Humans struggle with allocating losses

Canada seems to have a weird atmosphere of being in a recession, but without that term being used and without the definition (in terms of GDP growth or contraction) being met.

This starts to make more sense when you see that the GDP growth is largely the result of population growth and growth in the labour supply – not increased output per worker. GDP per capita was $58,304 in Q1 of 2020 and $58,111 in Q4 of 2023. Meanwhile, according to the Bank of Canada’s inflation calculator, inflation has averaged 4% per year over the span, so C$100 in 2024 buys what C$85.48 would have bought in 2020. The average Canadian is getting poorer, even with all the stimulus that was given out over the pandemic and with all the new debt which has been accumulated. I personally think governments have been pulling out all stops to keep asset prices (especially stocks and houses) high since the 2008 financial crisis, with very little consideration of what those measures are doing to the non-affluent and those in future generations.

This is worrisome both in the immediate context and as a broader signifier. Daniel Kahneman’s Thinking Fast and Slow stresses how people experience gains differently from losses, and find a loss of any size more aversive than they find a gain of that size pleasurable. He comments on the social and political implications:

If you are set to look for it, the asymmetric intensity of the motives to avoid losses and to achieve gains show up almost everywhere. It is an ever-present feature of negotiations, especially of negotiations of an existing contract, the typical situation in labor negotiations and in international discussions of trade or arms limitations. The existing terms define reference points, and a proposed change in any aspect of the agreement is inevitably viewed as a concession that one side makes to the other. Loss aversion creates an asymmetry that makes agreements difficult to reach. The concessions you make to me are my gains, but they are your losses; they cause you more pain than they give me pleasure. Inevitably, you will place a higher value on them than I do. The same is true, of course, of the very painful concessions you demand from me, which you do not appear to value sufficiently! Negotiations over a shrinking pie are especially difficult, because they require an allocation of losses. People tend to be much more easygoing when they bargain over an expanded pie. (p. 304)

Globally, this pattern is alarming too. Humanity is choosing to persist in activities which we know will cause catastrophic climate change, loss of wealth, and unprecedented damage to the natural world which sustains us. We are also massively failing to invest enough in non-fossil energy sources to retain our current standard of life. This is setting us up for brutal inter- and intra-national fights over allocating losses.

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Shrugging our way through the breakdown of a stable world

Lately, in observing our politics and dealing with our society, I feel like a time traveller who has been sent back to before the forthcoming collapse. There is no success to be had in warning people though. They sense and feel that the collapse is coming, and that they are unwilling to make the changes that might avoid it. It’s not that people don’t believe the warning; they do. Apocalypse has become the leitmotif of our culture. People are just too corrupted by self-interest and too pessimistic about the ability of our society to solve problems to believe that anything can be done.

Kahneman on risks from excess confidence and optimism

Organizations that take the word of overconfident experts can expect costly consequences. The study of CFOs showed that those who were most confident and optimistic about the S&P index were also overconfident and optimistic about the prospects of their own firm, which went on to take more risk than others. As Nassim Taleb has argued, inadequate appreciation of the uncertainty of the environment inevitably leads economic agents to take risks they should avoid. However, optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts and among organizations, creates powerful forces that favor a collective blindness to risk and uncertainty.

The social and economic pressures that favor overconfidence are not restricted to financial forecasting. Other professionals must deal with the fact that an expert worthy of the name is expected to display high confidence. Philip Tetlock observed that the most overconfident experts were the most likely to be invited to strut their stuff in news shows. Overconfidence also appears to be endemic in medicine. A study of patients who died in the ICU compared autopsy results with the diagnosis that physicians had provided when the patients were still alive. Physicians also reported their confidence. The result: “clinicians who were ‘completely certain’ of the diagnosis antemortem were wrong 40% of the time.” Here again, expert overconfidence is encouraged by their clients: “Generally, it is considered a weakness and a sign of vulnerability for clinicians to appear unsure. Confidence is valued over uncertainty and there is a prevailing censure against disclosing uncertainty to patients.” Experts who acknowledge the full extent of their ignorance may expect to be replaced by more confident competitors, who are better able to gain the trust of clients. An unbiased appreciation of uncertainty is a cornerstone of rationality—but it is not what people and organizations want. Extreme uncertainty is paralyzing under dangerous circumstances, and the admission that one is merely guessing is especially unacceptable when the stakes are high. Acting on pretended knowledge is often the preferred solution.

Kahneman, Daniel. Thinking Fast and Slow. Random House Canada, 2011. p. 262–3

The nuclear razor’s edge

I listened to the audiobook of Annie Jacobson’s Nuclear War. Having followed the subject and read a lot about it over the years, it nonetheless had a lot of new information inside of a compellingly presented, plausible, and chlling story.

Our whole world can end in a couple of hours; live life accordingly.

Rate matching in personal communication

One element of human interaction which I have always found perplexing and frustrating is when people lie with the expectation that you will understand that they are lying and also what they are really trying to say. For example, there is a kind of upper class reflex to say something like: “You will have to come visit the house sometime!” when they mean: “We will never see each other again, but please keep treating me like an aristocrat”.

One place where people frequently try this “I’ll be dishonest but assume they’ll understand what I mean” trick is with regard to volume of communication. For whatever reason, people are often dishonest about hearing from you too little or too much, and will even lie about it when directly asked, even if the volume of communication is really annoying them.

What I have learned to do in this arena is to ignore what people explicitly say and focus on rate matching. If someone responds to me promptly, I speed up the pace of my messages to keep the average time between my messages similar to the average time between theirs. Similarly, if someone is slow to respond to me (or never responds), I regulate down the frequency of my communication to be more closely matched. For example, if I send a text and get an immediate response, it’s OK to write back immediately. If it takes an hour, or five hours, or a day, or three days to get a response — it’s best to copy the length of the delay when responding.

The system doesn’t cover everything. One notable consideration is the division of labour. Perhaps because I am a lot keener than most to stay in touch with most people, I tend to be the person to establish and maintain communication. Once that behaviour has become a norm in the relationship, it can produce a dynamic where they rarely or never initiate contact because they now expect me to do it. Still, perhaps even here it would be sensible to rate match; if someone never ever reaches out to you, its probably an unspoken sign that they prefer to do other things with their time.

Whose agenda are you devoted to?

I have never seen George Monbiot’s bettered as career advice, though it will not lead to an easy life. For instance:

What the corporate or institutional world wants you to do is the opposite of what you want to do. It wants a reliable tool, someone who can think, but not for herself: who can think instead for the institution. You can do what you believe only if that belief happens to coincide with the aims of the corporation, not just once, but consistently, across the years

Also:

How many times have I heard students about to start work for a corporation claim that they will spend just two or three years earning the money they need, then leave and pursue the career of their choice? How many times have I caught up with those people several years later, to discover that they have acquired a lifestyle, a car and a mortgage to match their salary, and that their initial ideals have faded to the haziest of memories, which they now dismiss as a post-adolescent fantasy? How many times have I watched free people give up their freedom?

What he cheers for and takes satisfaction from is inspiring too:

Most countries have a number of small alternative papers and broadcasters, run voluntarily by people making their living by other means: part time jobs, grants or social security. These are, on the whole, people of tremendous courage and determination, who have placed their beliefs ahead of their comforts. To work with them can be a privilege and inspiration, for the simple reason that they – and, by implication, you – are free while others are not. All the money, all the prestige in the world will never make up for the loss of your freedom.

Autonomy, not authority, is the only way to escape the many traps of the status quo.

May Boeve ‘stepping back’ at 350.org

A few years after Bill McKibben, May Boeve is also ‘stepping back’ from the climate change activist group 350.org.

The first three items on her list of accomplishments are all things I saw firsthand. The global divestment movement was a focus of my activist efforts from 2012–16 and then for my PhD research. Keystone XL resistance is a big part of what drew my interest to 350.org after 2011. In some ways, the 2014 People’s Climate March was the high point for Toronto350.org.

I can’t say I am optimistic about the present state of climate organizing. Activists are distracted by all sorts of issues and have little focus on actually abolishing and replacing fossil fuels, or on building a large and influential political coalition. Meanwhile, in mainstream politics, the way things are going is characterized by incomprehension about what is happening and ineffectual efforts to recapture what people feel entitled to, without comprehending that the world that made those things possible no longer exists. Humanity has never been in greater danger.

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