Signaling Goodness

Series

• Economics, Cognition, and Society

Political, intellectual, and academic discourse in the United States has been awash in political correctness. PC thought has been both berated and defended, but there has been little attempt to understand it. Phillip J. Nelson and Kenneth V. Greene do so by looking at a more general process: adopting political positions to enhance one's reputation for trustworthiness both to others and to oneself.

Reputation seeking has profound effects on the nature of government policies and how they have changed over time. For many issues such as environmental, educational, and poverty programs one signals one's trustworthiness by advocating only one side of the issue (asymmetric "goodness"). As a result, government expenditures on these programs have increased over time because there has been a growth in the importance of this kind of reputation signaling.

As alternative explanations of public choice, neither narrow self-interest nor altruism works because of the free-rider problem involved in large group decisions. Signaling Goodness develops an alternative explanation—the theory of asymmetric "goodness"—that successfully predicts both political behavior as well as the behavior of charity, the traditional bastion of altruistic theorizing. The authors show, for example, that the main conflicting motivation is also a reputational return - imitating the behavior of one's close friends and associates to signal trustworthiness to them. They find that those who have the greatest returns to imitation are those least likely to use "goodness" signaling.

Phillip J. Nelson, Emeritus Professor of Economics, Binghamton University, who wrote his dissertation under Nobel Prize-winner George Stigler, has made some fundamental contributions to the literature on the information content of advertising. Recently, as did his mentor in his career, he has turned his attention to the economics of politics. Signaling Goodness has its source in his interest in both areas since it concerns the ways in which political positions and ethical behavior convey information.

Kenneth V. Greene is Professor in the Department of Economics, Binghamton University. His dissertation was written under Nobel Prize-winner James Buchanan. He has been a frequent contributor to the literature that develops and tests theories in the area of public choice. His previous book, Fiscal Interactions in a Metropolitan Area (with William B. Neenan and Claudia D. Scott), is widely cited in texts in urban economics and state and local finances. His interest in developing testable theories of the political process helped to generate the book's focus: what theories of ethical behaviors can both explain such behavior, including what is called political charity, and lead to testable hypotheses.

Praise / Awards

• "This is indeed a major effort and should excite considerable interest. Sociobiology has usually been understood to reinforce Homo economicus. The book's argument to the contrary will raise eyebrows initially and of course, any tie-in to evolutionary models is hot now."
  —James Buchanan, Nobel Laureate, George Mason University
  
• "I believe this will be an important work. It relates economic and evolutionary principles, and uses empirical analysis to test hypotheses in the intersection of these two areas of thought. The relation between economics and biology is becoming closer (as shown by the new Journal of Bioeconomics). This book adds significantly to this collaboration."
  —Paul H. Rubin, Professor of Economics and Law, Emory University, and author of Darwinian Politics: The Evolutionary Origin of Freedom
  
• "This book is extremely interesting and will garner a lot of attention in the area of public choice."
  —Robert Tollison, Robert H. Herin Professor of Economics, University of Mississippi
  
• "This book is highly fashionable stuff-sociological economics is amongst the fastest growing areas of economics-and most competently argued. What is wonderful is that Nelson and Greene go beyond theory to some tests. The homo sociologus approach has much to offer, since it brings into the analysis people's desire to be well regarded. I predict this book will get a lot of positive attention."
  —Thomas E. Borcherding, Professor of Economics and Politics, Claremont Graduate University
  
• "Phillip Nelson and his co-author, Ken Greene, take a very bold and striking new look at how we should understand charitable and voting behavior. These are very fundamental issues that have, over a long period, struck notes of discord in the profession. Standard economic models simply don't explain at all well why it is that people behave altruistically—the basic "economic man" of our models seeks to feather his own nest. Various attempts have been made to encompass such behavior in our economic models, but I think we all share the sense that they are not fully satisfactory. Nelson and Greene have taken on this very fundamental issue in economics in their new book—and they offer an entirely new perspective on it by embedding such behavior in a framework of social selection. It is all extremely intriguing and will receive much attention in the profession. I look forward eagerly to the debate that it will set in motion."
  —Wallace E. Oates, Professor of Economics, University of Maryland
  
• ". . . this book is well worth pondering. Nelson and Greene have not ended many arguments, but with this important volume they have certainly upped the level of discourse and provided substantial bases for debating these very important societal issues."
  —Choice
  
• "In this well-written and focused book . . . Nelson and Greene have produced a thought-provoking book that adds considerably to discussions of the paradox of voting, altruism-based charity, and expressive voting. I highly recommend it."
  —Public Choice
  

• "The strength of this book lies in its way of disentangling altruism from signaling activities in societal institutions, not by using a comprehensive theoretical framework, but through empirical observations that paint a coherent and valuable picture of social processes. The authors must be commended for this effort and the book will surely have considerable impact within the field of empirical studies of Public Choice. Seen in this way, the book can be regarded as remarkably interesting and worthy reading, that has a good chance to become part of an interesting new literature in the field of Public Choice."
  —Journal of Economic Behavior and Choice