Private Signaling & Incentive Structures

Last week I wrote about my surprise at how so few AVC.com readers actually make it down into the rich comment section below Fred Wilson's daily posts. To remind my readers that figure stands at a mere 5%.

Robin Hanson appeared on the latest episode of the Waking Up podcast with Sam Harris and basically confirmed that stat and the underlying reason why.

According to Robin it essentially has to do with the human propensity - a need even - to signal. Specifically it has to do with an overwhelming amount of society simply ignoring or failing to engage in actions, regardless of the potential personal benefit, that are private signals (i.e. actions that others aren't able to see or easily know about).

Robin used the example of providing free or paid information that details the success rates of local heart surgeons to individuals who, because of heart problems of their own, presumably would benefit the most from such information.

Only 8% of those targeted took and read that potentially life-saving information.
Just 8%.

That is so close to the 5% comment reading statistic it's scary.

What's even more interesting is the way perceived, norm-based, social incentive structures factor into this. If your signal is shielded, there is no to low chance of receiving any kind of a socially validating benefit. There is no one who is going to admire you more or say, "Good job Bob."

As fundamentally social, networked creatures, that social validation and reaction is like social currency to us.

Even if most AVC readers are working in sectors most closely related to what is discussed below Fred's articles (and thus stand to benefit the most from such discussions), they won't accrue any more social capital by reading the comments (much less if they make a couple of posts here or there) than if they didn't read them at all.

And that seems to be a powerful driver of human choice and action.

But just like I wrote in that post, these findings simply reinforce my original conclusion: a stronger incentive (i.e. cold hard capital) would appear to be all it would take to get people to make better decisions, at least in their private lives.

Moreover, since positive private decisions tend to have a strong compounding effect (see here) it should be expected that there would be a positive spillover effect into public spheres as well.

It was a great podcast, and anyone who hasn't should check it out.