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Thursday, June 16, 2016

Risk, Damage and Fairness: who pays the costs?

"You don't just start off using statistics. It all depends on the assumptions you can live with. If you can live with my assumptions as a statistician, I can use my statistics on your problems." -- John Flueck, Ph. D., Chairman, Dept. of Statistics (1972), Temple University. (In conversation. -- EGR)

Hazard & Harm: focussing on "externalities." Who is to determine the balance between the rights of those who practice moral hazard and those who suffer from it? How can we weigh the value of the free expression of an individual's even risky behavior against the possibly heavy costs it may inflict on those otherwise non-involved? (See Buffering: Enhancing Moral Hazard in Decision-Making?) Who can be relied on to make such a judgment a fair one?

For example, how does a situation such as the Dec 14, 2012 elementary-school killings in Newtown, Connecticut come to be? From a gun-user, we are told. But, is it only an aberration? Or, to judge from the more than sixty mass killings in the United States since 1982, does there lurk a strong probability for repeats of the same?

Some suggest that more gun-control is the answer. Is it? How much gun-control? Are there no other influences that carry much of the responsibility? And more practically, what would-be "cure" is politically possible? (See Gun Fun or Safe Citizens? Must We Make Tradeoffs?)

Maybe there are other approaches we might explore besides gun-control. Perhaps we should "look at the stats."

What Are You Taking for Granted? Don't ignore important presuppositions by hastily suggesting the following:
a. Identify the risky behavior and the undesirable outcome each as members of different event-sets.
b. Assign the individual event-instances a probability-value.
c. Assign each event-instance a "market"-value.
d. Use the formula for expected value, EP: EP = probability value times "market"value.
e. Compare the EP's and and give preference to the event with the larger EP.
(For more on assumptions, see Getting Down to Facts: can we avoid making assumptions?)

It's a sad fact that even rather elementary mathematics tends to intimidate too many "educated" US citizens. Otherwise they might recognize that the significant problem here is that the mathematics may only generate and obscure important assumptions. These assumptions, among others are:
1. Event-type Specification: How do we define the event-membership? (This is not a matter of pure mathematics!)
2. Causes-Effects Confusions Avoided: Are the two sets, the causes and effects, the "same kind" of event -- or events, at all? (An attitude is not the same thing as a rock!)
3. Non-Controversial Prioritizations Possible: How shall we measure event-importance? On what basis do we prioritized outcomes? (This, too, goes beyond mathematics.)
Unless we insist on avoiding any issues that make our mathematics foggy, we will well encounter -- in today's US of A -- little consensus on how we should identify events and value their importance.

Answers might be looked for in what we, as Americans, believe are reasonable and fair trade-offs in dealing with social risk in the pursuit of optimizing personal freedoms. But whose estimations of value and possibility can we trust to be fair?

What is Fairness? A Simple Conception Let's think of it this way: every transaction among people comprises a wager. Every social exchange you participate in involves a bet that you'll end up as well or better off than you would be by refusing the exchange. One way to attack this potentially complex tangle of considerations is to examine what "fairness" seems to mean to many people.

There is a long-standing concern that comes up whenever the issue arises of paying for public expenditures, in the US, for example, public schools: "Is it fair to compel individuals to pay for things they won't use?" This question is sometimes generalized to "Why do we have to pay any taxes? Why not leave the issue to markets to decide?"

However, if we examine the notion of fairness operating behind such complaints we discover it overlooks some important concerns of even those complaining. The rules for fairness that seem to be at work here is a reciprocity of costs and benefits in a simple exchange: you pay for what you get; you get what you pay for. That is what fairness is often claimed to be. (Overlooked here is how the "price" should be set.)

We should expect, then, that in a fair situation, those who pay to defray costs of some expenditure either willingly donate to it or receive imminent benefits from it. On the other hand, we would expect that in a fair situation, those who receive benefits either or accept them as charity, or pay to defray costs to some lesser extent, e.g. if only to indicate a willingness to be sociable.)

What About Wagers? But this all-too-simple model fails to consider to important aspects of cost and benefit:
1. people often wager their well-being, their fortune -- they call it "an investment" -- to support values they pursue, whether imminent or, often, quite remote.
2. people often receive benefits as investments made by others to be husbanded toward those values, as when they accept a scholarship to study medicine; or buy bombs to serve a cause. Or they accept benefits as entitlements.
Education is a good example here of such a value. But, so too is military service. Or running an honest business. But don't overlook less comfortable examples of people in pursuit of establishing racism, preparing for an apocalypse, or ushering in utopias. Examples abound of ideologically-based paranoias, or of crusading zealotry that promotes attempts to restructure society, either for the "common good," or for the sake of an overlordship.

So a more complete model of fair exchange is this. Those who pay to defray costs of an expenditure either:
a. willingly donate;
b. contribute to moral debts, e.g. veteran disability payments.
c. make a wager, e.g. invest to defend or pursue their own valued ends, whether imminent or remote; or,
d. receive imminent benefits
But, if we recognize that even what appears to be an imminent benefit, say, a new car, can turn out to be a lemon, then "imminent benefits" can be included among "risky bets" where the payer believes the risk to be minimal. Moral debt contributions, e.g. taxes, can be subsumed under "risky bets," also. (Think of them as contributions to avoid penalties for non-payment of varying size or probability of infliction.)

These considerations let us reconstruct the "Payer's Model of Expenditure" to being either those who incur payments greater than benefits received are making:
a. a free donation; or,
b. a (more or less risky) wager.
On the other side, however, those who receive the greater benefits than what they pay out are
a. accepting charity,
b. receiving entitlements;
c. husbanding the investments, the wagers, of others; or
d. paying to defray costs or engaging in symbolic participation rituals.
We rely on "communities of hope" to flesh out this model through their actions.

What are Communities of Hope? They are virtuous, or not, depending on one's perspectives. They are comprised of people who risk their well-being or time or wealth in order to gain what they believe are future benefits for themselves or others, or to forestall what they believe are future evils.

They are often little more than skeletal patterns of interaction or organizational structures that support, whether consciously or not, common goals. Note well: one community of hope may not be recognized by others as either desirable or benevolent. What makes such a group, e.g. alCaida, a community of hope is that its members see each other as contributing to an "improved" world by their efforts.

Common examples of communities of hope are:
• Well known charitable organizations, religious or secular.

• Those who choose to have children or to teach and care for them.

• Educators or trainers of adults, for whatever end.

• Pessimists who nevertheless refrain from suicide.

• Optimists who imagine that their suicides will contribute to desired goals.

• Those who argue that there are better ways to do things.

• Those who dare publicly express disapproval or support of the status quo
It's that thought that counts. Don't let examples of corruption or incompetence becloud the realization that without the implicit hope, fairness would be a pointless concern.

Will Altruism Bring Trust and Fairness? It seems that what the various Communities of Hope listed above have in common is an altruistic outlook. But this does not help us with our search for someone to trust to be fair in evaluating and apportioning the costs and benefits of individual actions, even morally hazardous ones, against those of the recipients of the consequences of such actions.

Hope is apparently still, as the ancient Greeks perceived it, not so much a defense against the evils loosed by Pandora on the world; but, an evil in and of itself, duping mankind, toys of the gods, into putting up an entertainingly pointless resistance to those evils. Any act, perceived as altruistic by some may be perceived by others as pathological altruism.

Pathological altruism is any practice or action, performed for altruistic reasons, that nonetheless tends to produce harmful results, either to its practitioners or to the targets of the altruism. See Pathological Altruism Barbara Oakley, et al (2012) Oxford University Press

An interesting example is Gandhi's prioritization of truth over non-violence: see Was Non-Violence Gandhi's Ultimate Goal? Gandhi saw non-violence as a generally useful, but not absolutely necessary means to the pursuit of truth.

A Broadly Contrarian Approach? Maybe we ought to back off trying to dupe, persuade or coerce people into some kind of common ethos, a mind-meld, that will enable sufficient similarity of value prioritization so that we can trust them to be fair by a common standard. (See Fair Share vs. Fair Play).

Let us -- Hear! Hear! -- disregard the cants and dogmas, the failed formulae of traditional Conservatisms and Liberalisms. Let a "natural" selfishness reign, constrained only by laws that protect an effectively productive society that provides each person with the real opportunity to obtain a modicum of creature comforts and freedom to pursue intellectual and artistic interests. (See Believer vs Atheist, Conservative vs Liberal, and other distracting frauds.)

Methinks someone might have thought of this ere now. (See Bestowing Trust)

Cordially
--- EGR