Citizinvestor bit the dust... Learning From the Civic Tech Graveyard. I found that article because I subscribe to Google alerts for "civic crowdfunding".
Here's the feedback that I shared with the website...
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Hi,
I just finished reading your interesting article "LEARNING FROM THE CIVIC TECH GRAVEYARD" and wanted to share my thoughts.
Here's a relevant quote from Peter Thiel...
"We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results."
From his perspective, a dictator rather than a mob should be at the helm of a company. But then what's the issue with a dictator being at the helm of an entire country? It's not like any given individual is wiser when they are in charge of a company. The difference is that it's easier for people to leave a company than it is to leave a country. Abandoning a sinking company is easier than abandoning a sinking country.
I agree with Thiel that democracy is worse than dictatorships for companies. Yet... our country uses democracy to choose who should be at our country's helm. The result is lowest common denominator leadership. Basically, we end up with idiots at the helm.
So Thiel considers dictatorships to be better than democracy for companies.... but there's one alternative that he didn't even consider... the market.
After reading your article I was disappointed that there wasn't a comment section. I like the topic so I enjoyed reading your thoughts on it, and would have also enjoyed reading other people's thoughts on the topic. Obviously I would have also enjoyed the opportunity to publicly share my own thoughts with other people interested in the topic.
With your organization's current system a dictator decides whether to facilitate comments. Obviously your dictator has decided against comments. What are the chances though that this is the best decision? If the chances were good, then it wouldn't be an issue for countries to have dictators. It stands to reason that an even poorer decision would be made by allowing everybody to vote for or against comments. My best guess is that the best decision would be made by donations. Whichever option received the most donations would be implemented.
Every significant decision could, and should be, a fundraiser for your organization. The market would steer your organization in the most valuable direction. If not, then we shouldn't allow the market to steer the entire private sector.
Showing posts with label civic crowdfunding. Show all posts
Showing posts with label civic crowdfunding. Show all posts
Wednesday, October 3, 2018
Monday, May 8, 2017
The Pragmatarian Model For The LA Times
Today I submitted the following idea to the LA Times...
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My friend has helped her 4th grade class to become a country...
http://classtopia.blogspot.com/
Recently a page was created to highlight their best blog entries...
http://classtopia.blogspot.com/p/blog-page_22.html
The value of the entries is determined by civic crowdfunding. Right now the crowd is pretty small. It consists of the students, their teacher and myself. But in theory the crowd could be as large as everyone in the world. Everyone could use their donated dollars to help "grade" the students' work. If the students are going to do a lot of work anyways, then they might as well do the most relevant work. Can you imagine if all the students in the world used their time, energy, creativity and brainpower to solve the most relevant problems?
This idea is just as relevant to newspapers. Actually knowing the relevance/value of your stories would allow you to far better serve your readers.
Does this idea seem far-fetched? It shouldn’t. Grocery stores allow consumers to substantially and specifically participate in the prioritization process. You have the wonderful and incredibly important opportunity to use your dollars to "grade" the relevance/value of the products that are available at your local grocery store.
This last Friday the Helpful Honda folks gave a really high "grade" to Classtopia by donating 24 chromebooks. Fox 11 was there to cover the event...
https://youtu.be/q5cPSsIvHRE
It was a pretty great overview. But the idea definitely merits wider coverage and deeper analysis. Either grocery stores are doing it wrong... or newspapers and schools are doing it wrong. Which is it? It would behoove us to figure out the correct answer sooner rather than later.
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My friend has helped her 4th grade class to become a country...
http://classtopia.blogspot.com/
Recently a page was created to highlight their best blog entries...
http://classtopia.blogspot.com/p/blog-page_22.html
The value of the entries is determined by civic crowdfunding. Right now the crowd is pretty small. It consists of the students, their teacher and myself. But in theory the crowd could be as large as everyone in the world. Everyone could use their donated dollars to help "grade" the students' work. If the students are going to do a lot of work anyways, then they might as well do the most relevant work. Can you imagine if all the students in the world used their time, energy, creativity and brainpower to solve the most relevant problems?
This idea is just as relevant to newspapers. Actually knowing the relevance/value of your stories would allow you to far better serve your readers.
Does this idea seem far-fetched? It shouldn’t. Grocery stores allow consumers to substantially and specifically participate in the prioritization process. You have the wonderful and incredibly important opportunity to use your dollars to "grade" the relevance/value of the products that are available at your local grocery store.
This last Friday the Helpful Honda folks gave a really high "grade" to Classtopia by donating 24 chromebooks. Fox 11 was there to cover the event...
https://youtu.be/q5cPSsIvHRE
It was a pretty great overview. But the idea definitely merits wider coverage and deeper analysis. Either grocery stores are doing it wrong... or newspapers and schools are doing it wrong. Which is it? It would behoove us to figure out the correct answer sooner rather than later.
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See also:
The Pragmatarian Model For The NY Times (22 Dec 2016)
The Pragmatarian Model For The Economist (22 Aug 2016)
Thursday, February 23, 2017
Most Valuable OTP Threads
Crowd sponsored results for threads in the The Outdoor Trading Post forum. Please share your valuation of OTP threads here... Favorite Threads.
View/Run the code
View/Run the code
Friday, December 9, 2016
Classtopia Book Valuations
Which children's books are the most valuable? The only real way to find out is to facilitate crowd sponsored results (CSR). When the citizens of Classtopia give their taxes to their Book Dept... they will be able to use their tax pennies to communicate their valuations of their favorite books.
Here's the list as of 6 Dec 2016...
This is a very new project so nearly all the books/valuations were submitted by Michelle and myself. We ended up giving around $13 dollars to the Book Dept. So far only one student, Laila, has contributed to this list. I believe she put 20 pennies on Charlotte's Web.
How will this list evolve over time? It will be very fascinating to find out! I will be using this blog entry to share updates.
Here's the list as of 6 Dec 2016...
This is a very new project so nearly all the books/valuations were submitted by Michelle and myself. We ended up giving around $13 dollars to the Book Dept. So far only one student, Laila, has contributed to this list. I believe she put 20 pennies on Charlotte's Web.
How will this list evolve over time? It will be very fascinating to find out! I will be using this blog entry to share updates.
Thursday, July 14, 2016
Would you give your kidney to Alex Tabarrok or Scott Sumner?
I recently retweeted two posts about kidneys...
Scott Sumner and Alex Tabarrok are economists who both perceive the need for kidney markets. But, there's more than one way to allocate kidneys.
Let's pretend that Sumner and Tabarrok both needed a kidney. Coincidentally, I happen to have an extra kidney. Which economist should I give my kidney to?
According to basic economics, I should try and get the most bang for my buck. In more economic terms... resources should be efficiently allocated. Would an auction accomplish this? An auctioneer would point in the general direction of my extra kidney and extol its virtues. Tabarrok and Sumner would engage in a fierce bidding war and my extra kidney would be sold to the highest bidder. This auction system is a pretty straightforward method for determining which economist is willing to pay the most money for my extra kidney.
Let's say that Tabarrok was the highest bidder. So, as a result, I would give him my kidney. But would this be the most efficient allocation of my kidney?
As the saying goes, no man is an island. In reality, Tabarrok wouldn't be the only person to benefit from my kidney. His family, friends, coworkers, students and random people would also benefit from my kidney. This is because lots of people benefit from Tabarrok's existence. However, in the auction scenario... their benefit didn't factor into the allocation decision. It stands to reason that the efficient allocation of my kidney depends on total benefit. So how would we measure total benefit?
Let's imagine a website. I could post my dilemma...
Who should I give my kidney to?
1. Scott Sumner
2. Alex Tabarrok
Anybody and everybody would be able to join the website and help answer the question. How, exactly, would people help answer the question? By voting? Voting would help determine the most popular answer. But is the most popular answer necessarily the most efficient/valuable answer? Nope. In order to determine the most efficient answer... people would need to spend their money on their preferred answer.
voting = popularity
spending = value
In the auction scenario... we determined Sumner's maximum willingness to pay (WTP) but did we determine Tabarrok's max WTP? Probably not. Tabarrok won the kidney because he was willing to spend more money than Sumner. But there was no incentive for Tabarrok to reveal his max WTP. How about with the crowdfunding scenario?
With the crowdfunding scenario... we can guess that Sumner would probably spend the same amount as he was willing to spend in the auction scenario. But perhaps Tabarrok would be willing to spend more than he spent in the auction? He wouldn't just be trying to outspend Sumner... he would be trying to outspend everybody who was willing to spend money on Sumner receiving the kidney. So we would expect a bit more "honesty" from Tabarrok... which equates to more efficiency. The amount of money raised for both economists via crowdfunding would definitely be more than the amount of money that the economists would be willing to spend during auction. This is because the money raised from crowdfunding would reflect total benefit. However, because of the free-rider problem... total funding wouldn't perfectly reflect total benefit. But the crowdfunding would more accurately reflect total benefit than the auction system. This is why the answer determined by crowdfunding would be more efficient than the answer determined by auction.
Of course in reality, Tabarrok and Sumner wouldn't be the only people in the world who needed a kidney. So how could we ensure the most efficient allocation of my kidney? It would be necessary to see the total benefit associated with all the parties that were interested in my kidney.
It's easy to jump to the conclusion that a crowdfunding system would obviously benefit the wealthiest individuals. But a crowdfunding system would benefit the most valuable individuals... and I'm not sure if it's always the case that the wealthiest people are the most valuable people. It's a given that Tabarrok and Sumner are not equally wealthy. If Tabarrok was wealthier than Sumner...then I don't think that this would necessarily guarantee that Tabarrok was more valuable than Sumner. Personally, Tabarrok is my favorite living economist. So I'd be willing to chip in a lot more money to help him receive a kidney. How much would I be willing to chip in? It's hard to predict what my willingness to pay would truly be.
Right now we can see and measure wealth, more or less,... but people's value to society is largely unseen. Right now we don't really know whether Tabarrok or Sumner is more valuable to society. Their value to society would be revealed if their continued existence depended on society's willingness to pay.
In his blog entry Tabarrok wrote... "I'm not expecting a market in kidneys anytime soon...". But would the crowdfunding approach be technically a market? I wouldn't be technically selling my kidney to the most valuable individual... I would be giving it to him. Of course I would receive money for my decision to donate my kidney to the most valuable individual. And perhaps markets can be thought of as buying decisions... but I'm not sure if they are technically defined as such.
Tabarrok isn't expecting a kidney market anytime soon because it's currently illegal to sell/buy kidneys. And who knows how long it would take the law to change. But does the law cover crowdfunding the decision to donate your kidney? I'd be surprised if the law was that specific. Out of curiosity I dug up the law (National Organ Transplant Act of 1984)...
The law specifies what "valuable consideration" doesn't cover... but it doesn't specify what it does cover.
We know that it's illegal to buy/sell kidneys... and we know that it's legal to donate kidneys... but what about crowdfunding the decision to donate kidneys? Let's say that 5,000 people were willing to contribute to help Elizabeth Warren receive a kidney. Would the kidney donor be prosecuted? Would Warren be prosecuted? Would the 5,000 contributors be prosecuted?
What if crowdfunding occurred after the fact? You donated your kidney to Warren and posted proof on a crowdfunding website. Anybody who benefited from your decision to donate your kidney to Warren could give you money for doing so. If you can donate something of value (your kidney) to Warren because you value her leadership... why can't people donate something of value (their money) to you because they value your donation?
Here's a thread I recently created about the idea of crowdfunding decisions...
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When I quickly search google for crowdfunding decisions I don't see any results that are relevant to what I have in mind. Figured that I'd share what I have in mind with you folks. We can discuss the concept and perhaps some of you might be able to dig up some relevant results.
What I have in mind is basically a website where you could post your real-life situations along with some possible courses of action (COAs). People could spend their money on the COA that they want you to take. You would choose a COA and receive the money that was spent on it. The people who spent their money on the other COAs would receive a refund.
Let's consider an example. Bob is a high-school student trying to decide what to do with his life. He'd like some substantial guidance so he goes on the website and posts an entry with lots of details about his situation. He lists some possible COAs...
1. Go to college
2. Go backpacking in Europe
3. Join the military
His family, friends and random strangers spend as much money as they want on the different COAs...
1. Go to college: $456
2. Go backpacking in Europe: $100
3. Join the military: $1000
Bob decides to go to college so he receives the $456 dollars. The people who spent their money on the other two COAs would receive a refund.
People could post any type of situations they wanted... ranging from frivolous (how short should I cut my hair?) to serious (should I get an abortion?).
Yes, I know, there are a gazillion potential problems with this concept. Maybe the most obvious and biggest potential problem is that there's no way to guarantee that the poster actually follows through. Bob could simply choose the most valuable COA (join the military), receive the $1000 dollars... but then go backpacking instead. Off the top of my head, one possible deterrent would be some sort of rating and/or verification system. On Bob's profile it would say something like, "Bob follows through 99.7% of the time". Of course, given that everybody would understand that follow through couldn't be guaranteed... this would influence their willingness to pay (WTP).
Another potential issue is whether the crowd should be able to suggest other possible COAs. And whether or not funders can be anonymous. And whether or not funders can switch their funding to a different COA.
Even though there are lots of potential problems... I find the idea really intriguing. The general concept really isn't new though...
When I was growing up my mother often quoted this proverb to me. It must have worked because... voila! Here I am!
The part of this idea that's relatively new is the crowdfunding part. It's one thing to go around asking a bunch of people whether you should join the military. It's another thing to ask people to put their money where their counsel is. Your uncle says that you should really join the military. But then he's only willing to spend $5 dollars on this potential COA. Do you believe his words or his actions?
Coincidentally, I had this idea when I encouraged Lucas Dailey to join Nation States.
Can you imagine yourself asking the crowd to show you the intensity of their preferences for your potential COAs? Can you imagine spending your money to try and help incentivize friends, family, coworkers and strangers to choose a certain COA? Is this song... Should I Stay Or Should I Go... the most relevant song? Is this flash animation... Crying... the most relevant flash animation?
I'd be surprised if the idea of crowdfunding decisions hasn't already been thought of and written about elsewhere. So please let me know if you manage to find some relevant search results.
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Ok, so here are my questions for Tabarrok, Sumner and anybody else interested in the general concept...
1. Would crowdfunding the decision to donate kidneys result in a more efficient allocation of kidneys compared to buying/selling kidneys?
2. Would crowdfunding the decision to donate kidneys be considered illegal?
Sumner: Allowing payment of organ donors could save lives and money. Why hasn't an organ market been created? https://t.co/InDUh6Ps2x— Mercatus Center (@mercatus) July 13, 2016
Donate a Kidney Now, Get a Kidney Gift Card for Later | Alex Tabarrok https://t.co/TB7r59tRmt via @feeonline— John Carney (@carney) July 13, 2016
Scott Sumner and Alex Tabarrok are economists who both perceive the need for kidney markets. But, there's more than one way to allocate kidneys.
Let's pretend that Sumner and Tabarrok both needed a kidney. Coincidentally, I happen to have an extra kidney. Which economist should I give my kidney to?
According to basic economics, I should try and get the most bang for my buck. In more economic terms... resources should be efficiently allocated. Would an auction accomplish this? An auctioneer would point in the general direction of my extra kidney and extol its virtues. Tabarrok and Sumner would engage in a fierce bidding war and my extra kidney would be sold to the highest bidder. This auction system is a pretty straightforward method for determining which economist is willing to pay the most money for my extra kidney.
Let's say that Tabarrok was the highest bidder. So, as a result, I would give him my kidney. But would this be the most efficient allocation of my kidney?
As the saying goes, no man is an island. In reality, Tabarrok wouldn't be the only person to benefit from my kidney. His family, friends, coworkers, students and random people would also benefit from my kidney. This is because lots of people benefit from Tabarrok's existence. However, in the auction scenario... their benefit didn't factor into the allocation decision. It stands to reason that the efficient allocation of my kidney depends on total benefit. So how would we measure total benefit?
Let's imagine a website. I could post my dilemma...
Who should I give my kidney to?
1. Scott Sumner
2. Alex Tabarrok
Anybody and everybody would be able to join the website and help answer the question. How, exactly, would people help answer the question? By voting? Voting would help determine the most popular answer. But is the most popular answer necessarily the most efficient/valuable answer? Nope. In order to determine the most efficient answer... people would need to spend their money on their preferred answer.
voting = popularity
spending = value
In the auction scenario... we determined Sumner's maximum willingness to pay (WTP) but did we determine Tabarrok's max WTP? Probably not. Tabarrok won the kidney because he was willing to spend more money than Sumner. But there was no incentive for Tabarrok to reveal his max WTP. How about with the crowdfunding scenario?
With the crowdfunding scenario... we can guess that Sumner would probably spend the same amount as he was willing to spend in the auction scenario. But perhaps Tabarrok would be willing to spend more than he spent in the auction? He wouldn't just be trying to outspend Sumner... he would be trying to outspend everybody who was willing to spend money on Sumner receiving the kidney. So we would expect a bit more "honesty" from Tabarrok... which equates to more efficiency. The amount of money raised for both economists via crowdfunding would definitely be more than the amount of money that the economists would be willing to spend during auction. This is because the money raised from crowdfunding would reflect total benefit. However, because of the free-rider problem... total funding wouldn't perfectly reflect total benefit. But the crowdfunding would more accurately reflect total benefit than the auction system. This is why the answer determined by crowdfunding would be more efficient than the answer determined by auction.
Of course in reality, Tabarrok and Sumner wouldn't be the only people in the world who needed a kidney. So how could we ensure the most efficient allocation of my kidney? It would be necessary to see the total benefit associated with all the parties that were interested in my kidney.
It's easy to jump to the conclusion that a crowdfunding system would obviously benefit the wealthiest individuals. But a crowdfunding system would benefit the most valuable individuals... and I'm not sure if it's always the case that the wealthiest people are the most valuable people. It's a given that Tabarrok and Sumner are not equally wealthy. If Tabarrok was wealthier than Sumner...then I don't think that this would necessarily guarantee that Tabarrok was more valuable than Sumner. Personally, Tabarrok is my favorite living economist. So I'd be willing to chip in a lot more money to help him receive a kidney. How much would I be willing to chip in? It's hard to predict what my willingness to pay would truly be.
Right now we can see and measure wealth, more or less,... but people's value to society is largely unseen. Right now we don't really know whether Tabarrok or Sumner is more valuable to society. Their value to society would be revealed if their continued existence depended on society's willingness to pay.
In his blog entry Tabarrok wrote... "I'm not expecting a market in kidneys anytime soon...". But would the crowdfunding approach be technically a market? I wouldn't be technically selling my kidney to the most valuable individual... I would be giving it to him. Of course I would receive money for my decision to donate my kidney to the most valuable individual. And perhaps markets can be thought of as buying decisions... but I'm not sure if they are technically defined as such.
Tabarrok isn't expecting a kidney market anytime soon because it's currently illegal to sell/buy kidneys. And who knows how long it would take the law to change. But does the law cover crowdfunding the decision to donate your kidney? I'd be surprised if the law was that specific. Out of curiosity I dug up the law (National Organ Transplant Act of 1984)...
TITLE 111-PROHIBITION OF ORGAN PURCHASES
SEC. 301. (a) It shall be unlawful for any person to knowingly acquire, receive, or otherwise transfer any human organ for valuable consideration for use in human transplantation if the transfer affects interstate commerce.
(b) Any person who violates subsection (a) shall be fined not more than $50,000 or imprisoned not more than five years, or both.
(c) For purposes of subsection (a): (1) The term "human organ" means the human kidney, liver, heart, lung, pancreas, bone marrow, cornea, eye, bone, and skin,and any other human organ specified by the Secretary of Health and Human Services by regulation.
(2) The term "valuable consideration" does not include the reasonable payments associated with the removal, transportation, implantation, processing, preservation, quality control, and storage of a human organ or the expenses of travel, housing, and lost wages incurred by the donor of a human organ in connection with the donation of the organ.
(3) The term "interstate commerce" has the meaning prescribed for it by section 20103) of the Federal Food, Drug and Cosmetic Act.
The law specifies what "valuable consideration" doesn't cover... but it doesn't specify what it does cover.
We know that it's illegal to buy/sell kidneys... and we know that it's legal to donate kidneys... but what about crowdfunding the decision to donate kidneys? Let's say that 5,000 people were willing to contribute to help Elizabeth Warren receive a kidney. Would the kidney donor be prosecuted? Would Warren be prosecuted? Would the 5,000 contributors be prosecuted?
What if crowdfunding occurred after the fact? You donated your kidney to Warren and posted proof on a crowdfunding website. Anybody who benefited from your decision to donate your kidney to Warren could give you money for doing so. If you can donate something of value (your kidney) to Warren because you value her leadership... why can't people donate something of value (their money) to you because they value your donation?
Here's a thread I recently created about the idea of crowdfunding decisions...
*************************************
When I quickly search google for crowdfunding decisions I don't see any results that are relevant to what I have in mind. Figured that I'd share what I have in mind with you folks. We can discuss the concept and perhaps some of you might be able to dig up some relevant results.
What I have in mind is basically a website where you could post your real-life situations along with some possible courses of action (COAs). People could spend their money on the COA that they want you to take. You would choose a COA and receive the money that was spent on it. The people who spent their money on the other COAs would receive a refund.
Let's consider an example. Bob is a high-school student trying to decide what to do with his life. He'd like some substantial guidance so he goes on the website and posts an entry with lots of details about his situation. He lists some possible COAs...
1. Go to college
2. Go backpacking in Europe
3. Join the military
His family, friends and random strangers spend as much money as they want on the different COAs...
1. Go to college: $456
2. Go backpacking in Europe: $100
3. Join the military: $1000
Bob decides to go to college so he receives the $456 dollars. The people who spent their money on the other two COAs would receive a refund.
People could post any type of situations they wanted... ranging from frivolous (how short should I cut my hair?) to serious (should I get an abortion?).
Yes, I know, there are a gazillion potential problems with this concept. Maybe the most obvious and biggest potential problem is that there's no way to guarantee that the poster actually follows through. Bob could simply choose the most valuable COA (join the military), receive the $1000 dollars... but then go backpacking instead. Off the top of my head, one possible deterrent would be some sort of rating and/or verification system. On Bob's profile it would say something like, "Bob follows through 99.7% of the time". Of course, given that everybody would understand that follow through couldn't be guaranteed... this would influence their willingness to pay (WTP).
Another potential issue is whether the crowd should be able to suggest other possible COAs. And whether or not funders can be anonymous. And whether or not funders can switch their funding to a different COA.
Even though there are lots of potential problems... I find the idea really intriguing. The general concept really isn't new though...
Where no counsel is, the people fall: but in the multitude of counsellors there is safety. - Proverbs 11:14
When I was growing up my mother often quoted this proverb to me. It must have worked because... voila! Here I am!
The part of this idea that's relatively new is the crowdfunding part. It's one thing to go around asking a bunch of people whether you should join the military. It's another thing to ask people to put their money where their counsel is. Your uncle says that you should really join the military. But then he's only willing to spend $5 dollars on this potential COA. Do you believe his words or his actions?
Coincidentally, I had this idea when I encouraged Lucas Dailey to join Nation States.
Can you imagine yourself asking the crowd to show you the intensity of their preferences for your potential COAs? Can you imagine spending your money to try and help incentivize friends, family, coworkers and strangers to choose a certain COA? Is this song... Should I Stay Or Should I Go... the most relevant song? Is this flash animation... Crying... the most relevant flash animation?
I'd be surprised if the idea of crowdfunding decisions hasn't already been thought of and written about elsewhere. So please let me know if you manage to find some relevant search results.
*************************************
Ok, so here are my questions for Tabarrok, Sumner and anybody else interested in the general concept...
1. Would crowdfunding the decision to donate kidneys result in a more efficient allocation of kidneys compared to buying/selling kidneys?
2. Would crowdfunding the decision to donate kidneys be considered illegal?
Monday, February 8, 2016
The Tabarrok Solution To Notification Overload
Reply to story by James Kwak: It Can Wait. Really.
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This can’t wait! Or can it?
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This can’t wait! Or can it?
Imagine if you received 1000 responses to your response to Steven Levy’s story. It stands to reason that no two responses are going to be equally urgent/relevant. There’s going to be a continuum that ranges from pure garbage to pure treasure.
But think about the opportunity cost of reading 1000 responses in order to find the pure treasure! Yikes!
Fortunately for you, there’s this thing called Linus’s Law: given enough eyeballs, all Easter Eggs are exposed. In other words… let the crowd lend you a million hands! Many hands make light work…
Chwe’s concept is readily apparent in the dynamics of social media. When a media organization posts a link to an online article on Facebook, for example, and people begin “liking” it, others will begin to assign some level of importance to the story and some will be compelled to share it and discuss it. The idea of “common knowledge” may also lend itself to thinking about advertising strategies on social media. — Richard Feloni, Mark Zuckerberg hopes this book will help shape his vision for Facebook
Here on Medium people could look through the 1000 responses to your response and “recommend” the “Easter Eggs” ( the best responses). As a result, the Easter Eggs would rise to the top of the results.
This is essentially how Google search results work. By linking to Feloni’s article I told Google… “here’s an Easter Egg!”. The more people who tell Google the same thing… the higher Feloni’s article shows up in the search results.
What Facebook, Google and Medium haven’t grasped yet is the value of quantifying a like, link or recommendation…
Heath’s conservatism makes him unwilling to suggest radical ideas. But big problems often need radical solutions. Voting, for example, reduces the cost of ignorance and irrationality. Raise the cost and people become more informed and rational. When pollsters ask Democrats and Republicans factual questions such as did inflation fall during Reagan’s presidency or were weapons of mass destruction found in Iraq, they answer in a highly partisan manner. But partisan bias greatly diminishes when voters are told that they will be paid if they answer correctly. Betting is a more reliable guarantor of objectivity than voting. Or, as I once wrote, “A bet is a tax on bullshit.” — Alex Tabarrok, Is Capitalism Making Us Stupid?
Just because I linked to both Feloni’s article (Y) and Tabarrok’s article (X) really doesn’t mean that I value them both equally. I value Tabarrok’s article a lot more (X > Y).
Does it make a difference that X > Y? For sure! Which is why we need to make it stupid easy for people to put their money where their votes/likes/links/recommendations are.
So the solution isn’t to turn off your notifications… the solution is to allow the crowd to use their money to increase the volume of the most valuable notices.
By turning off your notifications you’re essentially throwing the baby out with the bath water. But with crowd valuation… you could simply set your filter to be greater than your valuation of your current activity.
For example… let’s say that you’re about to go to sleep. How much do you value sleeping? Maybe $40? So you’d simply set your filter to > $40. If your phone woke you up with a notification… then it would be because the crowd pushed this response of mine over $40! Heh. And you would certainly agree that it was totally worth it for you to wake up in the middle of the night to read my response. You would say, “The crowd was right! This really couldn’t wait!”
Here I am right now sharing a lot of information with you. Medium made it stupid easy for me to do so. But Medium is hardly the exception in this regard. There’s a clear trend. When the future’s going to have more and more information flowing every which direction… then we’re going to greatly benefit by facilitating proper weighting of it all. And proper weighting is a function of opportunity cost. The amount of money that the crowd is willing to spend/sacrifice to push/lift/amplify information will help us correctly prioritize which information we consume.
Hopefully Medium will agree, sooner rather than later, that one click giving is a really good idea.
Monday, July 27, 2015
Creating The Most Efficient Demand Net
Chris Chen shared this story... The Real Relationship Economy — Part II
My reply... If a market is missing, then make one!
Chen's reply...
My reply...
Hi, I’ll be happy to share some thoughts about market based solutions to facilitate compensation of “healthy relationships”.
Imagine that you're going fishing with a net. The problem is that the holes in your net are too large... and good sized fishes are swimming right through them. You'd capture a lot more fish if the holes in your net were a lot smaller.
This analogy doesn't work perfectly because, when you cast a net for fish, you don't want to capture the tiny fishes. But when you cast a net for demand, you do want to capture all the demand... even the tiny demands. A lot of little demands can really add up!
Creating markets where they are needed helps to minimize the holes in the fishing-for-demand net.
Let's say that you go to your local park and you spend the entire day picking up litter. Is there any demand for this particular activity? We can guess that most people who visit the park will prefer it if there's less litter. But, we don't know how much they prefer it. My term for this is demand opacity. The demand for a litter-free park is unclear. As a result, it's doubtful that the supply will be optimal (perfectly match the demand).
One way to help clarify the demand would be to create a website that facilitates the monetary communication/exchange between suppliers (people who pick up litter) and demanders (people who prefer litter-free places). You could enter the relevant litter-removal details (where, when, how long) and people could give you as little as a penny for your efforts. Again, a lot of little demands can really add up!
This method of clarifying demand would have a few challenges...
1. verification
2. the free-rider problem
Neither challenge is insurmountable.
Verification can easily be accomplished with drones! Well... in the not-too-distant future at least. You'd have your personal drone buzzing around you documenting your litter removal efforts. Anybody on the website would be able to watch the live feed and, after you finished, the entire recording would also be available. Another method would be to wear a shirt that has the litter website and your username on it. Let's say that I'm having a picnic at the park and I see you picking up litter. I go to the website, look up your username... allocate $0.50 cents to your current activity ... and vouch for you... and/or add to your reputation.
Like I explained in my first reply to your story, the free-rider problem could be solved, more or less, by correlating contributions with advertising. If I own a sandwich shop that's adjacent to the park... and I'm looking to advertise my business and generate some goodwill... I can go to the litter website and make a contribution to people who have removed litter from the park. The larger my contribution... the higher up on the relevant pages (home, park, recipients) my contribution/name/business/website will be displayed. This will generate traffic to my website... which will help me make an informed decision regarding how much to contribute. Essentially, the litter-removal website will simultaneously function as an auction for advertising space.
Are there any other challenges? Probably... but certainly there aren't any that can't be overcome.
With this website, people would know the demand for litter removal. Well... past demand wouldn't perfectly predict future demand... but this is always true. Demand is never perfectly clear because nobody has a crystal ball. But when it comes to picking up litter, demand could certainly be a whole lot clearer. The clearer the demand, the more likely it is that the supply will be optimal. Making an informed decision requires adequate information.
Well... I mentioned past and future demand... so I might as well include present demand by giving a shout-out to Alex Tabarrok's assurance contracts. More recently... Assurance Contracts for Indie Films. Using our example, as a park becomes more and more littered... people could put more and more money into a pool. As the pool of money gets larger... the incentive increases for somebody to pick up the litter and collect the pool of money. Assurance contracts can certainly help clarify demand.
Picking up litter isn't the only...ummm...other-person-benefiting activity that can be done at a park. For example, this guy in Miami attached some orchids to trees at a local dog park. I think that most people who visit a park will prefer to see more, rather than less, flowers. And again, the fundamental question... how much do they prefer seeing more flowers at their local park? We don't know... but we should know.
Does it make sense to have a website for litter-removal and another website for flower-addition? Or does it make more sense to try and create an inclusive website? If an inclusive website is better... just how inclusive should it be?
On Facebook... people share all sorts of activities. What would happen if Facebook facilitated demand clarification? How much money do you allocate to your friend's engagement? How much money do you allocate to the subsequent marriage? How much money do you allocate to the wife's pregnancy and the birth of their child? How much money do you allocate to their couple's therapy? How much money do you allocate to their divorce?
I doubt that Facebook will clarify demand anytime soon. But I perceive the potential benefit of an equally inclusive website... but with "value" as well as "Like" buttons.
Perhaps the closest website is Patreon. However, its focus is a lot narrower than Facebook. Not that it couldn't be expanded though. Also, Patreon operates on the economically absurd premise that everything an artist creates is equally valuable. This economic absurdity screws both the suppliers and the demanders. The suppliers are screwed out of monetary feedback on specific creations... and the demanders are screwed out of the specific types of creations that they want more of. Demand is only partially clarified. It's better than complete demand opacity... but the holes in the net are still way too large.
So as far as models go... there's considerable potential for a Facebook type that doesn't just have a "Like" button... but also has coin buttons... penny, nickle, dime and quarter. This website would help answer the fundamentally important question of how much you like something. You like that your friend is engaged? Ok. But how much do you like it? You pressed the "Like" button... but are you also going to press the quarter button? If so, how many times are you going to press it? What is the intensity of your preference?
And when you added somebody as a friend... rather than seeing their updates sorted by time... you'd also want to be able to sort them by value. This way you could instantly see the most valuable thing that your new friend has done. Was it graduating from highschool? Or from college? Getting his PhD? Or getting a job at Google? Or getting married? Having a kid? Having a second kid? Having the seventh kid? Having a vasectomy? Finding God? Losing God? Becoming a democrat? Or a libertarian? Writing a book? Donating a kidney? Winning a Nobel Prize? Moving to mars?
It’s illegal to sell your kidney… but giving your kidney away could potentially be the single most profitable thing you do. Well… according to the crowd at least. See also: Tabarrok on Alvin Roth… The Hidden World of Matchmaking and Market Design.
Just in case it's not abundantly clear... the benefit of a market-based rather than a government-based solution is that the answer to "how much" is infinitely more accurate. If everybody has the same answer to "how much" then markets would be entirely pointless. But the fundamental fact of the matter is that we really don't all value everything equally. With markets... the supply accurately reflects this fundamental fact. We all get to decide on our own how much we value things. With governments, on the other hand, the complete absence of consumer choice guarantees that the supply will not accurately reflect the reality of our diverse preferences/circumstances. This disparity between supply and demand destroys value. The government supplies something good... which we all see... but always at the cost of something better... which we can't see. Just because we value X doesn’t mean that we’d be willing to give up Y.
With markets... who we are as people is taken into account. When we answer the fundamentally important question of "how much" we value something... our answer shifts the economy accordingly. When the government answers the question of "how much" for all of us... the economy shifts in less valuable directions. The government can't embody the immense variety of humanity. It can't even get close.
This doesn’t mean that we need to get rid of government… it just means that we need to create a market in the public sector. This can be accomplished simply by allowing people to choose where their taxes go. Then each and every one of us can answer the fundamentally important questions of “how much” we value war, peace, the environment, justice, public education, public healthcare and so on.
Will we like all the answers equally? Of course not. But how can we hope to improve them when we don't even know what they are?
For all intents and purposes...we're still in the dark ages. Enlightenment depends on clarifying demand. When we can all easily and clearly communicate the intensity of our preferences to each other... the economy will shift in the most valuable directions. And, given the diversity of humanity, clarifying demand will maximize the variety of available opportunities. Any loss of opportunities that result from technological progress will be more than offset by the gain in opportunities that the same progress will create.
People are willing to pay for plenty of things. Each willingness-to-pay is a fish that it would behoove us to catch. Right now society's net has way too many holes and way too many fish are slipping right through them. This means that there are far less opportunities available. We can remedy this problem by creating markets wherever they are needed. For example, Medium could easily be turned into a market simply by adding coin buttons next to the "Recommend" button. Anybody who values a story could quickly and easily communicate this by clicking the penny, nickle, dime or quarter button. How many fishes will be caught? Who knows. But certainly more fishes than Medium is currently capturing! And more captured fish means more opportunities.
It's pretty easy to get into the demand clarity mindset. Anytime you value something, but it's not stupid easy to communicate your valuation, then you've identified where there's room for improvement. Once you've fully adopted this mindset... then you'll realize that society's demand net is full of very large holes. In economic terms, society's demand net is extremely inefficient. There's a plethora of opportunities that should exist, but do not, because countless willingness-to-pay fish are swimming through giant and gaping holes in the demand net. The sooner that we fix the net by creating markets where they are needed... the sooner that we maximize the benefit that we derive from humanity's most valuable resource... its diversity.
My reply... If a market is missing, then make one!
Chen's reply...
Thanks for the comments. As I mentioned, I really hated coming to the “government redistribution,” conclusion. Part of my premise is that society, at some point, will not have limited resources in terms of goods and services and I’m trying to anticipate how we respond to that situation. I love the idea of creating a market-based solution to value healthy relationships. Can you expand upon that idea?
My reply...
Hi, I’ll be happy to share some thoughts about market based solutions to facilitate compensation of “healthy relationships”.
Imagine that you're going fishing with a net. The problem is that the holes in your net are too large... and good sized fishes are swimming right through them. You'd capture a lot more fish if the holes in your net were a lot smaller.
This analogy doesn't work perfectly because, when you cast a net for fish, you don't want to capture the tiny fishes. But when you cast a net for demand, you do want to capture all the demand... even the tiny demands. A lot of little demands can really add up!
Creating markets where they are needed helps to minimize the holes in the fishing-for-demand net.
Let's say that you go to your local park and you spend the entire day picking up litter. Is there any demand for this particular activity? We can guess that most people who visit the park will prefer it if there's less litter. But, we don't know how much they prefer it. My term for this is demand opacity. The demand for a litter-free park is unclear. As a result, it's doubtful that the supply will be optimal (perfectly match the demand).
One way to help clarify the demand would be to create a website that facilitates the monetary communication/exchange between suppliers (people who pick up litter) and demanders (people who prefer litter-free places). You could enter the relevant litter-removal details (where, when, how long) and people could give you as little as a penny for your efforts. Again, a lot of little demands can really add up!
This method of clarifying demand would have a few challenges...
1. verification
2. the free-rider problem
Neither challenge is insurmountable.
Verification can easily be accomplished with drones! Well... in the not-too-distant future at least. You'd have your personal drone buzzing around you documenting your litter removal efforts. Anybody on the website would be able to watch the live feed and, after you finished, the entire recording would also be available. Another method would be to wear a shirt that has the litter website and your username on it. Let's say that I'm having a picnic at the park and I see you picking up litter. I go to the website, look up your username... allocate $0.50 cents to your current activity ... and vouch for you... and/or add to your reputation.
Like I explained in my first reply to your story, the free-rider problem could be solved, more or less, by correlating contributions with advertising. If I own a sandwich shop that's adjacent to the park... and I'm looking to advertise my business and generate some goodwill... I can go to the litter website and make a contribution to people who have removed litter from the park. The larger my contribution... the higher up on the relevant pages (home, park, recipients) my contribution/name/business/website will be displayed. This will generate traffic to my website... which will help me make an informed decision regarding how much to contribute. Essentially, the litter-removal website will simultaneously function as an auction for advertising space.
Are there any other challenges? Probably... but certainly there aren't any that can't be overcome.
With this website, people would know the demand for litter removal. Well... past demand wouldn't perfectly predict future demand... but this is always true. Demand is never perfectly clear because nobody has a crystal ball. But when it comes to picking up litter, demand could certainly be a whole lot clearer. The clearer the demand, the more likely it is that the supply will be optimal. Making an informed decision requires adequate information.
Well... I mentioned past and future demand... so I might as well include present demand by giving a shout-out to Alex Tabarrok's assurance contracts. More recently... Assurance Contracts for Indie Films. Using our example, as a park becomes more and more littered... people could put more and more money into a pool. As the pool of money gets larger... the incentive increases for somebody to pick up the litter and collect the pool of money. Assurance contracts can certainly help clarify demand.
Picking up litter isn't the only...ummm...other-person-benefiting activity that can be done at a park. For example, this guy in Miami attached some orchids to trees at a local dog park. I think that most people who visit a park will prefer to see more, rather than less, flowers. And again, the fundamental question... how much do they prefer seeing more flowers at their local park? We don't know... but we should know.
Does it make sense to have a website for litter-removal and another website for flower-addition? Or does it make more sense to try and create an inclusive website? If an inclusive website is better... just how inclusive should it be?
On Facebook... people share all sorts of activities. What would happen if Facebook facilitated demand clarification? How much money do you allocate to your friend's engagement? How much money do you allocate to the subsequent marriage? How much money do you allocate to the wife's pregnancy and the birth of their child? How much money do you allocate to their couple's therapy? How much money do you allocate to their divorce?
I doubt that Facebook will clarify demand anytime soon. But I perceive the potential benefit of an equally inclusive website... but with "value" as well as "Like" buttons.
Perhaps the closest website is Patreon. However, its focus is a lot narrower than Facebook. Not that it couldn't be expanded though. Also, Patreon operates on the economically absurd premise that everything an artist creates is equally valuable. This economic absurdity screws both the suppliers and the demanders. The suppliers are screwed out of monetary feedback on specific creations... and the demanders are screwed out of the specific types of creations that they want more of. Demand is only partially clarified. It's better than complete demand opacity... but the holes in the net are still way too large.
So as far as models go... there's considerable potential for a Facebook type that doesn't just have a "Like" button... but also has coin buttons... penny, nickle, dime and quarter. This website would help answer the fundamentally important question of how much you like something. You like that your friend is engaged? Ok. But how much do you like it? You pressed the "Like" button... but are you also going to press the quarter button? If so, how many times are you going to press it? What is the intensity of your preference?
And when you added somebody as a friend... rather than seeing their updates sorted by time... you'd also want to be able to sort them by value. This way you could instantly see the most valuable thing that your new friend has done. Was it graduating from highschool? Or from college? Getting his PhD? Or getting a job at Google? Or getting married? Having a kid? Having a second kid? Having the seventh kid? Having a vasectomy? Finding God? Losing God? Becoming a democrat? Or a libertarian? Writing a book? Donating a kidney? Winning a Nobel Prize? Moving to mars?
It’s illegal to sell your kidney… but giving your kidney away could potentially be the single most profitable thing you do. Well… according to the crowd at least. See also: Tabarrok on Alvin Roth… The Hidden World of Matchmaking and Market Design.
Just in case it's not abundantly clear... the benefit of a market-based rather than a government-based solution is that the answer to "how much" is infinitely more accurate. If everybody has the same answer to "how much" then markets would be entirely pointless. But the fundamental fact of the matter is that we really don't all value everything equally. With markets... the supply accurately reflects this fundamental fact. We all get to decide on our own how much we value things. With governments, on the other hand, the complete absence of consumer choice guarantees that the supply will not accurately reflect the reality of our diverse preferences/circumstances. This disparity between supply and demand destroys value. The government supplies something good... which we all see... but always at the cost of something better... which we can't see. Just because we value X doesn’t mean that we’d be willing to give up Y.
With markets... who we are as people is taken into account. When we answer the fundamentally important question of "how much" we value something... our answer shifts the economy accordingly. When the government answers the question of "how much" for all of us... the economy shifts in less valuable directions. The government can't embody the immense variety of humanity. It can't even get close.
This doesn’t mean that we need to get rid of government… it just means that we need to create a market in the public sector. This can be accomplished simply by allowing people to choose where their taxes go. Then each and every one of us can answer the fundamentally important questions of “how much” we value war, peace, the environment, justice, public education, public healthcare and so on.
Will we like all the answers equally? Of course not. But how can we hope to improve them when we don't even know what they are?
For all intents and purposes...we're still in the dark ages. Enlightenment depends on clarifying demand. When we can all easily and clearly communicate the intensity of our preferences to each other... the economy will shift in the most valuable directions. And, given the diversity of humanity, clarifying demand will maximize the variety of available opportunities. Any loss of opportunities that result from technological progress will be more than offset by the gain in opportunities that the same progress will create.
People are willing to pay for plenty of things. Each willingness-to-pay is a fish that it would behoove us to catch. Right now society's net has way too many holes and way too many fish are slipping right through them. This means that there are far less opportunities available. We can remedy this problem by creating markets wherever they are needed. For example, Medium could easily be turned into a market simply by adding coin buttons next to the "Recommend" button. Anybody who values a story could quickly and easily communicate this by clicking the penny, nickle, dime or quarter button. How many fishes will be caught? Who knows. But certainly more fishes than Medium is currently capturing! And more captured fish means more opportunities.
It's pretty easy to get into the demand clarity mindset. Anytime you value something, but it's not stupid easy to communicate your valuation, then you've identified where there's room for improvement. Once you've fully adopted this mindset... then you'll realize that society's demand net is full of very large holes. In economic terms, society's demand net is extremely inefficient. There's a plethora of opportunities that should exist, but do not, because countless willingness-to-pay fish are swimming through giant and gaping holes in the demand net. The sooner that we fix the net by creating markets where they are needed... the sooner that we maximize the benefit that we derive from humanity's most valuable resource... its diversity.
Tuesday, March 31, 2015
Accurately Communicating Value
This blog entry is dedicated to Beth Cody. Who's Beth Cody you ask? According to her website... she's a libertarian writer who believes that "information and ideas should travel freely". So it's not very surprising that our very first interaction took place in the Disqus comments section of this article by Jeffrey Tucker... Steal Our Stuff, Please.
Here's a screenshot of our interaction...
As you can see in the screenshot, Beth left a comment on Tucker's article four months ago. Because her comment was liked by four other people, it was the very first comment that I saw after I finished reading Tucker's article. Curious to learn why Beth's comment was the most popular... I read it. It was well-written! But... missing something. So I hit the reply button, wrote some words, rearranged some words, deleted some words, added some words, reread my words and then... voila! Beth received her first reply! She posted her comment four months ago and that's how long it took before some random person (me!) came along and decided that what she wrote was worth replying to. Shortly afterwords, my e-mail notified me that she had replied back. I was also notified that she had commented on the blog entry that I had linked her to... Fee.org - Thumbs Up vs Quarters Up.
Back in February, thanks to Tyler Cowen's Assorted links... I learned that some website that I'd never heard of had actually started to charge people $2 to leave a comment on an article... Tablet magazine starts charging commenters. According to the editor... the primary goal wasn't to raise money... it was to raise the quality of the comments.
Tablet's innovative approach to comments generated quite a bit of buzz...
The reviews were mixed... but none really got close to the economic heart of the matter. So here I am!
If you read through my discussion with Beth Cody then you should already know that in my reply to her comment I made the case that Fee.org should charge its members a very reasonable amount...say $12 per year... but allow them to choose which articles they allocate their nickles, dimes and quarters to. So rather than giving articles "thumbs up"... members could give them "quarters up". Fee.org would take its cut and pass the rest of the money onto the writers.
To my pleasant surprise, Beth had absolutely no problem recognizing the value of this feedback mechanism. In her comment on my blog entry she wrote that Fee.org and Liberty.me "are the sites that would understand and value the concept most". She even took the additional step of sharing my blog entry with the editor of Fee.org... Max Borders. It wasn't very surprising to learn that Borders himself had a similar idea a while back but was stymied by micropayments not being feasible yet.
I'd really love it if either Fee.org or Liberty.me was the first to implement "quarters up". Fee.org in particular has a long and commendable history of endeavoring to help the public better understand economics. So it would be especially fitting if they were the first to lead the way. Hopefully this would generate a lot more buzz than Tablet generated when they started charging for comments.
While I agree with Beth that Fee.org and Liberty.me are more likely than other websites to recognize the value of "quarters up"... it's entirely possible that it's not currently feasible for them to take this small, but super significant, step in the right direction. And because their mission is to endeavor to help the public understand economics... I'm sure that they will appreciate it if I don't put all my eggs in their basket. The educational opportunities are just too huge! So both Fee.org and Liberty.org should agree that "quarters up" should be implemented by some website sooner rather than later.
With that in mind...
A letter to the editor of Tablet
************************************************
Dear Alana Newhouse,
I commend you on the boldness of your move to charge for comments! However, I feel compelled to suggest a much better solution.
Rather than just using money to create a barrier to entry... why not use money to lift the most valuable comments to the top of the comments section?
You could achieve this efficient allocation of comments simply by giving your readers the opportunity to use their nickles, dimes and quarters to lift the most valuable comments higher up on the page. If you write an article... then the comment that was lifted to the very top of the comments section would be the one comment that the crowd felt was most worthy of your attention.
If anybody didn't want to read the lesser valuable comments... or they didn't have the time to do so... then they simply wouldn't scroll any further down.
Think of it like this. The reason that you've probably heard of Harry Potter isn't because money was used to block the bad writers... it's because the crowd used their money to lift J.K. Rowling's book to the top of the books "section".
This method works for "lengthy" writing such as books... and it will work for "short" writing such as comments... so it will also work for "medium" writing such as articles. It would be quite excellent if members on your website could "quarters up" comments and articles. Just like how members on Youtube can give their favorite videos a "thumbs up". The difference is that "quarters up" would speak louder than "thumbs up" do.
This "quarters up" feedback mechanism for content would allow the crowd to...
1. ...accurately communicate their content preferences
2. ...easily find the most valuable content
Unfortunately, there aren't any examples of websites, that I know of, that use "quarters up" for content. Which is a problem because it reflects the fact that people don't really understand how and why markets work! But, given that you've already demonstrated considerable boldness... I figured that perhaps this same boldness could be used for our mutual benefit. Your website would benefit from better feedback/sorting... and I'd benefit because I could refer to your website in order to help illustrate the value of crowd sponsored content.
For background, conceptual and technical aspects of this approach... please see... http://pragmatarianism.blogspot.com/2015/03/accurately-communicating-value.html
************************************************
The opportunity cost of economic ignorance
Here's how I've wonderfully illustrated the concept of crowd lifting/amplification...
Shopping is the process by which we endeavor to find valuable voices. When we find a voice that we value... we use our money to help amplify it. Money is volume. A dollar is a unit of volume. The more dollars that the crowd gives to a writer... the more people that will hear her voice. This is why nearly everybody in the world has heard of Harry Potter. A very large crowd of people reached into their own pockets and helped to create a very large megaphone for J.K. Rowling. This means that the size of her megaphone is proportional to the amount of value that she has created for the crowd. A large crowd sponsors her because she sponsors a large crowd. The value of her productivity to others has determined the amount of influence/control/power she has to allocate society's limited resources.
Unfortunately, the benefit of dollar voting really isn't understood by most people. There's an endless supply of evidence to support this fact. Here's just a small sample of the evidence...
MMC = mandatory minimum contribution
BV = ballot voting (thumbs up, likes, favorites, etc)
DV = dollar voting (quarters up, dimes up, etc)
All these sectors, and countless more, should be MMC + DV. Take Amazon Unlimited for example. Every person who pays Amazon $9.99/month (MMC) to read over 700,000 titles should have the option to use their nickles/dimes/quarters to lift their favorite titles higher up.
Why MMC? Two reasons...
1. All the goods in question are non-rivalrous
2. Everybody wants a free lunch (free-rider problem)
Right now there's a book on my coffee table. It's Toleration by Andrew Cohen. Here's how I've wonderfully illustrated our exchange...
In this illustration I'm buying Cohen's book from him in person. But in reality, I purchased his book on Amazon. Amazon really helped to facilitate this trade. Amazon made it stupid easy for me to dollar vote for Cohen's content.
The question is... would I have given Cohen $20 if I could download his book for free? Maybe not. What about $10? Or $1?
With the free-rider problem we end up shooting ourselves in the foot. We rationalize that, in the grand scheme of things, it's not a big deal if we don't spend a dollar on a "free" book. What difference can a dollar possibly make? And if a dollar can't make much of a difference... then neither will anything under a dollar.
Coincidentally, I just found this article when I searched Google for "Youtube"...
Maybe you need a hand visualizing the logistics? Ok. Here's a modified screenshot from the Youtube page of one of my favorite songs... Geppetto by Optiganally Yours.
I highly doubt that this is the best layout... and it's definitely not the best style... but hopefully you get the idea.
In this example, $3.50 is how much money that I've given to this song and $250.01 is how money much the crowd has given to it. Giving this song a "quarters up" would be as easy as giving it a "thumbs up". All it would take is one click to give this song a quarter. Youtube would be making it stupid easy for me to trade with Rob Crow and all my other favorite artists.
Yes, I do realize that "truebigmacmaster" probably isn't Rob Crow. But once Youtube makes it stupid easy for us to trade with our favorite artists... then it probably won't take very long before its stupid easy for us to find our favorite artists on Youtube.
Unlike Youtube... Netflix already has MMC... it just needs the DV. Here are 10 of my favorite movies/shows...
It's not my absolute top 10 list... I tried to give more weight to content that you can currently stream on Netflix. The ones with an asterisk unfortunately are no longer available for streaming. Castaway on the Moon isn't even available from Amazon... but I linked to it anyways just so you could read the reviews if you were so inclined.
Assuming a monthly fee of $10.00 dollars... here's what my allocation would look like for a month...
Assuming I didn't change my allocation for an entire year...
Here's the breakdown...
Believe you me... it was not easy to come up with the allocation! This is a perfect example of one of the most important economic concepts... opportunity cost. Every allocation requires the sacrifice of alternative allocations. A dollar that I spend on The Man From Earth is a dollar that I can't spend on any of the other movies/shows that I also love. This is why it's informative when I do give a dollar to The Man From Earth. If we don't have this chance to accurately communicate our valuations... then it's a given that society's limited resources will not be put to their most valuable uses. Producers can't make informed decisions when the bulk of information is locked away in our heart of hearts.
Opportunity cost is the key to unlocking hearts. This is why "quarters up" would speak louder than "stars up". Do "stars up" have an opportunity cost? Nope. Do "thumbs up" have an opportunity cost? Nope. Allocating a "thumbs up" to a video doesn't require the sacrifice of alternative allocations. Youtube gives everyone a "thumbs up" to spend on every video. It doesn't cost Youtube a thing to supply an infinite number of thumbs. Thumbs are cheap. Stars are cheap. Talk is cheap. Quarters? Not so cheap. Youtube would go broke if it handed them out like thumbs.
Every valuable resource has an infinite number of different uses. These different uses have to be prioritized... but they can't be correctly (efficiently) prioritized when consumers aren't given the chance to prioritize. We can only arrive at the truth of people's priorities by giving people the chance to put their money where their mouths are. True priorities are a function of personal sacrifice.
Right now there are a vast multitude of people stuck doing jobs that they really hate. This is the logical consequence of countless sectors that haven't made it stupid easy for people to put their money where their mouths are. If these sectors implemented MMC + DV then people who are vastly underemployed would be given significantly better options (builderism).
As more and more sectors implemented MMC + DV, the demand for cool jobs would increase. As a result, the supply of labor would shift accordingly. When you have more people doing cool jobs... there are less people available to do crap jobs. If the demand for crap jobs stays the same... but there's a decrease in the supply of available labor... then the cost of labor (wages) for crap jobs would increase. This means that, if you want somebody to do a crap job... then you're going to have to pay them more to do it.
Better options are a function of the efficient allocation of resources. And what does the efficient allocation of resources depend on? Accurate information.
Let's get a little technical
It seems like the two main approaches to "quarters up" are in-house and out-house. Uh. Maybe internal and external.
Internal
This is the system that I mentioned in this blog entry... Fee.org - Thumbs Up vs Quarters Up. You would pay Fee.org, for example, $12 dollars and they would credit your account accordingly. This would allow you to spend 48 "quarters up" or 120 "dimes up" or 240 "nickles up". When you gave an article a "quarters up", there wouldn't be any "real" money involved. Your bank wouldn't be involved... Paypal wouldn't be involved... your credit card wouldn't be involved... there wouldn't be any transaction costs... it would just be Fee.org updating some numbers in its database. Real money would only be involved when you've ran out of "quarters up"... or content creators wished to cash out.
External
This system would be similar to how Disqus works. None of the comments on Fee.org articles are stored in their own database... they are all stored in Disqus databases. In terms of micropayments... none of the transactions would be tracked by Fee.org... they would all be tracked and stored by a third party. When you clicked the "quarters up" button for an article on Fee.org... the information would be sent to the third party who would update their database accordingly. Just like a third party is responsible for keeping track of and "serving" how many times this article... Steal Our Stuff, Please... has been shared... a third party would be responsible for keeping track and "serving" how much money has been spent on it.
The internal approach isn't at all technically difficult. It's not fundamentally different than Youtube keeping track of how many "thumbs up" a video has received or Flickr keeping track of how many "faves" a photo has.
Like I mentioned, I don't know of any sites that use "quarters up" for content. According to the Wikipedia entry for micropayments... some work has been done in this area... but most of it hasn't been successful. Perhaps Flattr is the closest example of an external "quarters up" system. On their website they say in big bold letters... "Add money to your likes"... which is really great! But...when you scroll down you'll discover that they also say this...
Take another look at my monthly allocation for Netflix...
With Netflix's current system... all I can do is give all these shows/movies 5 stars. There's no opportunity cost involved so there's a huge communication failure. Flattr's system would be better because I'd only choose to allocate my money to these shows/movies. I'd be putting my money where my stars are... so there would be some opportunity cost involved. This means that the communication wouldn't be as big of a failure. The problem is that my favorite shows/movies would all be bundled together. So with Flattr's system I'd be communicating that I value all these shows/movies equally. Which, as you can see from the graph, is entirely untrue. I really don't value Black Mirror as much as I value The Man From Earth.
Flattr's definitely on the right track though so I'll send them a link to this entry. It would be really outstanding if they could adjust their system so that it's based on sound economics.
Doing a bit more digging into micropayments I found this Stanford project... Micropayments: A Viable Business Model? I've only just skimmed it but it seems like a pretty great overview... especially the tab/section on solutions. Rather than the internal/external approach that I used... they have three categories for micropayments...
1. Pay-As-You-Go
2. Prepay
3. Postpay
They give descriptions, pros/cons and examples of each. They conclude that, because of the transaction costs, the pay-as-you-go form is a no-go.
The prepay form is pretty much what I had in mind. Out of the examples that they give... the most relevant seems to be an online gaming website... Nexon. You give them real money and they give you their currency which you can spend on (allocate to) whichever games of theirs most closely matches your preferences. I think all the games are produced by Nexon.... but the mechanism is pretty much the same. So if I had to share one website with the editor of Tablet magazine then it would probably be Nexon. It does, however, take a bit of imagination to make the connection between "quarters up" for games and "quarters up" for articles/comments. But as every good economist knows... every allocation is a gamble!
Tablet currently uses TinyPass online payment system in order to charge people to submit comments on their articles. From what I read, TinyPass indicated that Tablet is the only customer they have that puts comments behind a paywall. Looking over TinyPass's website... it seems that all their other customers use more or less standard subscription models. I'd definitely be interested to know TinyPass's thoughts on the feasibility of their customers giving subscribers the chance to "quarters up" their preferred content.
Determining the optimal MMC
Right now neither Blogger or Medium have an MMC. Or, we could think of it as both of them having an MMC of $0.00/year. If Medium increases its MMC to $6.00/year... and makes it stupid easy for members to "quarters up" their favorite entries... then Medium would be more effective than Blogger is at facilitating trades. If you're going to blog... then why not blog where it's stupid easy for readers to give you money? Google's not dumb though. So Blogger would increase its MMC to $10/year... and also make it stupid easy for members to "quarters up" their favorite entries. If Blogger writers started to make more money than Medium writers... then Medium would increase its MMC to $14/year. If Blogger writers still continued to make more money than Medium writers... then perhaps $10/year is closer to the optimal MMC than $14/year.
We can imagine that with an MMC of $6.00/year... given how stupid easy it is for readers to "quarters up" their favorite entries... we can guess that lots of people are going to run out of quarters half way through the year. That equals 4 "quarters up" per month. And since these readers clearly enjoyed helping to lift their favorite entries... it will be worth it for them to pay for another 24 quarters. Conversely, if the MMC is say $18.00/year... then maybe by the end of the year there would be plenty of people with unspent quarters.
We can run through the same exercise with Youtube vs Spotify. Which sector would make it more stupid easy for me to trade with Rob Crow?
There's an infinite number of ways that a sector can help to facilitate trades. "Quarters up" is one such way. If Tablet successfully implements "quarters up"... then it will be extremely easy to see all the trading that is being facilitating. We'll be able to see how much money is spent on each and every article. We'll be able to see how much money is spent on the most valuable comments. This information would motivate other sectors to follow suit. They would be incentivized to adopt this superior "trait". Any sector that failed to do so would lose resources to "fitter" sectors of the economy.
It would be survival of the fittest markets. When a website implements "quarters up"... it's no longer just a website... it essentially becomes a market within a market. We'd have thousands and thousands of websites all striving to become better markets. Why? Because there would be millions and millions of producers and consumers all striving to participate in better markets.
My main argument is that it's better when demand is clarified. With this in mind...
The same illustration as earlier but I added a bit of insight. You can see that there's a huge disparity between how much I paid for the book and how much I valued it. I'm not saying this was the case in real life when I purchased Cohen's book... I'm just trying to clarify the concept.
Everybody loves getting a deal. In this illustration you can clearly see that I'm getting an excellent deal. It's really easy to believe that markets are quite wonderful when consumers get a bunch of really great deals. But, when we embrace and fully appreciate the idea that money is a message... then when we pay the really wrong amounts of money... we send the really wrong messages to producers. And consumers really don't benefit when they send the wrong messages to producers. A much larger future benefit is sacrificed for a much smaller momentary pleasure. We end up with more of what we want less and less of what we want more.
This concept has all sorts of broad reaching implications. Some are easy for me to reach... while others remain tantalizingly just out of reach. One easy implication to reach is that taxpayers should be able to choose where their taxes go. Another easy implication is that each and every school should be a market within a market. What's harder to reach is the implication when it comes to truly private goods...like shoes. If we really don't want to send the wrong messages when it comes to public goods... hence the need for MMC + DV... then why in the world would we want to send the wrong messages when it comes to private goods? But does this mean that we need MMC + DV for private goods as well? Uhhh...
Let's shelf private goods for a second and think about MMC + DV for public goods. When we have thousands of websites striving to become better markets... the "winners" will be the markets that do a better job of ensuring that payments accurately communicate values. Consumers in these better markets will send more accurate messages... and, as a result, producers in these markets will be able to make better informed decisions. The supply will more accurately reflect the demand. Society's limited resources will be put to more, rather than less, valuable uses. Markets with better information will produce more benefit.
When more people see, understand and study this process... then we'll be able to better determine how we might apply MMC + DV to private goods. Given enough eyeballs, all Easter Eggs are exposed (Linus's Law).
Exclusion
Right now Netflix prevents non-members from "consuming" its content. This is an example of exclusion. If Netflix allowed its members to "quarters up" content... then would Netflix still exclude non-members? If it did, then would this facilitate trade... or hinder it?
At first glance it seems straightforward that there might not be very many people who would pay $10.00 dollars per month for content that they can get for free. After all... everybody wants a free lunch...
Let's say that there's a knock on my door. I open it and lo and behold... it's Frank, from the future. He informs me that 50 years from now... exclusion and MMCs will have both been removed from the market "gene pool". It turns out that they discovered a certain combination of different market "traits" that were far more effective at facilitating trades. Would I be surprised to learn this? Maybe a little bit. Mostly about the 50 years part. I'm pretty sure I'm the Herman Melville of economics.
Odds and ends
This entry is pretty much over... except for a few odds and ends. If I was a better writer then I wouldn't have so much stuff left over. Kinda like how a better surgeon doesn't have so much stuff left over after he operates.
You'd want to work harder/longer/smarter...
... if it was stupid easy to spend money in the Youtube sector of the economy. Is this true?
Who's my Netflix buddy?
Right now Netflix has around 50 million members. Which of these 50 million members has a monthly allocation that most closely matches my own? Who's my Netflix buddy!!??
In An Explanation and Some Reflections... Reed Hastings says...
1. Become great at new things that people want
2. Actions speak louder than words
I'm sure Hastings will agree that "quarters up" speak louder than "stars up". Right? And then Netflix will move too fast in this direction. Right?
Speaking of content buddies...
Who in the world gave this song the most money??!! It would be awesome to be able to click on the $250.01 and find out. There'd be a list of members sorted by how much they allocated to this song. When I clicked on the member at the top of the list... Frank??... his page would have a tab for recent valuations and a tab for highest valuations. What songs/videos would I find? Probably other artists that I'd also want to give some "quarters up" to. This is just one way, out of an infinite number of ways, that Youtube and other sectors could facilitate trades.
Bryan Caplain hates bad questions
In a really nice bit of synchronicity... the economist Bryan Caplan recently posted a blog entry that focused on a problem with seminars and how it can be fixed. Here's how he starts off...
In defense of trolls
This may come as a huge shock, but I've been accused of trolling before. Maybe once... or twice. So I was very tempted to share this passage by J.S. Mill in my letter to the editor of Tablet...
Epiphytic thinking
What about Uber for Welfare? I really want to like it but, unfortunately, Miles Kimball and Scott Sumner like it. Seriously though... I do want to like it. But it would require ignoring everything that I've endeavored to explain in this entry. They say that repetition helps with learning so...
Is this a better market? Nope. Andrew Cohen's megaphone ends up being a lot smaller than it really should be. Now here's what Morgan Warstler is recommending...
Is this a better market? Nope. Andrew Cohen's megaphone ends up being a lot larger than it really should be. Poverty is the logical consequence of society's failure to understand the problem with people's megaphones being the wrong sizes. Nobody truly benefits when we violate Quiggin's Implied Rule of Economics. Even when somebody ends up with a much larger megaphone than they really should have... then just imagine some rich guy who's got it all... including cancer. I'm not saying that cancer would already have been cured by now if megaphones were the correct sizes... I'm saying that nobody's balance is as beneficial as it really should be. Again, we end up with more of what we want less and less of what we want more.
What about Star Trek?
Want some more epiphyte on epiphyte action? Ok...
Futarchy
Proprietism
Quadratic voting
Razotarianism
Medium
I joined Medium! Consider these snippets...
See also
Here's a screenshot of our interaction...
As you can see in the screenshot, Beth left a comment on Tucker's article four months ago. Because her comment was liked by four other people, it was the very first comment that I saw after I finished reading Tucker's article. Curious to learn why Beth's comment was the most popular... I read it. It was well-written! But... missing something. So I hit the reply button, wrote some words, rearranged some words, deleted some words, added some words, reread my words and then... voila! Beth received her first reply! She posted her comment four months ago and that's how long it took before some random person (me!) came along and decided that what she wrote was worth replying to. Shortly afterwords, my e-mail notified me that she had replied back. I was also notified that she had commented on the blog entry that I had linked her to... Fee.org - Thumbs Up vs Quarters Up.
Back in February, thanks to Tyler Cowen's Assorted links... I learned that some website that I'd never heard of had actually started to charge people $2 to leave a comment on an article... Tablet magazine starts charging commenters. According to the editor... the primary goal wasn't to raise money... it was to raise the quality of the comments.
Tablet's innovative approach to comments generated quite a bit of buzz...
- Guardian digital chief: Killing off comments ‘a monumental mistake’
- Comment Sections Fall Out of Fashion
- Troll toll: Tablet is now charging its readers for the right to comment
- Tablet Web Comments: Pay to Play?
- Comments Will Cost You: Tablet Magazine Now Charges $2 Per Post
- An ingenious way to save the comments section
- A Jewish magazine is testing an unusual solution for toxic internet comments
- Jewish online magazine starts charging commenters to deter 'offenders'
- In possible first, Tablet website charging for comments
The reviews were mixed... but none really got close to the economic heart of the matter. So here I am!
If you read through my discussion with Beth Cody then you should already know that in my reply to her comment I made the case that Fee.org should charge its members a very reasonable amount...say $12 per year... but allow them to choose which articles they allocate their nickles, dimes and quarters to. So rather than giving articles "thumbs up"... members could give them "quarters up". Fee.org would take its cut and pass the rest of the money onto the writers.
To my pleasant surprise, Beth had absolutely no problem recognizing the value of this feedback mechanism. In her comment on my blog entry she wrote that Fee.org and Liberty.me "are the sites that would understand and value the concept most". She even took the additional step of sharing my blog entry with the editor of Fee.org... Max Borders. It wasn't very surprising to learn that Borders himself had a similar idea a while back but was stymied by micropayments not being feasible yet.
I'd really love it if either Fee.org or Liberty.me was the first to implement "quarters up". Fee.org in particular has a long and commendable history of endeavoring to help the public better understand economics. So it would be especially fitting if they were the first to lead the way. Hopefully this would generate a lot more buzz than Tablet generated when they started charging for comments.
While I agree with Beth that Fee.org and Liberty.me are more likely than other websites to recognize the value of "quarters up"... it's entirely possible that it's not currently feasible for them to take this small, but super significant, step in the right direction. And because their mission is to endeavor to help the public understand economics... I'm sure that they will appreciate it if I don't put all my eggs in their basket. The educational opportunities are just too huge! So both Fee.org and Liberty.org should agree that "quarters up" should be implemented by some website sooner rather than later.
With that in mind...
A letter to the editor of Tablet
************************************************
Dear Alana Newhouse,
I commend you on the boldness of your move to charge for comments! However, I feel compelled to suggest a much better solution.
Rather than just using money to create a barrier to entry... why not use money to lift the most valuable comments to the top of the comments section?
You could achieve this efficient allocation of comments simply by giving your readers the opportunity to use their nickles, dimes and quarters to lift the most valuable comments higher up on the page. If you write an article... then the comment that was lifted to the very top of the comments section would be the one comment that the crowd felt was most worthy of your attention.
If anybody didn't want to read the lesser valuable comments... or they didn't have the time to do so... then they simply wouldn't scroll any further down.
Think of it like this. The reason that you've probably heard of Harry Potter isn't because money was used to block the bad writers... it's because the crowd used their money to lift J.K. Rowling's book to the top of the books "section".
This method works for "lengthy" writing such as books... and it will work for "short" writing such as comments... so it will also work for "medium" writing such as articles. It would be quite excellent if members on your website could "quarters up" comments and articles. Just like how members on Youtube can give their favorite videos a "thumbs up". The difference is that "quarters up" would speak louder than "thumbs up" do.
This "quarters up" feedback mechanism for content would allow the crowd to...
1. ...accurately communicate their content preferences
2. ...easily find the most valuable content
Unfortunately, there aren't any examples of websites, that I know of, that use "quarters up" for content. Which is a problem because it reflects the fact that people don't really understand how and why markets work! But, given that you've already demonstrated considerable boldness... I figured that perhaps this same boldness could be used for our mutual benefit. Your website would benefit from better feedback/sorting... and I'd benefit because I could refer to your website in order to help illustrate the value of crowd sponsored content.
For background, conceptual and technical aspects of this approach... please see... http://pragmatarianism.blogspot.com/2015/03/accurately-communicating-value.html
************************************************
The opportunity cost of economic ignorance
Here's how I've wonderfully illustrated the concept of crowd lifting/amplification...
Shopping is the process by which we endeavor to find valuable voices. When we find a voice that we value... we use our money to help amplify it. Money is volume. A dollar is a unit of volume. The more dollars that the crowd gives to a writer... the more people that will hear her voice. This is why nearly everybody in the world has heard of Harry Potter. A very large crowd of people reached into their own pockets and helped to create a very large megaphone for J.K. Rowling. This means that the size of her megaphone is proportional to the amount of value that she has created for the crowd. A large crowd sponsors her because she sponsors a large crowd. The value of her productivity to others has determined the amount of influence/control/power she has to allocate society's limited resources.
Unfortunately, the benefit of dollar voting really isn't understood by most people. There's an endless supply of evidence to support this fact. Here's just a small sample of the evidence...
| Sector | MMC | BV | DV |
| Blogger |
x
| ||
x
| |||
| Fee |
x
| ||
| Flickr |
x
| ||
| Gov |
x
|
x
| |
| Kindle Unl. |
x
|
x
| |
| Less Wrong |
x
| ||
| Liberty |
x
|
x
| |
| Medium |
x
| ||
| Non-profit |
x
| ||
| Patreon |
x
| ||
| Netflix |
x
|
x
| |
x
| |||
| Spotify |
x
| ||
| Tablet |
x
|
x
| |
| Youtube |
x
|
MMC = mandatory minimum contribution
BV = ballot voting (thumbs up, likes, favorites, etc)
DV = dollar voting (quarters up, dimes up, etc)
All these sectors, and countless more, should be MMC + DV. Take Amazon Unlimited for example. Every person who pays Amazon $9.99/month (MMC) to read over 700,000 titles should have the option to use their nickles/dimes/quarters to lift their favorite titles higher up.
Why MMC? Two reasons...
1. All the goods in question are non-rivalrous
2. Everybody wants a free lunch (free-rider problem)
Right now there's a book on my coffee table. It's Toleration by Andrew Cohen. Here's how I've wonderfully illustrated our exchange...
In this illustration I'm buying Cohen's book from him in person. But in reality, I purchased his book on Amazon. Amazon really helped to facilitate this trade. Amazon made it stupid easy for me to dollar vote for Cohen's content.
The question is... would I have given Cohen $20 if I could download his book for free? Maybe not. What about $10? Or $1?
With the free-rider problem we end up shooting ourselves in the foot. We rationalize that, in the grand scheme of things, it's not a big deal if we don't spend a dollar on a "free" book. What difference can a dollar possibly make? And if a dollar can't make much of a difference... then neither will anything under a dollar.
Coincidentally, I just found this article when I searched Google for "Youtube"...
No one is pulling down the kind of money internet sensation PewDiePie rakes in ($4 million a year, according to the Wall Street Journal), but you don’t have to make millions to quit your job and earn a living doing what you love. - Chris Kohler, Why Does Nintendo Want This Superfan’s YouTube Money?If Youtube charged a very reasonable $12/year (MMC)... but allowed members to "quarters up" their favorite videos... then I think that quite a few people would be able to quit their day job and earn a living doing what they love. This wouldn't just benefit the creators of the content... it would also benefit the consumers of the content. Consumers really benefit when they they use their dollars to point producers in the most valuable directions. Consumers really don't benefit when they give producers bad directions. If producers were omniscient then there wouldn't be any need for consumers to clearly communicate their preferences/valuations.
Maybe you need a hand visualizing the logistics? Ok. Here's a modified screenshot from the Youtube page of one of my favorite songs... Geppetto by Optiganally Yours.
I highly doubt that this is the best layout... and it's definitely not the best style... but hopefully you get the idea.
In this example, $3.50 is how much money that I've given to this song and $250.01 is how money much the crowd has given to it. Giving this song a "quarters up" would be as easy as giving it a "thumbs up". All it would take is one click to give this song a quarter. Youtube would be making it stupid easy for me to trade with Rob Crow and all my other favorite artists.
Yes, I do realize that "truebigmacmaster" probably isn't Rob Crow. But once Youtube makes it stupid easy for us to trade with our favorite artists... then it probably won't take very long before its stupid easy for us to find our favorite artists on Youtube.
Unlike Youtube... Netflix already has MMC... it just needs the DV. Here are 10 of my favorite movies/shows...
- Amelie
- Black Mirror
- Castaway on the Moon*
- Rake
- Shaolin Soccer
- Sidewalls
- Snatch
- Spaced*
- The League
- The Man From Earth*
It's not my absolute top 10 list... I tried to give more weight to content that you can currently stream on Netflix. The ones with an asterisk unfortunately are no longer available for streaming. Castaway on the Moon isn't even available from Amazon... but I linked to it anyways just so you could read the reviews if you were so inclined.
Assuming a monthly fee of $10.00 dollars... here's what my allocation would look like for a month...
Assuming I didn't change my allocation for an entire year...
Here's the breakdown...
| Movie/Show | Month | Year |
| 1. Amelie | $1.50 | $18.00 |
| 2. Black Mirror | $0.25 | $3.00 |
| 3. Castaway on the Moon | $0.25 | $3.00 |
| 4. Rake | $1.25 | $15.00 |
| 5. Shaolin Soccer | $0.50 | $6.00 |
| 6. Sidewalls | $0.25 | $3.00 |
| 7. Snatch | $0.25 | $3.00 |
| 8. Spaced | $1.00 | $12.00 |
| 9. The League | $0.75 | $9.00 |
| 10 The Man From Earth | $4.00 | $48.00 |
| $10.00 | $120.00 |
Believe you me... it was not easy to come up with the allocation! This is a perfect example of one of the most important economic concepts... opportunity cost. Every allocation requires the sacrifice of alternative allocations. A dollar that I spend on The Man From Earth is a dollar that I can't spend on any of the other movies/shows that I also love. This is why it's informative when I do give a dollar to The Man From Earth. If we don't have this chance to accurately communicate our valuations... then it's a given that society's limited resources will not be put to their most valuable uses. Producers can't make informed decisions when the bulk of information is locked away in our heart of hearts.
Opportunity cost is the key to unlocking hearts. This is why "quarters up" would speak louder than "stars up". Do "stars up" have an opportunity cost? Nope. Do "thumbs up" have an opportunity cost? Nope. Allocating a "thumbs up" to a video doesn't require the sacrifice of alternative allocations. Youtube gives everyone a "thumbs up" to spend on every video. It doesn't cost Youtube a thing to supply an infinite number of thumbs. Thumbs are cheap. Stars are cheap. Talk is cheap. Quarters? Not so cheap. Youtube would go broke if it handed them out like thumbs.
Every valuable resource has an infinite number of different uses. These different uses have to be prioritized... but they can't be correctly (efficiently) prioritized when consumers aren't given the chance to prioritize. We can only arrive at the truth of people's priorities by giving people the chance to put their money where their mouths are. True priorities are a function of personal sacrifice.
Right now there are a vast multitude of people stuck doing jobs that they really hate. This is the logical consequence of countless sectors that haven't made it stupid easy for people to put their money where their mouths are. If these sectors implemented MMC + DV then people who are vastly underemployed would be given significantly better options (builderism).
As more and more sectors implemented MMC + DV, the demand for cool jobs would increase. As a result, the supply of labor would shift accordingly. When you have more people doing cool jobs... there are less people available to do crap jobs. If the demand for crap jobs stays the same... but there's a decrease in the supply of available labor... then the cost of labor (wages) for crap jobs would increase. This means that, if you want somebody to do a crap job... then you're going to have to pay them more to do it.
Better options are a function of the efficient allocation of resources. And what does the efficient allocation of resources depend on? Accurate information.
Let's get a little technical
It seems like the two main approaches to "quarters up" are in-house and out-house. Uh. Maybe internal and external.
Internal
This is the system that I mentioned in this blog entry... Fee.org - Thumbs Up vs Quarters Up. You would pay Fee.org, for example, $12 dollars and they would credit your account accordingly. This would allow you to spend 48 "quarters up" or 120 "dimes up" or 240 "nickles up". When you gave an article a "quarters up", there wouldn't be any "real" money involved. Your bank wouldn't be involved... Paypal wouldn't be involved... your credit card wouldn't be involved... there wouldn't be any transaction costs... it would just be Fee.org updating some numbers in its database. Real money would only be involved when you've ran out of "quarters up"... or content creators wished to cash out.
External
This system would be similar to how Disqus works. None of the comments on Fee.org articles are stored in their own database... they are all stored in Disqus databases. In terms of micropayments... none of the transactions would be tracked by Fee.org... they would all be tracked and stored by a third party. When you clicked the "quarters up" button for an article on Fee.org... the information would be sent to the third party who would update their database accordingly. Just like a third party is responsible for keeping track of and "serving" how many times this article... Steal Our Stuff, Please... has been shared... a third party would be responsible for keeping track and "serving" how much money has been spent on it.
Like I mentioned, I don't know of any sites that use "quarters up" for content. According to the Wikipedia entry for micropayments... some work has been done in this area... but most of it hasn't been successful. Perhaps Flattr is the closest example of an external "quarters up" system. On their website they say in big bold letters... "Add money to your likes"... which is really great! But...when you scroll down you'll discover that they also say this...
One budget for all microdonations - Support all the creators you want without thinking about the cost. The monthly budget you choose is divided by the number of flattrs you make.Not so great. It's better than Facebook "likes", but it's definitely not as good as a "quarters up" system. This is because with Flattr's system you're lifting all your favorite content equally high.
Take another look at my monthly allocation for Netflix...
With Netflix's current system... all I can do is give all these shows/movies 5 stars. There's no opportunity cost involved so there's a huge communication failure. Flattr's system would be better because I'd only choose to allocate my money to these shows/movies. I'd be putting my money where my stars are... so there would be some opportunity cost involved. This means that the communication wouldn't be as big of a failure. The problem is that my favorite shows/movies would all be bundled together. So with Flattr's system I'd be communicating that I value all these shows/movies equally. Which, as you can see from the graph, is entirely untrue. I really don't value Black Mirror as much as I value The Man From Earth.
Flattr's definitely on the right track though so I'll send them a link to this entry. It would be really outstanding if they could adjust their system so that it's based on sound economics.
Doing a bit more digging into micropayments I found this Stanford project... Micropayments: A Viable Business Model? I've only just skimmed it but it seems like a pretty great overview... especially the tab/section on solutions. Rather than the internal/external approach that I used... they have three categories for micropayments...
1. Pay-As-You-Go
2. Prepay
3. Postpay
They give descriptions, pros/cons and examples of each. They conclude that, because of the transaction costs, the pay-as-you-go form is a no-go.
The prepay form is pretty much what I had in mind. Out of the examples that they give... the most relevant seems to be an online gaming website... Nexon. You give them real money and they give you their currency which you can spend on (allocate to) whichever games of theirs most closely matches your preferences. I think all the games are produced by Nexon.... but the mechanism is pretty much the same. So if I had to share one website with the editor of Tablet magazine then it would probably be Nexon. It does, however, take a bit of imagination to make the connection between "quarters up" for games and "quarters up" for articles/comments. But as every good economist knows... every allocation is a gamble!
Tablet currently uses TinyPass online payment system in order to charge people to submit comments on their articles. From what I read, TinyPass indicated that Tablet is the only customer they have that puts comments behind a paywall. Looking over TinyPass's website... it seems that all their other customers use more or less standard subscription models. I'd definitely be interested to know TinyPass's thoughts on the feasibility of their customers giving subscribers the chance to "quarters up" their preferred content.
Determining the optimal MMC
Right now neither Blogger or Medium have an MMC. Or, we could think of it as both of them having an MMC of $0.00/year. If Medium increases its MMC to $6.00/year... and makes it stupid easy for members to "quarters up" their favorite entries... then Medium would be more effective than Blogger is at facilitating trades. If you're going to blog... then why not blog where it's stupid easy for readers to give you money? Google's not dumb though. So Blogger would increase its MMC to $10/year... and also make it stupid easy for members to "quarters up" their favorite entries. If Blogger writers started to make more money than Medium writers... then Medium would increase its MMC to $14/year. If Blogger writers still continued to make more money than Medium writers... then perhaps $10/year is closer to the optimal MMC than $14/year.
We can imagine that with an MMC of $6.00/year... given how stupid easy it is for readers to "quarters up" their favorite entries... we can guess that lots of people are going to run out of quarters half way through the year. That equals 4 "quarters up" per month. And since these readers clearly enjoyed helping to lift their favorite entries... it will be worth it for them to pay for another 24 quarters. Conversely, if the MMC is say $18.00/year... then maybe by the end of the year there would be plenty of people with unspent quarters.
We can run through the same exercise with Youtube vs Spotify. Which sector would make it more stupid easy for me to trade with Rob Crow?
There's an infinite number of ways that a sector can help to facilitate trades. "Quarters up" is one such way. If Tablet successfully implements "quarters up"... then it will be extremely easy to see all the trading that is being facilitating. We'll be able to see how much money is spent on each and every article. We'll be able to see how much money is spent on the most valuable comments. This information would motivate other sectors to follow suit. They would be incentivized to adopt this superior "trait". Any sector that failed to do so would lose resources to "fitter" sectors of the economy.
It would be survival of the fittest markets. When a website implements "quarters up"... it's no longer just a website... it essentially becomes a market within a market. We'd have thousands and thousands of websites all striving to become better markets. Why? Because there would be millions and millions of producers and consumers all striving to participate in better markets.
My main argument is that it's better when demand is clarified. With this in mind...
The same illustration as earlier but I added a bit of insight. You can see that there's a huge disparity between how much I paid for the book and how much I valued it. I'm not saying this was the case in real life when I purchased Cohen's book... I'm just trying to clarify the concept.
Everybody loves getting a deal. In this illustration you can clearly see that I'm getting an excellent deal. It's really easy to believe that markets are quite wonderful when consumers get a bunch of really great deals. But, when we embrace and fully appreciate the idea that money is a message... then when we pay the really wrong amounts of money... we send the really wrong messages to producers. And consumers really don't benefit when they send the wrong messages to producers. A much larger future benefit is sacrificed for a much smaller momentary pleasure. We end up with more of what we want less and less of what we want more.
This concept has all sorts of broad reaching implications. Some are easy for me to reach... while others remain tantalizingly just out of reach. One easy implication to reach is that taxpayers should be able to choose where their taxes go. Another easy implication is that each and every school should be a market within a market. What's harder to reach is the implication when it comes to truly private goods...like shoes. If we really don't want to send the wrong messages when it comes to public goods... hence the need for MMC + DV... then why in the world would we want to send the wrong messages when it comes to private goods? But does this mean that we need MMC + DV for private goods as well? Uhhh...
Let's shelf private goods for a second and think about MMC + DV for public goods. When we have thousands of websites striving to become better markets... the "winners" will be the markets that do a better job of ensuring that payments accurately communicate values. Consumers in these better markets will send more accurate messages... and, as a result, producers in these markets will be able to make better informed decisions. The supply will more accurately reflect the demand. Society's limited resources will be put to more, rather than less, valuable uses. Markets with better information will produce more benefit.
When more people see, understand and study this process... then we'll be able to better determine how we might apply MMC + DV to private goods. Given enough eyeballs, all Easter Eggs are exposed (Linus's Law).
Exclusion
Right now Netflix prevents non-members from "consuming" its content. This is an example of exclusion. If Netflix allowed its members to "quarters up" content... then would Netflix still exclude non-members? If it did, then would this facilitate trade... or hinder it?
At first glance it seems straightforward that there might not be very many people who would pay $10.00 dollars per month for content that they can get for free. After all... everybody wants a free lunch...
One of the selling points is that Tidal is “artist-friendly,” but as plenty of people have pointed out, if the average person cared all that much about artist royalties, Napster never would have happened. - Cortney Harding, TIDAL Wave or Shallow Pool?Then again, the non-profit sector isn't exactly small. More specifically... consider the musician Amanda Palmer. She tried to raise $100,000 on Kickstarter but... she ended up with a bit more. And thanks to Patreon (Amanda Palmer is Creating Art) she receives nearly $30,000 for every thing that she creates. If you're even vaguely interested in the topic then I highly recommend watching her TED Talk... The Art of Asking.
Let's say that there's a knock on my door. I open it and lo and behold... it's Frank, from the future. He informs me that 50 years from now... exclusion and MMCs will have both been removed from the market "gene pool". It turns out that they discovered a certain combination of different market "traits" that were far more effective at facilitating trades. Would I be surprised to learn this? Maybe a little bit. Mostly about the 50 years part. I'm pretty sure I'm the Herman Melville of economics.
Odds and ends
This entry is pretty much over... except for a few odds and ends. If I was a better writer then I wouldn't have so much stuff left over. Kinda like how a better surgeon doesn't have so much stuff left over after he operates.
You'd want to work harder/longer/smarter...
... if it was stupid easy to spend money in the Youtube sector of the economy. Is this true?
If someone like Sten could individually choose the level of environmental quality, he would choose a higher level than the level set by the collective choice of society given his personal marginal cost. In turn in order to pay for this higher level of environmental quality, Sten would work more. - Nicholas Flores, Philip E. Graves, The Valuation of Public Goods: Why Do We Work?
Who's my Netflix buddy?
Right now Netflix has around 50 million members. Which of these 50 million members has a monthly allocation that most closely matches my own? Who's my Netflix buddy!!??
In An Explanation and Some Reflections... Reed Hastings says...
For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.He also says...
In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, “Actions speak louder than words,” and we should just keep improving our service.So what have we learned from Reed Hastings?
1. Become great at new things that people want
2. Actions speak louder than words
I'm sure Hastings will agree that "quarters up" speak louder than "stars up". Right? And then Netflix will move too fast in this direction. Right?
Speaking of content buddies...
Who in the world gave this song the most money??!! It would be awesome to be able to click on the $250.01 and find out. There'd be a list of members sorted by how much they allocated to this song. When I clicked on the member at the top of the list... Frank??... his page would have a tab for recent valuations and a tab for highest valuations. What songs/videos would I find? Probably other artists that I'd also want to give some "quarters up" to. This is just one way, out of an infinite number of ways, that Youtube and other sectors could facilitate trades.
Bryan Caplain hates bad questions
In a really nice bit of synchronicity... the economist Bryan Caplan recently posted a blog entry that focused on a problem with seminars and how it can be fixed. Here's how he starts off...
I'm sick of academic seminars. Even if the presenter has a good paper and speaks well, the audience ruins things. How? Two minutes into any talk, the fruitless interruptions begin. Half the time, they're premature quality control: "Are you going to deal with ability bias?" "Uh, yes. On the next slide." The other half the time, they're bizarre pet peeves. "How does this relate to sequential equilibrium?" "Uh, it doesn't. It's an empirical paper." "Yes, but that reminds me of something Rudi Dornbusch once said. Now I'm going to talk for four minutes."
Caplan's predicament was pretty darn close to Tablet's predicament. But wait! There's a twist! Tablet's solution was a lot more economical than Caplan's solution. Rather than attempting to determine people's willingness to pay for the opportunity to question/comment... Caplan's solution simply involves telling people to hold their questions until the end. Somehow this would make it "easier for the speaker to filter out bad questions".
Reading through the comments... I managed to find one that was a lot closer to the "best" solution....
The answer is simple:
Have some kind of chat room or reddit-like thread open where people can post questions and you can see them on a screen. Between slides look down, if there's something important that you're not already going to answer, answer it, if not, move on. - Borrowed_Username
Very close! But rather than simply having the crowd ballot vote for the best questions/comments... the crowd could "quarters up" the most valuable questions/comments. People in the audience could get paid for posting valuable questions/comments! How cool would that be?
In an earlier comment Tyler Cowen wrote, "I find this an oddly non-Caplanian post." I agree. But it's certainly quite useful for illustrative purposes.
This may come as a huge shock, but I've been accused of trolling before. Maybe once... or twice. So I was very tempted to share this passage by J.S. Mill in my letter to the editor of Tablet...
Mankind can hardly be too often reminded, that there was once a man named Socrates, between whom and the legal authorities and public opinion of his time, there took place a memorable collision. Born in an age and country abounding in individual greatness, this man has been handed down to us by those who best knew both him and the age, as the most virtuous man in it; while we know him as the head and prototype of all subsequent teachers of virtue, the source equally of the lofty inspiration of Plato and the judicious utilitarianism of Aristotle, "i maëstri di color che sanno," the two headsprings of ethical as of all other philosophy. This acknowledged master of all the eminent thinkers who have since lived—whose fame, still growing after more than two thousand years, all but outweighs the whole remainder of the names which make his native city illustrious—was put to death by his countrymen, after a judicial conviction, for impiety and immorality. To pass from this to the only other instance of judicial iniquity, the mention of which, after the condemnation of Socrates, would not be an anti-climax: the event which took place on Calvary rather more than eighteen hundred years ago. The man who left on the memory of those who witnessed his life and conversation, such an impression of his moral grandeur, that eighteen subsequent centuries have done homage to him as the Almighty in person, was ignominiously put to death, as what? As a blasphemer. - J.S. Mill, On Liberty
Epiphytic thinking
What about Uber for Welfare? I really want to like it but, unfortunately, Miles Kimball and Scott Sumner like it. Seriously though... I do want to like it. But it would require ignoring everything that I've endeavored to explain in this entry. They say that repetition helps with learning so...
Is this a better market? Nope. Andrew Cohen's megaphone ends up being a lot smaller than it really should be. Now here's what Morgan Warstler is recommending...
Is this a better market? Nope. Andrew Cohen's megaphone ends up being a lot larger than it really should be. Poverty is the logical consequence of society's failure to understand the problem with people's megaphones being the wrong sizes. Nobody truly benefits when we violate Quiggin's Implied Rule of Economics. Even when somebody ends up with a much larger megaphone than they really should have... then just imagine some rich guy who's got it all... including cancer. I'm not saying that cancer would already have been cured by now if megaphones were the correct sizes... I'm saying that nobody's balance is as beneficial as it really should be. Again, we end up with more of what we want less and less of what we want more.
What about Star Trek?
I sort of love that Star Trek forces us to think about a society that has no money but still operates with individual freedom and without central planning. I love that democracy is still in place. I love that people can still buy and sell things. It’s real. It’s a more realistic vision of post-capitalism than I have seen anywhere else. Scarcity still exists to some extent, but society produces more than enough to satisfy everyone’s basic needs. The frustrating thing is that we pretty much do that now, we just don’t allocate properly. And allocating properly cannot be done via central planning. - Rick Webb, The Economics of Star TrekIt's a very entertaining entry... and it's certainly true that we aren't allocating properly and central planning isn't the solution. But Webb doesn't explain that the reason that we aren't allocating properly is because consumers aren't given the opportunity to send the right messages.
Want some more epiphyte on epiphyte action? Ok...
Futarchy
Proprietism
Quadratic voting
Razotarianism
Medium
I joined Medium! Consider these snippets...
At Medium, how we work is just as important as the product we work on, and growing as an individual is just as important as contributing to the organization. We constantly look for new ways to better ourselves. - Gianni, Watching Medium
When considering potential partnerships for your business, you might be missing a big opportunity for collaboration right in front of you — your audience. - Brian Honigman, Startups, Partner With Your Audience
But that type of thinking— and guys like me, who work in media but haven’t done anything to help support creative industries— is why these businesses are crumbling on all sides. You can’t just take take take. You have to give back. Because these systems are vital to the creation, transmission, consumption and exchange of ideas. And those ideas are what make our society great. - Paul Cantor, Why I Started Paying for Music, Movies, Newspapers and Magazines AgainNapster was awesome because it made taking stupid easy. Will Medium be even more awesome because it makes giving stupid easy? Will Medium make it stupid easy to give this entry a "quarters up"? Will Medium get the quarter rolling? Or will it be Fee.org? Or Tablet? Or Reed Hastings? Whoever it is... hopefully they'll do it sooner rather than later!
See also
- Crowd Sponsored Results
- The Satt - Economic Coherence Test
- Data Mining Reveals How The “Down-Vote” Leads To A Vicious Circle Of Negative Feedback
- #BeTheChange? Hit ‘Em Where It Hurts!
- Business Ecosystems
- A Sense of History (errrr...)
See also update [3 Apr 2015]
Just stumbled upon this excellent and relevant article... Our economies are messed up. And the cause is the Internet. I probably should have searched Medium for "micropayment" before I posted this!
- Supporting The People And Content You Love
- Coinbase Tip and the Future of Listicles
- Beyond the Deadweight Loss of “All You Can Eat” Subscriptions
- One website. All newspapers and magazines.
- The ChangeTipping Point
- Can Nanopayments Save Blogging and Journalism?
- MediumTippr
- Appraising Amanda Palmer’s New Patreon Campaign
- Media Micropayments: Rethinking the unthinkable
- Rewriting The Future Of Media
- Toward a world in which content is the product, not readers
- Why Can’t I Send $1 Over the Internet?
- This blog post isn’t free.
- Ello, meet Swarm
- Is there an alternative
- free startup ideas for technical cofounders
- our vision for businessplans.io
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