Policies that can be set in motion with little more than the stroke of a pen can be very seductive. That’s particularly true with policies that appear to have the same hue as some major social problem, since lawmakers can use that problem as a rationale for the policy, and hope that no one thinks too hard about whether it’s logical to expect the policy to effectively address the problem.

Such is arguably what we’ve seen recently in the heated debate about universal basic income (UBI), and now it we are seeing it with the proposed sugar tax.

Though it may have some other benefits (e.g., capturing externalities of obesity), the sugar tax is often defended on the basis that there are a lot of obese people in modern-day Australia – including children – and many Australians take in far more sugar than health guidelines recommend, much of it in the form of sugary drinks. Hence, or so the argument goes, if we make those drinks more expensive through imposing a sugar tax, then people will buy less of them and obesity rates will dutifully start to fall.

As parents, we can make sugary drinks harder for our kids to access by not buying a lot of them in the first place. Schools too have choices about what to stock in canteens, and how to arrange and price food so that healthier things are within easier reach. A tax on sugary drinks also makes them less accessible, especially for cash-constrained people, and therefore may well reduce the consumption of those drinks – as has been seen in Mexico.

But are sugary drinks really the underlying cause of obesity? History shows us that sugary drinks have been around far longer than the modern obesity epidemic, which began in select developed countries around the late 1980s and early 1990s. Why were we able to resist the soda on the shelves for generations before the 1980s, after which we suddenly started succumbing to large quantities in the past generation? On the basis of layperson logic alone, sugary drinks cannot be the primary cause of the catastrophic rise in obesity we’ve seen in the internet age.

Evidence suggests that sugary drinks are more likely to be bought regularly by people in the lower income brackets of our society. Why then do lower-income adults buy large quantities of sugary drinks for themselves or their children? Are they ignorant of sugar’s health effects? Sadomasochistic? Trying to select the least-cost beverage option (water) but misfiring due to plain stupidity?

An alternative theory is that the reason for the initial kick-off in obesity rates, and some of the reason they’ve stayed high, is psychological. Evidence suggests that being lower-income can cause negative pressure on people’s self-esteem. The stress of being poor may have worsened as inequality has increased, and/or with the advent of globalized media, which provides access to unlimited stories about beautiful superstars to whom it’s very difficult for most real people to measure up. If modern lower-income Australians are already finding life pretty mentally exhausting, then they may not have the surplus mental strength required to resist buying unhealthy things (sugary drinks included) that will taste nice, and that their family and friends will enjoy and thank them for.

To the extent that obese people make poor food purchase decisions for psychological reasons, a tax on sugary drinks will do little to help them lose weight.

Tom Schelling was a US American economist (born April 14, 1921); until his death yesterday (Aussie time) he was Distinguished Professor of Economics at the University of Maryland, College Park. He was awarded the 2005 Nobel Memorial Prize in Economic Sciences which he shared with Robert Aumann, a belated completion of the NASH quartet that was not possible in 1994 because the Nobel Prize is given to maximally three people.

Schelling was awarded the Nobel Prize mainly “for having enhanced our understanding of conflict and cooperation through game-theoretic analysis”. This is true to the extent that he typically thought about interdependent decisions, i.e., decisions whose outcomes depend on the decisions of others. Schelling wanted game theorists to pay more attention to strategic uncertainty, issues such as promises and threats, strategies of credible commitments, tacit bargaining, the role of communication, and the design of enforceable contracts and rules. Schelling is probably right in saying (as he did in the biographical sketch that he supplied to the Nobel Prize Committee) that his work in this area – at least initially – did not have noticeable influence on game theorists but that it reach sociologists, political scientists, and some economists. His interests in such issues were in the first couple of decades clearly motivated by his having one foot in academia and the other firmly in various policy making bodies. He ended his work for the government upon the U.S. invasion of Cambodia in the Spring of 1970 but in later years took up important advisory and consulting activities.

Schelling wrote numerous widely cited articles which were the basis for the half dozen books that he wrote. These are Schelling (1960, 1961, 1966), Schelling (1978), and Schelling (1984, 2006). The first three – as also suggested by their title – deal with strategic interaction between entities such a nations but Schelling (1960) is a very fundamental, and eminently readable, treatise that tries to inject new themes into game theory. Almost three decades later it inspired a literature on what is now known as coordination games (Devetag & Ortmann 2007). Schelling (1978) provides models of racial dynamics that are as insightful as they are simple – Schelling’s work is almost always non-technical — and elegant. He showed specifically how seemingly fairly innocent micro-motives could bring about undesirable macro-outcomes. This particular work is said to have inspired what is now known as agent-based computational economics. Schelling (1984) is dedicated to issues of self-command and Schelling’s interest in substance abuse and addictive behavior; this interest guided much of his research in the seventies and eighties. The strategic interaction between competing selves is at the heart of his personalized narratives of strategic conflict. Schelling (2006) covers all aspects of his work and in this sense is the idea starting point for an exploration of the astonishing range of ideas pursued by this very public intellectual. The book contains also three essays on climate change, and related collective action problems, that interested him since 1980. Schelling is on record as saying that “global warming and climate change is what I expect to be, during this century, what nuclear arms control was during the century past, namely an immense challenge to ‘cooperation amid’ conflict.” His solution to climate change – geoengineering rather than a world-wide cap and trade system – is controversial.

The above entry has been culled, with slight modifications, from Morris Altman’s Encyclopedia of Behavioral Decision Making (Praeger 2015)

See also: Strategic Uncertainty, Coordination games, Theory of conflict, Self-command

Further Reading:

Devetag, Giovanna and Andreas Ortmann. 2007. “When and Why? A Critical Review of Coordination Failure in the Laboratory.” Experimental Economics 10, 2007, 331 – 44.

Ortmann, Andreas and Angelika Weber. 2007. “Thomas Schelling und die Theorie der Self-Command,” Pp.121 – 34 in Ingo Pies and Martin Leschke (eds), Thomas Schellings strategische Ökonomik. Tübingen: Mohr-Siebeck, 2007.

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2005:

Biographical http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2005/schelling-bio.html

Press release http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2005/press.html

Avanced information http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2005/advanced-economicsciences2005.pdf

Schelling, Thomas. 1960. The Strategy of Conflict. Cambridge, MA: Harvard University Press.

Schelling, Thomas and M.H. Halperin. 1961. Strategy and Arms Control. New York: Twentieth

Century Fund.

Schelling, Thomas. 1966. Arms and Influence. New Haven, CT: Yale University Press.

Schelling, Thomas. 1978. Micromotives and Macrobehavior. Cambridge, MA: Harvard

University Press.

Schelling, Thomas. 1984. Choice and Consequence. Cambridge, MA: Harvard University Press.

Schelling, Thomas. 2006. Strategies of Commitment and Other Essays. Cambridge, MA:

Harvard University Press.

Zeckhauser, Richard (1989): “Reflections on Thomas Schelling”, in: Journal of Economic

Perspectives 3, S. 153–64.

 

It’s been a great 15 years in Australia for me and the family, so we will be leaving lots of friends and colleagues behind as we seek new adventures in London, where from next week onwards I will be part of a Wellbeing centre, pretty much the same topic as the Australian Research Council has been generously funding me to look at for the last 3 years.

The essential aim of the ‘Centre of Wellbeing’ at LSE will be to put utilitarianism into practice as much as possible. To this end, we hope to be part of wellbeing policy experiments, textbooks on how a decision maker can be a better wellbeing-bringer, longitudinal studies, large data-gathering exercises, policy briefs, Master’s courses, inter-active wellbeing systems, and all the rest of it. We have partners all over the world and an international panel for wellbeing is up and running at the end of next week. If you happen to have a few million lying around to help us get to our goals quicker, then please help!

Whilst the grass is greenest in Australia, variety is the spice of life so I am looking forward tremendously to the new adventure. Still, the family is not truly leaving Australia, as my 3 kids now carry Australian citizenship and one kid is still studying in Sydney. So it is ‘Tot ziens’ (‘See ya later!’) rather than farewell!

To all my friends and colleagues in the Australian economics community: do come and look me up in London; please join in with utilitarian-oriented research projects; and best of luck.

German economist extraordinaire Reinhard Selten has died. Born October 1930, he was 85.

In 1994 he was awarded the Nobel Memorial Prize in Economic Sciences which he shared with John Harsanyi and John Nash, three quarters of the NASH quartet of Nash, Aumann, Selten, Harsanyi that has been widely credited to have advanced decisively the theory of games in the fifties, sixties, seventies, and eighties. Aumann received his Nobel Prize, together with Thomas Schelling, in 2005.

Selten was awarded the Nobel Prize mainly on the strength of his game-theoretic contributions. Specifically, he was credited by the Nobel Prize Committee with the introduction of the concept of subgame perfection which defined conditions under which to exclude from a set of equilibria those which are unreasonable by some standard (non-credible threats). A decade later he provided as a further tool in the game theorist’s toolbox the concept of a trembling hand equilibrium which likewise helped to reduce the set of equilibria.

The Nobel Memorial Prize Committee in Economic Sciences credited Selten in addition explicitly with “powerful new insights regarding evolutionary games and experimental game theory”. Indeed, after he had finished his master’s thesis in 1957, Selten was hired by professor Heinz Sauermann who held a chair at the University of Frankfurt and for whom he worked in various roles as assistant for about a decade. Selten was given considerable leeway by Sauermann and, influenced by characteristic function experiments done by Kalisch et al. (1954) as well as Simon’s Models of Man (1957), embarked on the study of oligopoly experiments which ended a couple of years later in his first experimental paper (Sauermann & Selten 1959). It was through Simon’s influence as well as his own experimental work that Selten started thinking about the bounded rationality that defines much of the decision making of individuals and firms. In fact, from the very beginning of his academic career it has been this methodological dualism that has defined his work (and occasionally confounded his colleagues).

Selten – while being famously dismissive of some of the rites of the scientific community – has worked on too many topics to even start an enumeration here: “I do not want to convey the false impression that my research is single-mindedly organized around a grand question. I am easily attracted by the opportunity to shift my interests into unforeseen exciting new directions. The little coherence there is in my work is due to a desire to understand both fully and boundedly rational economic behaviour, especially in the context of game situations.” (Selten 1993, p. 113)

Selten (1993) remains a good primer of his research interests over the first three or so decades; it is also an enjoyable read. Ortmann (1999) is a succinct introduction to a set of articles selected in collaboration with Selten. Selten (1999) has a brief but very informative biographical sketch by himself. Easily accessible information about both his life and his work may be found on the website of the Nobel Prize Committee .

Acknowledgment: The above draws on a contribution I wrote for Real World Decision Making: An Encyclopedia of Behavioral Economics. (editor: Morris Altman, Praeger 2015)

References.

Kalisch, G., Milnor, J.W., Nash, J., and Nering, J.D..1954. “Some experimental n-person games.” Pp. 301-27 R.M. Thrall, C.H. Coombs, and R.L. Davis (eds). Decision processes. New York and London.

Ortmann, Andreas. 1999. “Introduction (to Selten 1999).” Pp. xi – xxi in Selten (1999)

Sauermann, Heinz, and Selten, Reinhard. 1959. “Ein Oligopolexperiment.” Zeitschrift fuer die gesamte Staatswissenschaft 115, 437-71.

Selten, Reinhard. 1993. “In Search of a Better Understanding of Economic Behaviour.” Pp. 115-39 Arnold Heertje (ed). The Makers of Modern Economics, Vol. 1. Harvester Wheatsheaf.

Selten, Reinhard. 1999. Game Theory and Economic Behaviour. Selected Essays Volumes One, Two. Cheltenham, UK and Northhampton, MA, USA: Edward Elgar.

Simon, Herbert A. 1978. “Rationality as a Process and as a Product of Thought.” American Economic Review 70: 1–16.

Peggy Noonan is a writer and columnist for the WSJ. Part of her reputation stems from her writing speeches for Reagan and the elder Bush, and for coming up with memorable phrases. Some of these phrases apparently did not work out well for whom she coined them. Read my lips.

In a recent WSJ opinion piece titled How Global Elites Forsake Their Countrymen – a piece much shared on social media — Noonan enlightens us about the failure of global elites to empathize:

“The larger point is that this is something we are seeing all over, the top detaching itself from the bottom, feeling little loyalty to it or affiliation with it. It is a theme I see working its way throughout the West’s power centers. At its heart it is not only a detachment from, but a lack of interest in, the lives of your countrymen, of those who are not at the table, and who understand that they’ve been abandoned by their leaders’ selfishness and mad virtue-signalling.”

Noonan, presumably to impress on us her status among the well-connected, opens her piece recounting a meeting with “an acquaintance of Angela Merkel, the German chancellor and the conversation quickly turned, as conversations about Ms. Merkel now always do, to her decisions on immigration.” Noonan then recounts Merkel’s announcement in late 2014 that refugees from Syria, Iraq and elsewhere were welcome in Germany, the following influx (net) of more than a million in 2015, the resultant public discussions in Germany about this fact, and the claim that, coming “from such a sturdy, grounded character as Ms. Merkel the decision was puzzling – uncharacteristically romantic about people, how they live their lives, and history itself …”. We learn that the acquaintance of Merkel attributes her puzzling decision to her upbringing as the daughter of a Lutheran minister in East Germany, and as yet another attempt of providing “a kind of counter-statement, in the 21^st century, to Germany’s great sin of the 20^th.”

We learn that, while this was as good an explanation as Noonan heard, there was a fundamental problem with the decision:

“Ms. Merkel had put the entire burden of a huge cultural change not on herself and those like her but on regular people who live closer to the edge, who do not have the resources to meet the burden, who have no particular protection or money or connections. Ms. Merkel, her cabinet and government, the media and cultural apparatus that lauded her decision were not in the least affected by it and likely never would be.”

“Nothing in their lives will get worse. The challenge of integrating different cultures, negotiating daily tensions, dealing with crime and extremism and fearfulness on the street—that was put on those with comparatively little, whom I’ve called the unprotected. They were left to struggle, not gradually and over the years but suddenly and in an air of ongoing crisis that shows no signs of ending—because nobody cares about them enough to stop it.”

Noonan goes on to invoke the Cologne transgressions at last new year’s eve celebrations and Merkel’s adjustment to the considerable political backlash that her policies have brought about (the strong emergence of the AfD and the growing support of other populists such as Seehofer, the head of her own party’s Bavarian branch) and her pleading with her own populace to deal with both the positive and the negative aspects of globalization. Quoting a fellow journalist, Noonan argues: “’This was the chancellor’s … way of acknowledging that various newcomers to the national household had begun to attack her voters at an alarming rate.’ Soon after her remarks, more horrific crimes followed, including in Munich (nine killed in a McDonald’s) Reutlingen (a knife attack) and Ansbach (a suicide bomber).”

Now, it is rather rich that as prominent a megaphone for the global elites as Noonan virtue-signals her compassion for the disenfranchised masses that allegedly have fallen victim to the NIMBY syndrome. For all we know, Noonan got paid royally for her piece and was writing it in a brownstone home in an affluent residential New York City neighborhood.

All that hypocrisy aside, while we have come to expect false and silly claims from presidential candidates in the USA, it is noteworthy that Noonan seems not to check the facts that she parades to make her case. Of the three horrific crimes that she mentions, at best two can be clearly linked to Merkel’s open-door immigration policy (the suicide bomber in Ansbach, and maybe the Reutlingen knife attack, which — while committed by an immigrant asylum seeker from Syria — seems to have been a crime of passion). Importantly, the McDonald’s killings were committed by some kid born in Germany that was as confused and unhinged as some of the school shooters in the USA from which he seems to have taken his cues. Apparently, fact-checking is not Noonan’s thing. Never let the facts get in the way of a story that sells. True journalism, that.

Yes, there is no doubt that the open-door policy was ill-advised, lacked appropriate consultation, and was poorly implemented in particular on the federal level, but the fact is that murders in Germany — currently about 250 annually — have been cut by 40 percent since 2000 and – at least for 2015 — this number has not increased, notwithstanding the influx of the various newcomers to the national household. For all I can tell, Germany is far from falling apart at the seams as some of the hysteric press and social-media responses have tried to suggest.

The Independent — a British newspaper, no less — has argued that Angela Merkel’s open-door immigration policy will protect Germany from terrorism in the long run. It seems that for now things have worked out remarkably well even in the short run, notwithstanding the fact that this policy has been implemented poorly.

While it is way too early to assess all the benefits and costs of the developments in Germany since late 2014, it seems self-evident that Noonan is mostly uninformed about the current state of affairs there. That, unfortunately, seems to be the modus operandi of post-truth journalists like her who are no better than the illiterati and inumerati populating social media.

This news caused me to make a spit-take on my morning coffee.

Several of the country’s big banks are seeking to join forces and negotiate as a bloc with technology giant Apple, which could lead to a collective boycott of Apple Pay, in a bid to offer “digital wallets” on the iPhone.

Commonwealth Bank, National Australia Bank, Westpac and Bendigo Bank have this week applied to the Australian Competition and Consumer Commission, asking permission to negotiate as one with Apple.

Their application also seeks permission to undertake a “limited form of collective boycott,” in which the banks will agree not to negotiate with Apple individually while the collective talks are occurring.

Let’s unpack this. Apple has an NFC solution on its iPhone (just as Google does) but in order for Australian consumers to use it, they need permission of their banks. The banks claim that because Apple controls the phones of some of its customers, they need to negotiate as a block on access to the NFC component on the iPhone. Of course, not all banks. ANZ has already signed up to Apple Pay.

But here is what I don’t get. First, what does negotiating for access to the NFC component mean? Do the banks think that Apple will open it up to them when they haven’t opened it up to anyone else in the world? The reason Apple keep that close knit is because of security. It is unlikely there is anything else going on.

Second, the idea apparently is for the banks to agree not to sign up to Apple Pay until this is done. Then they will negotiate terms of access individually. In other words, a collective boycott.

The Australian law has provisions to allow this sort of thing if there are public benefits. But in this case, the public benefits only arise (potentially) if it is in the public interest for Apple to open up access to NFC. However, that decision would lie elsewhere with a much more detailed process. Also, because Apple is not a dominant handset maker — it has much less than 50% market share in Australia and elsewhere — opening up access through the usual route won’t happen. Put simply, Google have already developed this and so access to NFC is possible.

Instead, the idea here is to allow for something blantantly anti-competitive. One of the forces the drives banks to adopt new technologies that are provided by others is competitive pressure between them — that is, their customers want it. That is why AmEx and ANZ are already on board with Apple Pay. What the remaining banks want to do is ensure any one of them doesn’t break ranks and adopt Apple Pay and activate a competitive response.

In summary, the banks are using the wrong part of the law to deal with a public interest question precisely because Apple is not dominant in the Australian market. And they are doing it to protect what is likely a poor set of investments on their part and because they are unwilling to throw their weight behind Google alone. In other words, it is classic undermining of competition to benefit the interests of competitors and not the interests of consumers. Hopefully the ACCC will deal with it quickly because it is pretty clear that while the regulators deliberate, the same effect as a collective boycott is actually occuring.

In the wake of the recent academic-freedom cases involving Safe Schools co-founder and academic Roz Ward (here, here, and here) and the journalism academic Martin Hirst, comes the decision that the Fair Work Commission (FWC) posted yesterday in the case of Frijters v University of Queensland.

As you may recall I wrote about this deplorable situation more than a year ago here on CET (for a refined version, see here) and suggested that UQ’s attempt to charge Professor Frijters — the 2009 winner of the bi-annual Young Economist Award of the Economic Society of Australia — with (serious) research misconduct and to suppress his, and his former student’s, research on racial discrimination on Brisbane public transportation, was ill-considered and that at that point already the University’s ongoing and drawn-out attempts to hang on Frijters those charges were at the minimum disproportionate to the facts then known and also apparently unduly influenced by Brisbane bus company Translink.

The University administration under VC Peter Hoj decided — for what now looks like poorly veiled punitive reasons –- to push on, finding in a March 25 2015 report by one Professor Wright that Frijters was guilty of misconduct and that disciplinary actions were warranted. This led Frijters on 13 April 2015 to make his application for the Fair Work Commission to deal with the dispute.

The DECISION that commissioner Bissett posted yesterday is a pointed slapdown for UQ and some of its top administrators. While couched in typical legalese, the commissioner does not mince many words given the restraint that her office and position require. On more than 50 dense pages, and no less than 379 detailled statements of fact, assessments, and decisions, she makes it very clear that the University systematically, and through-out the three-year saga, violated its own Enterprise Bargaining Agreement, and that these violations were substantial and in several cases prejudiced.

To wit,

“[239] For the University to suggest that these are not fatal errors is to not give proper weight to the words of the agreement it has entered into with staff or a set of procedures it developed.”

Says the Commissioner, concluding:

“[374] I am satisfied that there were substantial flaws and a lack of procedural fairness in the process applied to Professor Frijters with respect to dealing with a complaint about the research.

[378] I am satisfied that the failures in the process, and hence the failure to apply the provisions of the 2010 Agreement properly are such and extend so far back that the entire process, including outcomes, is not reliable. There is no point in the process where it is possible to say that everything before that point in time was reasonable. The process was infected by error from so early on that the fairest thing would be to commence the process from the beginning again.”

The whole document makes for depressing reading and shows key admin players at the University have lost whatever compass, moral or of proportionality, one could and should reasonably expect. The document presents administrative arrogance of the kind that many academics here in Australia unfortunately have come to expect too often.

Again Commissioner Bissett does not beat around the bush (here and in many other places):

“[200] The 2010 Agreement and the research misconduct procedures have set out clearly how an investigation is to come about and how it is to be conducted. That the process and requirement may appear inconvenient or even if they are not fully fit for purpose in the particular circumstances does not give the University the right to alter those procedures. The procedures provide staff members with understanding and confidence in what is to take place. To vary from them so markedly is to undermine the importance of the 2010 Agreement entered into by the University freely with its employees. This is not something to be lightly put aside.”

I urge my fellow academics to read this document; who-dunnits and morality plays do not get much better.

What can we learn from the Frijters v University of Queensland saga?

First, discovery procedures such as FWC hearings are a beautiful thing.

Second, universities – even in the G8 – have more than their fair share of unscrupulous people who believe that under the cover of hierarchy and bureaucratic procedures they can act out any way they see fit. (I know, for many a reader here that is hardly a surprise.)

Third, for a leadership team that has been so clearly unmasked as being in contempt of its own agreements, it seems impossible to regain rapport with its staff members under the best of circumstances (such as an honest apology). The honourable thing to do seems to accept the finding (and for key players to take their hat).

Fourth, in [379] Commissioner Bissett notes that “It is not for the Commission to indicate the fairness or otherwise of Professor Frijters being put through the process again. That was always a likely outcome of the instigation of these proceedings.” It is to be hoped that the Commissioner is incorrect in that assessment and that those responsible for the ordeal they inflicted on Professor Frijters are not allowed give it another shot.

Fifth, Professor Frijters – at considerable costs to his health and also straight out-of-pocket and opportunity costs to himself – has provided us with a public good of considerable value. We should appreciate it. And learn from it. It seems about time to start a FIRE in Australia.

Sixth, every academic should be glad, and grateful, that an entity such as the FWC exists.

 

Facey is in the news again. Apparently one of Zuckerberg’s former employees went rogue and told the world that the news that is being streamed and trended is not determined by some “objective” algorithm. Rather the news is curated by a bunch of left-wing Ivy-Leaguers. Shocking news indeed. Who would have thought that a paragon of virtue such as Facebook and its owners would feed us biased news and opinions?

Predictably, plenty of social-media activity ensued. Also, the Facebook overlords invited a bunch of conservative / right-wing “victims” of that bias to its headquarters for a – undoubtedly very sincere – session. It must have been quite something, as even Glenn Beck found some aspects of it unpalatable. More social-media activity ensued.

Facebook also recently played an enabling role in the Aussie cases of Safe Schools co-founder and academic Roz Ward [see here and here and here], Senator Levonhjelm’s senior policy advisor Helen Dale [see here], and racist posts directed at outgoing Senator Nova Peris. All cases demonstrate that the boundary of what is private and public are not well defined, and that in fact for all practical purposes the boundary is evaporating. Always expect everything that you post on Facey to find its way into the public discourse even if your privacy settings are non-public.

Discourses on Facebook can, of course, quickly spin out of control. I doubt there is anyone who has not been through, or at least watched, debates that quickly deteriorated into exchanges of accusations, imputations of beliefs, insults, and more. Lots of virtue-signalling, too. As the adage has it, it can be a good thing for everyone to have a voice but it is often not. Too many people do not take the opportunity not to say something when it is offered.

While for years Facebook has been considered a necessary evil by many, its scope and usage continue to grow, with recent numbers suggesting that more than half of the Australian population have an account and on average spend 1.7 hours a day on it, qualifying them as some of the heaviest users world-wide.

Time, in any case, to the weigh the benefits and costs of it, with all the self-serving biases that might entail.

Let’s get the costs out of the way first.

There are at least three costs and they are considerable, no doubt:

First, the Facebook business model monetizes the kind of private information that (all too) willing customers are providing by liking this and reacting to that in the various ways that it provides. Facebook uses these revealed preferences to customize the messages that it sends and the ads it presents. The more of these ads the Facebook user reacts to, the better for Facebook since that kind of activity translates straight into Facebook’s profits, click-through rates being an important success metric. For the Facebook user that does not only imply various annoyance costs but quite possibly subtle meddling with preferences and never-ending targeted marketing. Lots of attention costs on top of the opportunity cost that Facebooking brings about in any case.

Second, Facebook presents a considerable invasion in privacy and security all the way to outright scams (google “skype video scam”). Reasonable pre-caution – for me, for example, not accepting the many requests by scantily dressed pretty young things who want to friend me – can avoid some of it but it is essentially impossible to escape the milking of emails that Facebook seems somehow be able to do. It is surely no coincidence (although it seems, as often, poor inference on Facebook’s part) that ads for some airline show up when I just made a booking on that airline for a trip.

Third, and possibly the most important negative thing about it, is Facebook’s addictive features. Like e-mail, or texting, it is now well understood to induce a form of neural addiction and, like e-mail, or texting that addiction gets triggered faster when its rewards are structured in an intermittent-variable way. This does not even take designers to do, it is in a sense a feature that is built-in. Your mind gets easily hi-jacked, the reason being the choice between the considerable effort a serious task takes– writing that article, or report, or preparing that lecture – or reading up on a couple chatty news item.

Relatedly, there are also health costs that come with it. Because Facebook is often read on mobile devices – in Australia of the 10 million that are on Facebook every day, 9 million are on a mobile device -, “text necks” have become a recent epidemic with serious consequences for those affected by it.

Now that we got the costs out of the way, why would anyone in their sane mind use it? Well, for starters, other social media platforms such as twitter are not much better. (Not that I knew first-hand.)

I see at least three benefits:

First, it is an easy way to stay in touch with the large number of people I met over the years. Friends from kindergarden (quite literally), to peers at various educational institutions, and teachers and students as well. Then there is all kinds of social contacts, random and not-so-random encounters of various kinds, and others. Of course, this motley network poses interesting questions about what the meaning of the word “friends” is in this context. Some have argued that there is a natural limit to the number of meaningful friends one can have [Dunbar’s number]. To me these are very silly notions drawing on conceptions of friendship that are antiquated. Clear is, to me, that there is absolute no reason to lose friends as you age, as was claimed in one recent study (see for write-ups about this study here and here).

Of course that takes some serious curating of your set of friends but it is often worth it. Once you have more than a couple of hundreds of friends, Facebook’s default setting deals with the resulting information flow and overload on its own mysterious terms and its algorithms often lead to “friends” drifting out of the feed. So Facey’s birthday reminder – worth the price of admission alone if you are as forgetful about these things as I am — is a good trigger to catch up quickly with someone’s recent activities. Being pro-active in this respect, and using several of the customization functions and prompts, is a way to defeat the Facebook algorithms that run in the background.

Second, Facey can be a fabulous content aggregator. Many – literally hundreds – of my Facebook friends are academics. At any point in time, and on any topic (replication crisis in the social sciences anyone? academics cutting corners? politics in Straya?) –, I can count on them posting comments, or links to articles, that I would most likely not come across otherwise. All moderated by the credibility that they have with me based on often long histories of postings. In addition, if I try to recall something or need some pointers, typically s brief post suffices to get me quickly all the information that I need. And then some.

Third, Facey it is an excellent platform to explore ideas, to test-drive ideas that might just be of interest (e.g., this post essentially aggregates ruminations of myself and others on and about Facebook), even to test-drive ideas that might lead to publishable products. But it goes beyond content aggregation. It is the nature of Facebook that you can throw out even outrageous ideas for commentary.

How to maximize the value added for self?

First, stay away every day for about half a day completely. This is a strategy to avoid the neural- addiction problem and a rather useful way to go about digital de-toxing. It is not the only strategy of course – others have chosen other ways such as writing cocoons (see here and here) but mine works quite well for me.

Second, when you are online – whether every day for half a day or between writing cocoons, try to use it as reward mechanism. I.e., don’t leave it one because you make yourself susceptible to the kind of neural addiction discussed above. Set yourself a goal – like finishing a draft, or reviewing a paper – and then reward yourself with some Facebooking. Then repeat. It might take some serious convincing yourself that the latest Kanye West update can really wait but once you manage to do it, you should have tamed the neural-addiction beast. Note that this way you also deconstruct the intermittent-variable-reward mechanism problem. While the strategy is simple and straightforward, its implementation is less so: Facebook’s data scientists estimate people check the platform about 14 times a day.

Third, be proactive. That is the way to counteract Facebook’s deviousness; it is also a way of keeping your site useful for your friends. Don’t just post stuff; at the minimum — lest it is obvious — rationalize your posts by offering a summary or commentary, or at least some excerpts from the article that you post. Facebooking is an indefinitely repeated game with multiple players and gift exchange is a major driver of its usefulness. Do not hesitate to delete out-of-bound or irrelevant comments or their perpetrators. Too many will post and repost over and over again what they think is interesting, often even without bothering to explain why, and thus most likely will end up cluttering your site. Plus, there are many that specialize in proselytizing on sites that are better curated and where their posts might reach more readers. While digital assets of the Facebook kind are not exactly commons, they tempt many to treat them that way.

In sum then, Facey has important costs — from outright opportunity costs over various annoyance and attention costs to added privacy, security, and addiction risks as well as health costs — but it also can be customized to bring about considerable benefits. By revealed preference, I obviously believe that the benefits outweigh the costs. It takes some effort though to get there.