Explicit vs. Implicit Comparisons

July 22, 2010

I’ve had a post idea on the tips of my fingers, so to speak, for a few weeks now but I can’t ever seem to find just the right words or examples to get started. It follows on the theme of David’s excellent post on top ten lists, as well as the general line of discussion on this and other blogs of rankings, ratings, and metrics. One trend we seem to be identifying is the movement from implicit comparisons to explicit ones. Surely, there was a status hierarchy among elite universities before the US News and World Report rankings – but now there is a metric and a published list. There are definitely corporations with better and worse reputations, but after David and Daniel construct their “Top Ten Demonized Companies in the Gulf”, there will be an explicit reference guide. My question is – what can we generalize about the difference between explicit and implicit comparisons? Do explicit comparisons always win out? What role do methodology, transparency and authority play in all this? And why do we sometimes feel, well, icky when we see an explicit comparison trying to assert itself where previously the tradeoffs involved were much more implicit?

Let me give you an example that’s been on the back of my mind for a few months. Way back in February, the excellent economics blog Baseline Scenario posted a critique of a regulatory framework for cost-benefit analysis that was keyed to the “discount rate” used to commensurate present and future damage. That post discusses another, which mentions that the Office of Information and Regulatory Affairs “instructed agencies to discount the value of future lives in constructing cost-benefit analyses by 7 percent a year, so that 100 lives in 50 years would only be worth 3.39 current lives.” The post takes issue with this discount rate, and argues instead (based on productivity growth, population growth, risk-aversion, and so on) for a discount rate of more like 1% – “And instead of 3.39 lives today, you get 60.80 lives today. That’s a big difference.”

There’s something fascinating and yet profane about this sort of calculation. Certainly, any policy that involves sacrificing current well-being or wealth in exchange for future benefits can be framed as this kind of trade-off (with lots of caveats) – but usually we don’t make so explicit the comparison. Under what conditions does making this comparison explicit lead to better decisions? Does our intuitive sense of the “ickyness” of such grim calculations provide any useful indication that this particular attempt to make something explicit is a bad path? Is there a way to fight an explicit comparison without trying to produce a better one (as Kwak is doing)?

2 Responses to “Explicit vs. Implicit Comparisons”

  1. danielbeunza Says:

    Very much liked your concept of the “icky comparison.” Philip Tetlock calls these “taboo tradeoffs,” and they point to the limits of calculative decision-making where values are involved.

    Fabrizio Ferraro and I have encountered this problem repeatedly in the area of responsible investing: once you adopt the stakeholder view that the firm (and its investor) needs to take into account the wellbeing of the different stakeholders, you run into the problem of trading off the interests of, say, workers and the environment. To be crude about it: how many saved worker’s hands is a forest worth?

    Right now, existing systems for responsible investor don’t give you a way to consider these problems. You just get information on the performance along different dimensions — separately. The interface designers that we are following are trying to come up with ways to build tradeoffs, and they’re having a hell of a difficult time.

  2. Pete Says:

    Possibly a red herring, but “icky comparison” looks closely related to trolley problems in philosophy – moral dilemmas that involve killing one person to save others. Those were meant to be arguments about the limits of consequentialism – “Thou shalt not kill” often seems to trump “The end justifies the means”.

    In philosophy, the traditional tool for fighting explicit comparisons is essentialism – you favour fixed rules and principles over calculation of the consequences. So from that point of view, once you’ve admitted the possibility of an implicit comparison you’ve accepted that calculation is possible in principle, and you probably are reduced to offering better explicit comparisons when you don’t like the existing ones.

    One thing that the Soc Finance focus on “methodology, transparency and authority” adds to the debate is the fact that the calculation itself is a political act. IIRC, trolley-problem ethics is very out of fashion at the moment because it assumes a frankly unrealistic level of certainty about the consequences to be calculated – you know for sure that your killing one person really will save five.

    Question for Daniel: do the interface designers make much use of the philosophy literature in trying to resolve their problems with trade-offs? And if so which? I always like to imagine ethical trade standards setters poring over the works of Peter Singer as they earnestly calculate levels of harm, but I rather suspect that’s not the case.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: