Psycho-economics 102

Psycho-economics 101 means social status and concern for truth have an inverse relationship — like supply and price.

• As supply goes up, price goes down, unless counterbalanced by an equal increase in demand.

• As social status goes up, care for truth goes down, unless counterbalanced by an equal increase in care for truth.

As social status goes up, the cost of telling the truth goes up with it, because there’s more to lose.

It is possible to maintain care for truth despite high social status — Gandhi is perhaps the easiest example — but it takes great emotional strength, courage, and in all likelihood, preparation in advance before gaining status. (Note how none of these involve the intellect or “being smart”)

People who don’t prepare for status are often surprised by this dynamic. Myself included!

A personal story

A few months ago I discovered a fatal design flaw in Ideamarket, and decided to pull the plug and launch an entirely new product in its place.

Neither Ideamarket nor I are particularly high-status. But admitting a mistake to a mere 5,000 people was far more difficult than I had expected.

It was embarrassing, because I had been touting the doomed product as the savior of the information world for years beforehand. I had not been humble about it, and when reality corrected me, it was painful to confess.

I can only imagine how difficult it must be to admit mistakes with an audience (or a company) 100, 1000, or 10,000 times larger than mine.

Since then, I’ve been referring to our products as “experiments” a lot more often.

*(I’ve never studied economics formally, so let me know if there’s a better way to express this)