People need not value everyone in the reference network equally. There could be hierarchies within the reference networks.
When the preferences of others are stacked against one’s preferences:
While it’s true that the the marginal cost of bandwagoning/blocking/hating on social media is low, there are reputational costs involved.
When reputational costs are significant, people engage in preference falsification. When the reputational costs are not significant, people bandwagon/block/hate the ‘others’.
E.g., when the PM decided to roll back the farm laws, it wasn’t easy for his supporters to bandwagon/block/hate him. They engaged in preference falsification.
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Is it right to say that comparative association involves a set of individuals indulging in interdependent behaviour where expectations are empirical. Whereas the likes/dislikes driving the preferential association have an element of normative expectation?
I don't think preference association ~ normative expectation and comparative association ~ empirical expectation. Once a reference network is formed, both kinds of expectations can operate in either of the associations.
Thought this could serve as another example of the crimes that happen when we kill the pricing principle. It charts how USSR stayed in the whaling industry when most others left due to the industry being unprofitable.
Jul 11, 2022·edited Jul 11, 2022Liked by Pranay Kotasthane
It's one of the core principles of USSR being a planned economy right? Everyone except USSR and Japan quit the whaling industry by the 1960s. I read some excerpts from the book itself; the author says how the Soviets maintained an accounting system (for whaling) that went by Marx's labor theory of value. Consequently, he says they didn't consider the state's capital investment as input costs at all. This ended up showing the whaling output as an immense profit. Author is skeptical if the whaling industry was ever profitable for the Soviets. It seemed like a system that could sustain itself, sustain the whaling ship industry, the whalers and their rich lives, their narratives of being the cool Soviet dudes in whichever port they docked, a self-serving system that could sustain itself for decades before the state capital inputs were exhausted and the whale species hunted to extinction.
"they didn't consider the state's capital investment as input costs at all" is an interesting insight. However, opportunity cost neglect is common in public spending, and not just in socialist States. My limited point is that there could have been possibly other stronger reasons to continue whaling? For instance, with the a run-down domestic economy and with other whaling competitors having exited, there were perhaps incentives to continue.
That could be probable. But I still feel strongly about your stress upon letting the pricing mechanism work. All kinds of perverted incentives and self-serving individuals come into play when that goes for a toss. I will comment here again once I read the book fully!
People need not value everyone in the reference network equally. There could be hierarchies within the reference networks.
When the preferences of others are stacked against one’s preferences:
While it’s true that the the marginal cost of bandwagoning/blocking/hating on social media is low, there are reputational costs involved.
When reputational costs are significant, people engage in preference falsification. When the reputational costs are not significant, people bandwagon/block/hate the ‘others’.
E.g., when the PM decided to roll back the farm laws, it wasn’t easy for his supporters to bandwagon/block/hate him. They engaged in preference falsification.
——
Is it right to say that comparative association involves a set of individuals indulging in interdependent behaviour where expectations are empirical. Whereas the likes/dislikes driving the preferential association have an element of normative expectation?
Agree about preference falsification.
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I don't think preference association ~ normative expectation and comparative association ~ empirical expectation. Once a reference network is formed, both kinds of expectations can operate in either of the associations.
Many thanks for the response, Pranay 🙏🙂
Thought this could serve as another example of the crimes that happen when we kill the pricing principle. It charts how USSR stayed in the whaling industry when most others left due to the industry being unprofitable.
https://slate.com/news-and-politics/2022/06/history-of-soviet-whaling-greenpeace-twentieth-century.html
Thanks for sharing this fascinating read. Not sure if that's my takeaway though. Why do you say the pricing principle was killed in this case?
It's one of the core principles of USSR being a planned economy right? Everyone except USSR and Japan quit the whaling industry by the 1960s. I read some excerpts from the book itself; the author says how the Soviets maintained an accounting system (for whaling) that went by Marx's labor theory of value. Consequently, he says they didn't consider the state's capital investment as input costs at all. This ended up showing the whaling output as an immense profit. Author is skeptical if the whaling industry was ever profitable for the Soviets. It seemed like a system that could sustain itself, sustain the whaling ship industry, the whalers and their rich lives, their narratives of being the cool Soviet dudes in whichever port they docked, a self-serving system that could sustain itself for decades before the state capital inputs were exhausted and the whale species hunted to extinction.
"they didn't consider the state's capital investment as input costs at all" is an interesting insight. However, opportunity cost neglect is common in public spending, and not just in socialist States. My limited point is that there could have been possibly other stronger reasons to continue whaling? For instance, with the a run-down domestic economy and with other whaling competitors having exited, there were perhaps incentives to continue.
That could be probable. But I still feel strongly about your stress upon letting the pricing mechanism work. All kinds of perverted incentives and self-serving individuals come into play when that goes for a toss. I will comment here again once I read the book fully!