At the public library the other evening, N was playing trains alongside another child. In the chair-slumped way of parents too tired to fully engage with the world, that boy’s father and I began to talk. He was a bit older than me and sounded to be well traveled, having worked for a few years in many different countries, but he’d spent time in Bloomington when he was young and decided this would be a good place to raise his own kid.
I told him I liked our little town, too. I said that it seemed much better than where K & I were living in California. Silicon Valley is a bit expensive, for one thing, and I repeated K’s phrase: “Just because people eat yogurt and do yoga doesn’t mean they’re nice.”
I posited that people are friendlier in Bloomington than in northern California.
The boy’s father shrugged. He said, “There’s an old Chinese proverb about that. Two travelers walking different directions down the road, each passes by an old man sitting on a fence. The first traveler stops to talk, asks, ‘What are people like in the town ahead?’
“The guy on the fence says, ‘What’d you think about the people in the town you just left?’ And the traveler says, ‘Man, they were all assholes!’ So the old guy says, ‘The people in the town ahead, they’re pretty much the same.’ And the traveler keeps walking, looking bleak.
“Soon the next traveler, the one going the other way, reaches the old man and stops. He asks the same thing, says, ‘What are people like in the town ahead?’ And the old man says back to him, ‘What’d you think of the people in the town you just left.’ And the traveler says, ‘Those people were great!’ So the old guy says, ‘Well, the people in the town ahead, they’re pretty much the same.’”
It’s a charming little parable. Our attitude as we approach each new situation colors how we’ll perceive it, and that, in turn, changes how people will respond to us. The majority of people are pretty similar everywhere, so we may as well calm down and accept them for the flawed creatures they are.
At the same time, though … people certainly aren’t identical everywhere. If you read much about politics, it doesn’t take long to notice some stark differences between northern California and southern Indiana … I have to admit, northern Californians are nicer politically. It was only interacting face-to-face that they seemed unpleasant.
In the United States as a whole, the differences between people living in different regions have been steadily increasing. You can see this in many different ways, by looking at demographics, or voting records, or income distributions, or religious beliefs, etc.
One consequence of this heterogeneous distribution of people across the United States came up while I was reading George Akerlof and Robert Shiller’s Phishing for Phools. If you enjoy pop economics, or if you’re simply frustrated with all the ways the world seems stacked against good decision-making, this is a charming book. The tone is light-hearted and self-depreciating. Not even economists are the unflappable rational decision-makers that their theories assume us all to be, and Akerlof & Shiller include several anecdotes about times they’ve been duped. It’s an easy book, too. Their analysis is lucid and accessible.
I could’ve used fewer explanatory metaphors, though. I’d like to think that most people can understand that an institution known for high-quality financial products can use that good reputation — once — to sell a whole bunch of crummy ones. But Akerlof & Shiller repeatedly mention that this is equivalent to a farmer known for high-quality avocados duping his customers into buying rotten ones. By the nth time a reference to a financial product was “clarified” by stating that agencies like Standard & Poor’s were rating rotten “avocados” (i.e. rotten derivatives) as triple-A, I found myself urging them to get on with it.
Maybe I’m just a curmudgeon. Maybe you’re less likely than I am to ‘zerk out at superfluous analogies. I assume part of my problem is that I’m a slow reader — because each word carries an appreciable cost, I like knowing that they all need to be there.
The basic premise behind Phishing for Phools is quite nice, though. The central idea is related to the “no arbitrage” condition in economics. “No arbitrage” means there’s no opportunity to make money by risk-free buying and selling. It means that in fantasy economics land, you won’t have situations like a grocery store selling avocados for a dollar each and people at an adjacent farmer’s market buying identical avocados for two dollars each. In that scenario, you could earn a profit by purchasing grocery store avocados and immediately re-selling them at the farmer’s market.
In the world of stocks and bonds, “no arbitrage” means you won’t simultaneously find people selling a stock for five dollars a share and others buying it at ten. Their valuations should converge, eliminating the opportunity for a middleman to profit.
In economics, the fantasy is that everyone’s valuations converge instantly. In the real world, of course, that isn’t true. The “no arbitrage” condition still holds for most investors, but only because somebody else with a supercomputer adjacent to the stock exchange is placing automated orders moments before other traders, effectively taxing everyone else billions of dollars a year.
This is a pretty big deal, actually. If you’re at all interested in the stock market, you should read Michael Lewis’s Flash Boys (or, if you’re too busy, the much-condensed version he prepared for the New York Times Magazine) about high-frequency trading. It’s an incensing and still-urgent story — the S.E.C. still hasn’t allowed IEX, the trading platform that uses a whole bunch of superfluous fiber optic cable to slow down everyone’s orders and thereby prevent high-speed traders from taxing other investors, to register as a national securities exchange.
A major problem is that members of the S.E.C. bounce back and forth from employment at the companies merrily taxing all the chumps (i.e., you and me). They have a strong disincentive to make things fair. In a fair world, they and their friends would be less able to siphon off other people’s money.
Anyway, the underlying principle of the “no arbitrage” condition is that, if there were an opportunity for easy profit, someone already would have taken it. In Phishing for Phools, Akerlof & Shiller argue that the world is full of traps — like unwholesome food engineered to be delicious — for a similar reason.
For instance, selling Oreos is a good way to make money. Oreos are delicious! They’re so easy to eat! If Nabisco hadn’t invented them, someone else would’ve. Because bad ideas vanish and the good ones persist, the world eventually fills up with insidiously enticing products like Oreos and french fries and smartphones. Which leaves us, the irrational emotional consumers of the world, beset by impulses we know we should resist … but often can’t.
Akerlof & Shiller’s combine behavioral economics (the study of consumers as irrational decision-makers) and a “survival of the fittest”-like idea about the steady enrichment of effective strategies for manipulating consumers. This is a lovely framework for understanding why, clever as we are, humans have created a world that suits our real interests so poorly. Nobody’s happy to be at a party where everybody is just staring at their phones.
Not all of Akerlof & Shiller’s reasoning stands up to close scrutiny, though. I want to highlight one example because, embarrassingly, as soon as I read it I realized that I had made the exact same misguided claim in a recent essay. Whoops!
From Phishing for Phools:
It is now estimated that one out of every nine school-aged children and adolescents in the United States has been diagnosed with attention-deficit hyperactivity disorder (ADHD). Ritalin, the drug that is most commonly prescribed, is powerful — its long-term side effects unknown. But we also know that many diagnoses are almost surely wrong, one way or the other, since the diagnosis rate for Kentucky (15 percent) is more than three times that for Nevada (4 percent); and among populous states, the diagnosis rate for Texas (9 percent) is half again as big as that for California (6 percent).
At first glance, their logic seems reasonable. Diagnosis rates are different between two regions, so either some doctors are missing cases or else other doctors are labeling too many kids as having ADHD. Or both.
This is quite similar to an argument I made about autism recently. I wrote that the difference in autism prevalence between states suggests we still aren’t diagnosing all cases.
My reasoning was flawed.
The United States is heterogenous, with people self-selecting where to live. More and more of us end up living near people who are similar to us, whether because that’s where jobs are or because it feels comfortable to be surrounded by like-minded individuals. So it’s actually quite reasonable for ADHD and autism to be heterogenously distributed as well.
Hans Asperger was right in that many of the traits associated with autism are beneficial. Attention to detail, mathematical acuity, innovative language usage … those are all good things. But there seem to be genetic correlates to autism (even some of the “environmental” factors, like high exposure to prenatal testosterone, are partially under genetic control), and although we don’t know what these genetic factors are, it seems that higher doses can increase autism severity.
A bit like sickle cell anemia that way. A low genetic dose protects you from malaria with mild drawbacks. A high dose leaves you chronically fatigued.
A low dose of the (unknown, but presumed to exist) autism genetic factors might help a child with logical thinking and puzzle solving. A high dose might make the barrage of sensory information from the outside world so overwhelming that it becomes difficult to speak.
If many people with low doses of those genetic factors decided to move to the same place and interbreed (you could say “start families” instead, but isn’t the word “interbreed” funnier?), more children born there should have autism than elsewhere.
You wouldn’t necessarily see this if the genetic factors had little effect on personality. Cystic fibrosis is genetic too, but because the carrier genes are mostly silent, and in any case don’t affect brains, there’s no reason why many people with cystic fibrosis genes would move to the same place. Or be exceptionally likely to fall in love with each other.
Genetic factors for autism probably do affect the brain, though. This is why children whose grandfathers were engineers are much more likely to be autistic.
In the United States, it’s reasonable to expect that genetic factors contributing to autism would be concentrated in regions with the best employment opportunities for engineers and other technically-minded individuals. In my erroneous previous post, I wrote that it was suspicious for New Jersey to have a much higher autism prevalence than Alabama … but there are many more jobs available for technically-minded people in New Jersey.
Not only might people with these genetic factors want to move to similar places, but they may be more likely to form relationships with each other than with non-carriers. There’s a lovely description of this phenomenon (“assortative mating”) in Simon Baron-Cohen’s Scientific American article, “Autism and the Technical Mind.”
As more people decide to marry someone they consider a friend, with whom they share interests (e.g. lawyers marrying lawyers, doctors marrying doctors, which has been lamented for its effect on income inequality but probably also leads to happier couples than pairings between a wealthy careerist and arm candy), it becomes more likely for both parents to carry a gene that influences the brain in a peculiar way.
Both K and I are the sort of people who became giddily happy when told that the math department at her high school would start photocopying the mathlete exams for us so that we could solve them on our own time. This sort of shared interest is part of why we’re good enough friends to have gotten married. And, if there were a gene that conferred a love of mathematics, our daughter would’ve had a high chance of getting two copies of it.
I don’t think Akerlof & Shiller’s example is as egregiously illogical as mine was, by the way. I think ADHD is probably also correlated with personality, and people with ADHD are probably better at some types of work than others, but (given our current imperfect understanding of both conditions) these effects are probably weaker than with autism. I wouldn’t be shocked if people with ADHD were concentrated in certain areas of the U.S., but I’d expect a heat map of autism genetic factors to show more dramatic geographic hot spots. I can’t think of a reason why a particular place would hoover up people with ADHD (do they have a cool name for themselves yet, like “the multifocused” or something?) the way Silicon Valley does with geeks.
Frank Brown Cloud 