A short thread on an obvious selection effect with some big consequences.
The social networks that are huge and very powerful now are the ones that grew the fastest. All else equal, these tend to be those with compelling products, but also another crucial thing:
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Being willing to make most trade-offs in favor of growth during a crucial period, which often was pretty long.
That process isn't pretty: it involves being willing to manipulate users and operate as many viral loops as possible, as long as they don't have a *growth* downside
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There's also a large, and maybe more important, effect on corporate culture: the people who grow most powerful and influential at the company during this period are the ones who were willing to give up a lot of other things for growth.
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So now you have these companies that influence world events at the highest level. And, just by the nature of how they got to be that way, their senior leaders are selected on having been obsessed, to the exclusion of other values, with user growth.
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Not all the leaders, of course, but the directional effect is there.
And now, these are the people (naturally - who else?) who run earnest corporate responsibility initiatives to make the platforms serve society better.
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Facebook is, of course, the perfect example of this, but not the only one.
So part of what we are learning about in the early 21st century is what a politics and a culture presided over by growth hackers looks like.
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I think a recognition of this phenomenon is why some of the people who understand these companies (and the leaders involved) best feel darkest about things.
Thread inspired (most proximately) by this useful history
This lovely paper by @SNageebAli, Mihm, and Siga — just revised for Econometrica — proposed a really striking theory of when voters rationally, but wrongly, think that policies are bad for them if they're good for others.
The paper has had a long childhood — I remember first seeing it in 2017 and finding the core adverse selection mechanism remarkable and compelling.
(Check out this study in abstract length, @ShengwuLi ! )
Hope it gets the attention it deserves in political economy.
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PS/
Scott Aaronson once defined an important theoretical idea as one that is hard to ignore in future discussions of the issue (in this case, zero-sum thinking), and I think by that standard, this is an important idea.
In the WSJ, Steven Landsburg proudly used this brain teaser to make an argument about where economics teaching is going wrong.
Instead he illustrates what’s wrong with his way of doing price theory: sloppy economic thinking, way more impressed with itself than it deserves to be.
It's worth thinking through the "answer" he expects, which you can guess based only on knowing his personality (never great):
marginal cost of the fruit is lower for the monopolist. He writes, "In a competitive industry, prices are a pretty good indicator of resource costs."
Let's forgive the obvious incoherence of “in a competitive industry.” His answer is very bad even so.
What will happen to the profit of the monopoly? In the actual world, some of it will be invested in the capital markets, where it might support resource-intensive production.
The notion that amazing papers should not get rejected is an odd one.
Any genuinely important idea is more likely to be strongly disliked. (Some reasons below in a short thread.)
To publish important work, editors have to be bold and overrule some negative experts.
Non-exhaustive list of reasons
1. The first technical work in a new paradigm is often crude and simple relative to the sophisticated and elaborate papers written late in a paradigm, when methods are being polished by a large community of experts in those methods.
2. Good ideas are often counterintuitive and have obvious drawbacks. They often prove valuable mainly through their later consequences.
Experts see the reasons not to pursue the counterintuitive paths: often, they have thought about and rejected these paths themselves before.