Friday, November 14, 2008

Friendship and The Supply of Ideas

I've discussed the demand for ideas. What about the supply? (I'm ignoring beliefs for now.)

For many ideas, which are carried in books, on CDs, in movies, and the like, the supply works just as it does with any other material good. As the market price goes up, so does the amount supplied. The everyday upward-sloping supply curve for material goods applies equally to these ideas — because they are material goods. (Some advertising also works in this manner, with advertisers targeting those who are interested in the information they supply, and then adding the advertising cost onto the price of the good when a person buys it. In effect, the supply increases in response to the "price", that is, the value consumers are willing to pay for it.)

Ideas supplied outside of traditional markets are more problematic. What determines the information brought up in, say, everyday discussions?

The key to understanding the supply of these ideas in these situations is the realization that many social processes, though money is not explicitly involved, operate as markets.

There are 6 billion people on Earth, and you can only be in close relationships with a handful of them. The upper limit to the number of people a person can keep in touch with is probably a few hundred. Somehow, individuals must decide who to befriend and who to ignore. Thus friendship involves the allocation of scarce resources. Whether the reasoning behind the relationship is described best by social exchange theory, Gary Becker's rotten kid theorem, or something entirely different, the result is a market.

Let's say each person is looking for the most rewarding friendship he can get, without searching for too long. Since the value of a friendship is subjective, each individual is going to be looking for somewhat different qualities in a friend.

But there's not enough of each person to satisfy the friendship desires of everyone who wants to be his friend (well, maybe for some people— but wannabe friends still have to compete with other activities, like jobs and television). So a sorting process occurs, each person looking for the best friends he can get that will take him.

One of the things a person looks for in a friend is pleasing ideas. For example, a person who talks constantly about his cat probably won't get many friends outside of cat enthusiasts. People might avoid this person like the plague. A person with an unending supply of hilarious jokes, or who can give profitable stock market advice, will be more successful on the friendship market, other things being equal.

This gives friend-seekers an important incentive, which is the entire reason for jumping into this subject: the incentive to tailor their conversation to their friend's (or potential friend's) interests. By doing this, they can extend the range of possible friendships open to them. In other words, there is a sort of implicit price for information in the friendship market, and, by providing more valuable information, you can ask for a higher price. Presumably, people are aware of this, at some level, and respond accordingly. This means the supply curve looks something like this:



As the benefits of supplying information go up, so does the amount supplied.

Combine this with the demand curve from earlier, and the information market looks like this:




Economics and sociology: 1
Memetics: 0


More

Gary Becker, Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology (from The Economic Approach to Human Behavior) -- the rotten kid version of friendship

Sergio Currarini, Matt O. Jackson, Paolo Pin, An Economic Model of Friendship: Homophily, Minorities and Segregation -- a market-oriented model of friendship

George Homans, Social Behavior: Its Elementary Forms -- the social exchange version of friendshp

3 comments:

Thirtyseven said...

I think the score-keeping is a little premature here. Saying that "the information market looks like this" and then posting a graph is something Korzybski died cautioning us mammals about doing.

Also, as a general rule it's wise to distrust any model with that many right angles and straight lines -- we live in a very curved and contoured Universe.

This post felt incomplete. I'd be interested in why this model is valid to you, and I'm also curious about why you feel Memetics has nothing to offer for questions like this.

Skeptikos said...

Mmm... I'm open to altering it as needed, mostly I'm trying to put some kind of basic model together just to have a starting point for thinking about this. I want to have the simple stuff straightened out before I try to straighten out the crazy stuff.

Korzybski is the general semantics guy, right? I don't know much about him.


Most of the reason it takes me so long to write these posts is because I have a hard time deciding how to set up the model. For example, I was worried that the supply and demand curves wouldn't apply in a nonmonetary market like friendship. After thinking it through some more, I think it applies. If not, that would make things more difficult for me (not cool).

I think it's valid-- at least as a simplistic starting point-- because it matches my own experience. When I'm around friends, I tend to bring up topics that would interest them, and avoid topics that I know they think are boring. Why do I do this? Well, I figure if I constantly babble about economics and market anarchism, at some point they might stop hanging out with me. I'm guessing other people act similarly.


I don't think memetics has nothing to offer, per se, I actually think the two views are technically equivalent. Again, evolutionary biology and economics are pretty similar fields, and you can even think of markets as evolutionary systems, so the two views are compatible. I just think an explicitly economic approach is more appropriate because economists already have useful models of how people affect the selection process. It seems directly analogous to people shopping for groceries to me. That aspect is missing from evolutionary biology, because it's not central to the theory. Historically, humans haven't played a large role in the biological selection process, so evolutionary theorists haven't put much thought into this situation. (Though I might decide to use some sociobiology later- who knows.)

This is the reason I think memetics not going anywhere-- people are too stuck in the evolutionary mindset to see its limitations. It's gone as far as it can without providing models of human choice.

And actually, a lot of what I've said so far (everything except the demand for beliefs and the friendship dynamics) has been accepted by economists for decades. I'm just applying it in a different context.

So, though I think there's nothing technically incorrect about it, I'm trying to distance myself from memetics because I don't believe it's a useful way to think about ideas. That, and I'm borrowing models straight from economics.

Skeptikos said...

Oh, and the incompleteness:

I don't know how familiar you are with this kind of formal economics, but the supply-and-demand graph at the end is probably the most well-known economics graph ever. If I didn't mess anything up, I just showed that ideas can be thought of as economic goods, and that graph is the main idea of my basic model. (Technically, it's nothing new, like I've said, but it suggests possibilities that aren't obvious from the memetics perspective.)

If this approach is valid, then analyzing the spread of ideas should be pretty darned easy. Just gather the relevant data from psychology and sociology and plug it into the model, and you're good to go. More or less.