Category: economics

Our discourse is broken. We can’t talk to one another anymore. Tribalism reigns supreme. How many times have you heard a variation of this?

For the record, I think this is exaggerated. I’m perfectly able to communicate with family, friends, colleagues, neighbors, strangers. This is largely about politics, one domain of life that doesn’t matter for most people on a daily basis.

But there is truth to it. What’s driving this trend is that somehow, a noble lie has been spoiled. Everything is signaling.

Signaling is an economics concept that explains how parties credibly communicate information to one another. I learned about this concept because the signaling theory of education has gained attention recently. Put simply, a college degree is not necessarily valuable because one acquires knowledge during college. It is valuable because it is a signal to employers (possibly a signal of intelligence, but likely also of work ethic, social IQ, willingness to follow direction, and other attributes).

Imagine you have been in college for three and a half years, only to drop out before your final semester. Are you only semester less employable than a comparable person with a college degree? Are you seven semesters more employable than someone who didn’t enroll in college?

If you agree with me that a college dropout will be judged more closely to someone who didn’t enroll in college than someone who finished college, you hopefully see the plausibility of the signaling theory of education. The value of the degree does not come from the knowledge gained in class. It comes from acquiring the signal.

Back to politics. Discourse is broken because the point of talking is not to talk. It is to signal.

Take the latest example, the sexual assault allegations against Supreme Court nominee Brett Kavanaugh. In economic terms, to any random individual the costs of determining the validity of the accusation are relatively costly (time and effort to wade through the evidence, which you don’t have direct access to) and the benefits are relatively low (most people can’t affect the proceedings in a meaningful way). Meanwhile, the benefits of signaling your tribal allegiance are relatively high (being alone in politics is meaningless, power comes in numbers) and the costs are relatively low (all it takes is a tweet).

There are (a small number of) people who are seriously attempting to assess the validity of the allegations and determine how they should affect Kavanaugh’s nomination. For a vast majority of folks, it is an opportunity to signal which political tribe you support. Without knowing their previous stances on similar allegations of sexual assault, you can accurately guess their stance on Kavanaugh if you know how they vote. It’s amazing!

It seems to me that subconsciously, more and more people are clued in to the fact that the point of political discourse is to signal which tribe you support. This is even more maddening as politics creeps and eats into more and more realms of life.

I think this is pretty clear. I’m not so confident on how we got here and if there’s a way out. That would be my personal preference, but I also am curious what the costs and benefits of such a culture of discourse.