I don’t know much about signaling, but I thought the whole point was to spend money on nothing. It won’t work if the money goes somewhere useful.
For example, let’s say that a Rolex costs $4000, and that you could buy an equally-beautiful watch for $500. You’re spending $3500 for nothing. If we can believe MacAskill’s book Doing Good Better, $3500 is about what it takes to save a life in Africa. If there were a $4000 watch that included both the $500 watch and a saved life in Africa, and showed it conspicuously, I don’t know that it would work as a signal. I’m wealthy enough to buy a $4000 watch that saves a life, but not a $4000 watch that doesn’t. Only a truly wealthy person would buy the Rolex, and that’s enough to ruin the save-a-life’s watch as a signaling object. (Put another way, anything that I would buy can’t possibly be a signal of wealth.)
In the diamond example, I think your idea would ruin both real diamonds and synthetic diamonds, since no one would want to appear to be a jerk by buying a real diamond, nor want to appear poor by making good use of their money with a synthetic diamond (with 90% going to good causes).
It’s like smoking cigars with $100 bills. The whole point is that you get nothing out of it.
I was trying to get my cousins to realize that I was rich, and they didn’t need to feel guilty for the help I was giving them. I gave 500 bucks to the next homeless dude to ask us for change, and they seemed to get it. Same principle as literally smoking the money. Buying an expensive watch wouldn’t have worked as well, they’d have just thought I liked watches.
But the gala dinners work because they’re conspicuously wasting significant resources, e.g. being held in a prominent venue, being hosted by or presenting famous performers or entertainers; the signal is costly, i.e. a significant portion of the money raised by gala dinners goes to paying to put on the gala dinner itself.
In a signaling model, Type A people can be distinguished from Type B people because they do something that is too expensive for Type B people. One reason this action can be worthwhile for Type As and not for Type Bs is because type As have more to gain by it. A man who really loves his girlfriend cares more about showing her than man who is less smitten. A box of chocolates costs the same to both men, but hopefully only the first will buy it.
But there is another reason an action may be worthwhile for As and not for Bs: the cost is higher for type Bs. Relating some intimate gossip about a famous person is a good signal that you are in close with them because it is expensive for an ignorant person to fake, but very cheap for you to send.
Directly revealing your type can be thought of as an instance of this. Taking off your shirt to reveal your handsome muscles is extremely cheap if you have handsome muscles under your shirt and extremely expensive if you do not.
I don’t know much about signaling, but I thought the whole point was to spend money on nothing. It won’t work if the money goes somewhere useful.
For example, let’s say that a Rolex costs $4000, and that you could buy an equally-beautiful watch for $500. You’re spending $3500 for nothing. If we can believe MacAskill’s book Doing Good Better, $3500 is about what it takes to save a life in Africa. If there were a $4000 watch that included both the $500 watch and a saved life in Africa, and showed it conspicuously, I don’t know that it would work as a signal. I’m wealthy enough to buy a $4000 watch that saves a life, but not a $4000 watch that doesn’t. Only a truly wealthy person would buy the Rolex, and that’s enough to ruin the save-a-life’s watch as a signaling object. (Put another way, anything that I would buy can’t possibly be a signal of wealth.)
In the diamond example, I think your idea would ruin both real diamonds and synthetic diamonds, since no one would want to appear to be a jerk by buying a real diamond, nor want to appear poor by making good use of their money with a synthetic diamond (with 90% going to good causes).
It’s like smoking cigars with $100 bills. The whole point is that you get nothing out of it.
I was trying to get my cousins to realize that I was rich, and they didn’t need to feel guilty for the help I was giving them. I gave 500 bucks to the next homeless dude to ask us for change, and they seemed to get it. Same principle as literally smoking the money. Buying an expensive watch wouldn’t have worked as well, they’d have just thought I liked watches.
The fact that a lot of charities run gala dinners and wealthy people are willing to pay a lot of money for that, suggests that the model can work.
I think many more rich people go to charity gala dinners than rich people smoking cigars with $100.
But the gala dinners work because they’re conspicuously wasting significant resources, e.g. being held in a prominent venue, being hosted by or presenting famous performers or entertainers; the signal is costly, i.e. a significant portion of the money raised by gala dinners goes to paying to put on the gala dinner itself.
Katja Grace’s post on cheap signaling seems relevant here: