Tuesday, October 2, 2012

Novelty and Alternatives

"Hedonic adaptation" is the academic's way of describing faded shine. You know that feeling you get when you buy a new car and you just know you got a screaming deal on it? A few weeks later, that amazing machine that was to so delightfully enrich your very soul is just the car you use to drive to work and pick up groceries. It's a little like mean regression, but it applies to feelings and attitudes.

Hedonic adaptation is how we assimilate new products and experiences into our schema. Take your pick of any of the little things around you and marvel at how life would be different in its absence. The obvious example is the computer you're using to read this, but what about the chair you're sitting on? Is it made of rough-cut wood? Can it pivot? Swivel? Roll? Can it do these things quietly? Are you in a climate-controlled environment? Are your clothes comfortable? Are nearby windows drafty? Do you spend your day in googly-eyed fascination about the wonders of modern life or do you just accept things as they are and go about your day? Does your current endowment define your BATNA?

There's a reason we like to talk about taco trucks in the desert: the situation is stark, the consequences clear. Statistically speaking, I expect zero of my readers to ever be stuck in a desert, waiting for Jorge to crest the horizon, a tinny recording of otherwise good Cumbia filling the pores in the sand. It's easy to discuss BATNA disparity in this example, but when inventions that are barely ten years old are already hopelessly out of date, it can be more of a challenge to pin down what counts as a reasonable BATNA. More to the point, is it reasonable to bake expectations into the delicious cake of product releases? Can a leading-edge firm exploit its customers? What's my reasonable alternative to buying the newest portable telephone? To getting the newest OS? Do I run afoul of the Red Queen Dilemma when I'm in the market for fast-changing technology?

I have a bit of a suspicion that there's a wobbly edge to technological euvoluntariness, where the newest stuff is euvoluntary because the alternative is to just keep using what you had last year, and well, last year wasn't so bad, was it? But when it comes to more ossified, older components, the alternatives are more unattractive: electricity firms are quasi-public, your ISP is closer to being unregulated. The pace at which hedonic adaptation occurs is evident in Finland's 2010 announcement that broadband access is a human right, but I'm unwilling to claim that this pace is homoscedastic or predictable.

So I think the puzzle for me is to pick out the point at which the vultures descend. Rent-seeking is sadly inevitable in a world where Constitutional constraints have been eroded and now seem quaint relics of a steam-powered past. Rent-seeking still requires some moral justification for the median voter to swallow an intervention, so to what extent do elite interests attempt to encourage assimilation of novelty to lend a moral foundation to justifications for regulation? Or do they even need bother? Do agencies like the CFPB and the CPSC appeal to the public before drafting regulations? Should we expect them to? How would you change Mancur Olson's stationary bandit model in a rapidly-changing world?

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Do you have suggestions on where we could find more examples of this phenomenon?