Tipping, Status, and Signaling
By Bryan Caplan
Everything Arnold says about status goods and tipping points holds for signaling as well. It’s theoretically possible for bizarre new equilibria to emerge:
Something that is a status good in one era can be the opposite in another. Think of smoking, for example.
At some point, there may emerge a generation for whom having their children attend an elite college is not a status good.
Today, wearing a suit signals conformity and ambition. A thousand years ago, however, wearing a suit would have signaled that you were an utter freak. Tipping happens.
I’m puzzled, however, when Arnold seems to suggest that the emergence of bizarre new equilibria is likely:
Predicting when that will happen is difficult. It’s like predicting any
tipping point, such as the tipping point at which an asset bubble pops
or the tipping point at which people no longer believe that a government
will pay its debts.
Isn’t it more accurate to say the following about the unraveling of status/signaling equilibria?
1. “Predicting whether tipping will happen is easy: Smart money says it won’t.”
2. “If tipping does happen, however, it will be hard to predict when.”