prior probability

Can you correctly spell words like corduroy, kinsman, or wheedle? My youngest daughter Adys Ann won her school’s spelling bee on the word “tomahawk“! Below is a video of her during an earlier round spelling out the word “cumbersome“:

I have been participating in an Adam Smith reading group this winter and have thus been rereading various parts of Adam Smith’s first magnum opus, The Theory of Moral Sentiments (TMS), and I have also been sharing on this blog those passages from TMS that have caught my attention the most: see here and here (or below), for example. Here, I want to revisit the Scottish philosopher’s memorable three-part taxonomy of social groups (note: citations are to the Liberty Fund edition of TMS), which I sum up below as follow:

1. First, cut-throat and unpleasant “anti-social” social groups in which people “are at all times ready to hurt and injure one another” (TMS, p. 86, para. 3).
2. Secondly, amoral or mercenary utility-maximizing social groups in which people don’t have “any mutual love or affection” for each other (pp. 85-86, para. 2).
3. And thirdly, what I like to call lovely social groups where “assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem” (p. 85, para. 1).

Now, I want to discuss a possible connection between Adam Smith’s three types of social groups and Thomas C. Schelling’s Strategy of Conflict (Harvard University Press, 1980). In brief, Schelling identifies three types of games or strategic interactions (see also here; citations are to the 1980 edition of The Strategy of Conflict):

1. Zero-sum games or games of pure conflict where one player’s win is always another player’s loss (pp. 83-84).
2. Games of pure coordination or positive-sum games where both players can win if they are able to coordinate their moves (pp. 89-99).
3. And what Schelling calls “mixed-motive games” with varying amounts of anti-social competition and pro-social cooperation (pp. 99-118).

I now want to propose a possible one-to-one correspondence between Adam Smith’s three types of social groups (cut-throat, mercenary, and lovely) and Schelling’s three types of games (pure conflict, pure coordination, and “mixed motive”) as follows:

1. People in cut-throat “anti-social” social groups are playing games of pure conflict; e.g. a mafia boss or drug lord ordering a hit against a rival.
2. People in utility-maximizing amoral mercenary social groups are playing games of pure coordination; e.g. the decision whether to drive on the right or left side of the road.
3. And lastly, people in lovely social groups are playing mixed-motive games; e.g. parent-child relationships, members of a trade or guild, etc.

What I love the most about this possible connection between Smith and Schelling is that it reveals a cool insight: people don’t live, play, and work in just one type of Smithian social group writ large; instead, people are simultaneously embedded in different types of social groups of various scales — i.e. playing different types of strategic games — depending on how the rules and payoffs of these games are structured.

Happy Candlemas! I was honored to attend an activity at last night at the Museo de Arte de Puerto Rico, where Taina Caragol, Kate Clarke Lemay, and Carolina Maestre presented their book 1898: Visual Culture and U.S. Imperialism in the Caribbean and the Pacific (Princeton University Press, 2023), a stunningly beautiful coffee table tome full of illustrations and maps that was published last year to commemorate their ground-breaking art exhibition on North American imperialism at the National Portrait Gallery in Washington, D.C. (The exhibition was curated by Caragol, Clarke Lemay, and Maestre and runs until the 25th of this month.) Shout out to my colleague and friend Gustavo Gelpi for providing me a copy of the book and to the curators of this excellent exhibition for signing my copy.

I pre-ordered this little book many months ago (hat tip: Tyler Cowen), and my copy has just arrived. Suffice it to say, I will report back soon.

The great Adam Smith identifies three types of civil society in his first magnum opus The Theory of Moral Sentiments:

1. A cut-throat “anti-social” society where people “are at all times ready to hurt and injure one another”;
2. A utility-maximizing and amoral mercenary society “without any mutual love or affection”;
3. A lovely society where “assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem”.

Below is the full passage from Smith’s Theory of Moral Sentiments, Book 2, Section 2, Chapter 3, Paragraphs 1-3:

“All the members of human society stand in need of each others assistance, and are likewise exposed to mutual injuries. Where the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem, the society flourishes and is happy. All the different members of it are bound together by the agreeable bands of love and affection, and are, as it were, drawn to one common centre of mutual good offices.

“But though the necessary assistance should not be afforded from such generous and disinterested motives, though among the different members of the society there should be no mutual love and affection, the society, though less happy and agreeable, will not necessarily be dissolved. Society may subsist among different men, as among different merchants, from a sense of its utility, without any mutual love or affection; and though no man in it should owe any obligation, or be bound in gratitude to any other, it may still be upheld by a mercenary exchange of good offices according to an agreed valuation.

“Society, however, cannot subsist among those who are at all times ready to hurt and injure one another. The moment that injury begins, the moment that mutual resentment and animosity take place, all the bands of it are broke asunder, and the different members of which it consisted are, as it were, dissipated and scattered abroad by the violence and opposition of their discordant affections. If there is any society among robbers and murderers, they must at least, according to the trite observation, abstain from robbing and murdering one another. Beneficence, therefore, is less essential to the existence of society than justice. Society may subsist, though not in the most comfortable state, without beneficence; but the prevalence of injustice must utterly destroy it.”

See here: https://en.wikipedia.org/wiki/Emoji

“To be deprived of that which we are possessed of, is a greater evil than to be disappointed of what we have only the expectation. Breach of property, therefore, theft and robbery, which take from us what we are possessed of, are greater crimes than breach of contract, which only disappoints us of what we expected. The most sacred laws of justice, therefore, those whose violation seems to call loudest for vengeance and punishment, are the laws which guard the life and person of our neighbour; the next are those which guard his property and possessions; and last of all come those which guard what are called his personal rights, or what is due to him from the promises of others.”

–Adam Smith, The Theory of Moral Sentiments, Book 2, Sec. 2, Ch. 2, Para. 3

That is the title of my new paper (preprint available here via SSRN), which will be published in an upcoming issue of History of Economic Ideas, a refereed journal specializing in the history of economic thought. (This is one of the papers I was editing over the weekend.) My paper attempts to confirm the veracity of the oft-told story about Adam Smith having been reprimanded by his academic superiors at Oxford for having read one of David Hume’s early works, perhaps Hume’s Treatise of Human Nature. Among other things, a reviewer brought to my attention the fact that neither C. R. Fay’s biography Adam Smith and the Scotland of His Day nor Lord Keynes’s introduction to David Hume’s “Abstract of A Treatise of Human Nature, 1740” mention the supposed Oxford incident. Although the absence of evidence is not necessarily evidence of absence, these omissions are revealing and support my tentative verdict that “the Balliol College conspiracy” is more likely than not pure fiction.

I haven’t been blogging too much lately because I am busy editing, line by painstaking line, two of my forthcoming papers in order to get them ready for publication: “Adam Smith, David Hume, and Balliol College Conspiracy” and part 1 of “Smith in the City of Lights“. I will post and say more about the revised and corrected versions of my scholarly papers in the next day or two; in the meantime, allow me to share some music for everyone to enjoy …