Obsession (was Savings and Investment)

Martin Taylor 2004.03.25.10.32]

[From Bill Powers (2004.03.25.0623 MST)]

Bill Williams 24 March 2004 8:30 PM CST --

I have come to the conclusion that the overwhelming condition of most people
in contemporary society is a situation in which the desired level of
consumption is greater than the budget availible to support consumption
purchases.

Yes, this is one of the ideas that I have been considering and I'm pleased
at your corroboration. When there is a state of permanent uncorrected
error, the result could easily look to an outside observer like maximizing.
No matter how much more of something one gets, one still tries to get more
of it, and that might lead the observer to conclude that one is trying for
the maximum possible. Of course if one ever actually got close to reaching
the reference level, efforts to get still more would decline, going to zero
when the reference level was actually met (some level of sustained effort
would be needed to maintain the input near the reference level, so the
error would never quite get to zero).

I know that's a theoretically obvious statement, but does it
correspond to the real world? To me, it looks more as if the
"required money" reference level for poor people in a rich economy is
substantially higher than their perceived level, but this is not true
for poor poeple in a poor economy or for reasonably well-off people
in a rich economy. So far, so good. On could argue that the reference
level for "required money" is related to what one perceives other
people to have.

But going higher in the scale, it seems to me that for many people
the more money one has, even obscenely above the average, the higher
the reference level goes, as if very rich people actually do
maximize, or at least set their reference level using a positive
feedback loop in which the money available is involved. More money ->
higher reference for money -> more effort to increase money.

This latter seems a weird notion, I know, and it's quite incompatible
with the hierarchy, but could it be a kind of pathological condition,
and if it is, could a similar pathology exist elsewhere, leading to
other kinds of obsessive behaviour? In the money case, it seems to me
to describe the behaviour of some people better than does a simple
setting of the reference level very high right from the get-go.

Martin

Martin Taylor 2004.03.25.10.32]

>[From Bill Powers (2004.03.25.0623 MST)]
>
>Bill Williams 24 March 2004 8:30 PM CST --
>>I have come to the conclusion that the overwhelming condition of most

people

>>in contemporary society is a situation in which the desired level of
>>consumption is greater than the budget availible to support consumption
>>purchases.
>
>Yes, this is one of the ideas that I have been considering and I'm

pleased

>at your corroboration. When there is a state of permanent uncorrected
>error, the result could easily look to an outside observer like

maximizing.

>No matter how much more of something one gets, one still tries to get

more

>of it, and that might lead the observer to conclude that one is trying

for

>the maximum possible. Of course if one ever actually got close to

reaching

>the reference level, efforts to get still more would decline, going to

zero

>when the reference level was actually met (some level of sustained effort
>would be needed to maintain the input near the reference level, so the
>error would never quite get to zero).

I know that's a theoretically obvious statement, but does it
correspond to the real world? To me, it looks more as if the
"required money" reference level for poor people in a rich economy is
substantially higher than their perceived level, but this is not true
for poor poeple in a poor economy or for reasonably well-off people
in a rich economy.

Seems that this is so.

So far, so good. On could argue that the reference

level for "required money" is related to what one perceives other
people to have.

It may be required, but you don't actually die if the "requirements" aren't
met.

But going higher in the scale, it seems to me that for many people
the more money one has, even obscenely above the average, the higher
the reference level goes, as if very rich people actually do
maximize, or at least set their reference level using a positive
feedback loop in which the money available is involved. More money ->
higher reference for money -> more effort to increase money.

This latter seems a weird notion, I know, and it's quite incompatible
with the hierarchy, but could it be a kind of pathological condition,
and if it is, could a similar pathology exist elsewhere, leading to
other kinds of obsessive behaviour?

/veblen's 1896 _The THeory of the Leisure Class_ is the classic study
of such patholgical obsessive behaviors.

In the money case, it seems to me

to describe the behaviour of some people better than does a simple
setting of the reference level very high right from the get-go.

I would agree that the analysis ought to start with how the reference
levels get set to levels beyond what the consumer's budget will allow.
And, there is a student here completing a dissertation on the credit
card phenomena. Using a newly available data set created recently
it can be observed that credit card use tracks the number of hours
spent watching television. Seems that the more commercial one
watches the more one uses the plastic cards. I occurs to me, now,
that I ought to ask him if the more hours one watches TV the more
credit cards one has. So, emphatically yes, by the way can you code
in Delphi?

Bill Williams

ยทยทยท

----- Original Message -----
From: "Martin Taylor" <mmt-csg@ROGERS.COM>
To: <CSGNET@listserv.uiuc.edu>
Sent: Thursday, March 25, 2004 9:43 AM
Subject: Re: Obsession (was Savings and Investment)