course disagrees. In his view, those who oppose the travel ban – including judges and so-called judges – are ignoring a vast global threat. The cause of their ignorance is that the media are underreporting terrorism. “It’s gotten to a point where it’s not even being reported, and in many cases, the very, very dishonest press doesn’t want to report it.”

Even Fox News says that Trump is wrong. (Note that Fox puts this item under “Religion.” Apparently, saying things that aren’t true is a pillar of the Trumpist faith.)

The obvious reason for Trump’s exaggerating the threat is that it justifies his anti-Muslim and anti-immigrant policies. But some on the left suspect something broader and more ominous –  “authoritarianism, American-style,” as Paul Krugman puts it in his column in today’s New York Times:

Never mind the utter falsity of the claim that bad people are “pouring in,” or for that matter of the whole premise behind the ban. What we see here is the most powerful man in the world blatantly telegraphing his intention to use national misfortune to grab even more power.

Some on the left go even farther. Widespread fear of terror will allow Trump to stifle opposition. Those who protest Trump’s policies will no longer be merely dissenters. They will be traitors, putting the country at risk. As such, they could be thrown in jail.

The hypothesis is this: when members of a group perceive an external threat to the group, they demand more loyalty and are less tolerant of dissent.

It seems logical, and I can think of examples from recent history. But I wondered if there was any support from controlled experiments in social psychology. I asked an expert who knows the literature much better than I do (not all that difficult since I let my subscription to the JPSP lapse somewhere back in the Harding administration). The answer was that we have research on the “rally effect” –  the perception of threat causing people to rally ’round the flag and to support a strong leader.*

But what about throwing dissenters in jail, or whatever the social psych experiment analogy would be? On this, my source wrote:

“I don’t know of anything on intolerance of dissent. That might be an important literature gap to fill!”

Never mind the hint that I should sharpen up my experimenter chops and get to work. What this means for the “more threat, less tolerance of dissent” hypothesis is: “no evidence.” At least, no evidence from controlled experiments.

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* Not all of this research supports the rally effect.

Losing My Religion . . . And Its Swears

February 7, 2017
Posted by Jay Livingston

Walking across campus yesterday, I heard a loud, long belch. About ten yards away were two girls, one drinking a can of soda as they walked.

“Jesus Christ!” exclaimed her friend.

Wow, I thought, that’s something I rarely hear these days – not belching, but “Jesus Christ.” We must have found some other phrase to express a mixture of surprise and disapproval. Or was this just my idiosyncratic sampling of language?

No, my impression was correct.  Linguist Melissa Mohr, author of Holy Sh*t: A Brief History of Swearing, says that “Jesus Christ” doesn’t even make it into the top 20 among swears these days. as religion become more powerful and able to impose its taboos? Just the opposite. Religion is declining in importance, especially among the young, and as a consequence, religious swears have lost the power entwined with taboo.

Religious swears – words once deemed blasphemous – are now perfectly acceptable.  The Hollywood Production Code of 1927 banned damn, hell, God, Jesus, Christ, and even lord (unless used in a religious sense). The Code faded in the 1950s, but television adopted many of its rules. That was then. Now, if you told young people told that invoking the lord’s name was once unacceptable, they would probably text back, “OMG, why?” 

Some of those no-longer-powerful religious curses are being replaced with sex-based terms. In earlier generations, you might have said that a room was “hot as hell.” Now, it’s “hot as fuck.” As a simile, it makes no sense, but fuck emphasizes the heat in a way that hell no longer does.

I’m not sure what most college-age people would say these days when a friend unabashedly emits a loud belch. I am not a religious Christian; I’m just old. So I found it comforting to hear America’s youth repeating the familiar words, “Jesus Christ!”

The Wisdom of Crowds Redux —Bookies and Bettors

February 5, 2017
Posted by Jay Livingston

Several posts in the early years of this blog (e.g., here ) looked at the “wisdom of crowds” – the idea that the collective wisdom of large numbers of interested people is usually more accurate than the guesses of a few experts. Each post focused on a single event, usually a football game, where the public favored one side while the “smart money” (a small number of professional gamblers) favored the other. 

My thesis was that at least in sports gambling, the crowd was not so wise. If it were, it would have put a lot of bookmakers out of business.

The only data I had, unfortunately, was anecdotal – a few games, like the 2010 Superbowl, where the public heavily favored one side and lost. But this season, I’ve compiled a more complete data set – all NFL games. My indicator of the crowd’s opinion is the change in the point spread late in the week – from Friday to kickoff.*  If the spread goes up, it’s probably because the public is betting the favorite. The bookies are raising the line to attract more money on the underdog and thus balance their books. (On most bets the bettor puts up $110 to win $100. The book with equal amounts on both sides – say $1100 on the favorite, $1100 on the underdog –  is guaranteed a net of $100 no matter who wins.)

I looked at games this season where the line moved by at least one point.** Here are the results.

If you had bed against the wisdom of crowds, you’d have won 54 bets and lost 32. Putting up $110 to win $100 on each of the 86 games, you’d have come out $1880 to the good on a total investment of $9460 – about a 20% return. And except for the first week – 1 Win, 3 Losses – the whole season you’d have been in the black, playing with house money.

As for today’s Superbowl, there has been no movement in the line. It opened at 3 two weeks ago and has stayed there.*** Small bettors are tending towards the Patriots, larger bettors towards the Falcons, so the money is about evenly distributed. Of course the deluge of bets in the next few hours could change that balance.

My own hunch is that the Falcons will win it on the field.


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* Line changes early in the week are usually caused by large bets from “sharps.”

** The change in the point spread is not a perfect variable. For one thing, different books put out different lines. I used the consensus number. For another, bookmakers now respond to betting imbalances by changing the odds rather than the point spread. For example, in today’s Superbowl, the point spread is 3. If a book is getting too much action on the Patriots and needs more Falcons money, rather than raising the line to 3½, they will adjust the “vig.” Bettors usually think of the vig as a tax on losing bets. If you win, you get $100. If you lose, you pay $100 plus the tax – usually 10%. But to balance the bets, a book might raise the vig on the Patriots to 15% or 20% and lower the Falcon bettors’ rate to 5% or even 0%.  In this case, the unchanged point spread would be misleading. The public would be betting on the Patriots, but the line remains at 3.

*** Books are very reluctant to change a point spread of 3. It’s the most common outcome – out 10% of games are decided by three points. If a book raises the line to 3½ and gets a lot of action on the underdog, and if the final score is 20-17, the book loses all those 3½-point bets while not collecting on the 3-point bets. That’s one reason that when the line is 3, books are much more likely to adjust the vig rather than the points.