If something doesn’t make sense, your go-to hypothesis should be “costly signaling.” The core idea is more than a century old, but new wrinkles deserve wider exposure. Thorstein Veblen’s “conspicuous consumption” explained why people lit their cigars with $100 bills as a costly signal of their wealth. Later economists showed that a signal of a hidden trait becomes reliable if the cost of faking it is more than the expected gain. For example, Michael Spence showed that college degrees (even in irrelevant subjects) can reliably signal good future employees, because they’re too costly for bad employees to obtain.
Darwin said, “The sight of a feather in a peacock’s tail, whenever I gaze at it, makes me sick!” because he couldn’t see its adaptive benefit. It makes perfect sense as a costly signal, however, because the peacock has to be quite fit to survive with a tail like that! Why do strong gazelles waste time and energy stotting (jumping vertically) when they see a cheetah? It’s a costly signal of their strength, and the cheetahs will chase other gazelles. Biologists came to accept the idea only in 1990 and now apply it to signaling between parents and offspring, predator and prey, males and females, siblings, and many other relationships.
Technology is just getting on the bandwagon. The integrity of the cryptocurrency bitcoin is maintained by bitcoin “miners,” who get paid in bitcoin. The primary deception risk is “Sybil attacks,” where a single participant pretends to be many miners in an attempt to subvert the network’s integrity. Bitcoin counters this by requiring miners to solve costly cryptographic puzzles in order to add blocks to the blockchain. Bitcoin mining currently burns up a gigawatt of electricity, which is about a billion dollars a year at U.S. rates. Venezuela is in economic turmoil and some of its starving citizens are resorting to breaking into zoos to eat the animals. At the same time, enterprising Venezuelan bitcoin miners are using the cheap electricity there to earn $1,200 per day. Notice the strangeness of this: By proving they’ve uselessly burned up precious resources, they cause another country to send them food!
As a grad student at Berkeley, I used to wonder why a preacher would often preach on the main plaza. Each time, he’d be harassed by a large crowd, and I never saw him gain any converts. “Costly signaling” explains that preaching to that audience was a much better signal of his faith and commitment than preaching to a more receptive audience. The very antagonism of his audience increased the cost and therefore the reliability of his signal.
A similar idea is playing out today in social media. Rationalist blogger Scott Alexander points out that the animal-rights group PETA is much better known than the related group Vegan Outreach. PETA makes outrageous statements and performs outrageous acts which generate a lot of antagonism and are therefore costly signals. They have thrown red paint on women wearing furs and offered to pay Detroit water bills for families who agree to stop eating meat. They recently called for the firing of the Australian zookeeper who punched a kangaroo to rescue his dog. Members who promote ambiguous or controversial positions signal their commitment to their cause in a way that generally accepted positions would not. For example, if PETA campaigned to prevent the torture of kittens, everyone would agree, and members wouldn’t be sending a strong signal of their commitment to animal rights.
This connects to meme propagation in an interesting way. Memes everyone agrees with typically don’t spread very far, because they don’t signal anything about the sender. Nobody’s tweeting that 2 + 2 = 4. But controversial memes make a statement. They cause people with an opposing view to respond with opposing memes. As vlogger CGP Grey beautifully explained, opposing memes synergistically help each other to spread. They also create a cost for the senders in the form of antagonistic pushback from believers in the opposing meme. But from the view of costly signaling, this is good! If you have enemies attacking you for your beliefs, you’d better demonstrate your belief and commitment by spreading your beliefs even more! Both sides get this boost of reliable signaling and are motivated to intensify meme wars.
One problem with all this costly signaling is that it’s costly! Peacocks would do much better if they didn’t have to waste resources on their large tails. Bitcoin would be much more efficient if it didn’t burn up the electricity of a small country. People could be more productive if they didn’t have endless meme wars to demonstrate their commitments.
Technology may be able to help us with this. If hidden traits could be reliably communicated, there would be no need for costly signals. If a peacock could show a peahen his genetic sequence, she wouldn’t have to choose him based on his tail. If wealthy people could reliably reveal their bank accounts, they wouldn’t need luxury yachts or fancy cars. If bitcoin miners could show they weren’t being duplicitous, we could forget all those wasteful cryptographic puzzles. With proper design, AI systems can reliably reveal what’s actually on their minds. And as our understanding of biology improves, humans may be able to do the same. If we can create institutions and infrastructure to support truthful communication without costly signaling, the world will become a much more efficient place. Until then, it’s good to be aware of costly signaling and to notice it acting everywhere.