Re: Ethical Investment Gone Wild

From: Wei Dai (weidai@weidai.com)
Date: Thu Jul 17 2003 - 15:21:14 MDT

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    On Thu, Jul 17, 2003 at 04:01:13PM -0400, Robin Hanson wrote:
    > In Miller's view, ethics is primarily about signaling, so whether the
    > ethical investments are well spent is largely irrelevant to his story. It
    > is analogous to the signaling theory of education, which says that you
    > don't learn much useful in school, but since the better workers find it
    > easier to put up with school, you can infer who is the better worker by
    > seeing who got more school.

    Education signals intelligence, and conspicuous consumption signals
    wealth. What does ethical investment signal? I guess it simultaneously
    signals wealth and belief in an ethical system. For the signal to work,
    the investments do have to be well spent, otherwise it only signals wealth
    and we already have ways to do that.

    I think the main problem with the idea is that it requires people to give
    up their financial privacy. I don't completely understand what is behind
    the demand for financial privacy, but it appears to be quite strong. Part
    of it has to do with bargaining power. If everyone knows exactly how much
    money you have, that makes you much weaker in bargaining situations.

    It's hard to say which will be stronger in the long run, the desire to
    signal belief in an ethical system, or the desire to retain financial
    privacy. But one might expect for example that if financial privacy was to
    erode for other reasons, then ethical investments will become more
    popular. Then again maybe a much cheaper way to signal beliefs will be
    found, for example (as we discussed earlier) standardized mental
    artitectures that can produce a convincing "proof of belief".



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