Statusful Regulation

As an economist who leans libertarian, I’ve long struggled to account for our many apparently-excessive government regulations and interventions. Many theories offered to explain such things have grains of truth, and often do well on particular examples, but to me their sum falls flat an explanation of the whole. So I continue to seek patterns in such regulations, and theories to account for such patterns.

One neglected pattern that stands out to me is that many economically-puzzling regulations and policy inclinations tend to make everyone act like high status folks act, regardless of how appropriate that is for their situation.

Consider one-size-fits-all building codes, food and drug regulations, safety rules, professional licensing, and medical insurance regulations. Such rules tend to make sure that a typical rich person wouldn’t accidentally buy a product or service of a much lower quality than they would desire.

You might argue that rules can only vary so much with circumstances, and poor folks simply suffer by being in the tails of the distributions of circumstances – nothing personal. But many regulations seem to go out of their way to target the poor. Consider min wages, min house lot sizes, max apartment occupancy rules, and child labor laws. Rich folks are in little danger of accidentally violating such rules – the intent seems to be to stop poor folks from doing things that rich folks wouldn’t think of doing.

Policies to subsidize and encourage schooling and homeownership also encourage high status activities. Zoning regulations and complex business rules discourage poor folks from running their own small businesses, especially out of their homes, pushing them to instead become employees of rich folks. Rules against “excess” noise, and against “eyesore” lawns, cars, or clothes, also tend to impose high status aesthetic standards on everyone else.

Drugs like crack favored by poor folks get much higher penalties that drugs like cocaine consumed more by the rich. Much more concern is expressed about poor than rich alcoholics, and about cheaper mixes of alcohol and caffeine. There is also more concern about the teen pregnancies favored by the poor, relative to the over-35 pregnancies favored by the rich, even though the later have much higher medical risks.

So why does so much regulation seem designed to push low status folks into doing what high status folks do? One theory is that high status folks dominate the policy process, and by focusing on people they know, they forget that policies also apply to low status folks. But that is hard to square with policies targeted at the poor.

Another theory is that we want to push away low status folks, so that we will not be lowered in status by affiliating with them. This might make some sense of very local rules, but much less of national rules, as few movements will be influenced by such rules.

A third theory is that we think that a big reason why poor folk are poor is that they don’t act like the rich. So for their sake, we make the poor take on the styles of behavior – to help them escape poverty. This theory requires that we be pretty clueless about how behaviors should reasonably change with wealth. A closely related theory is that high status folks see their own behaviors as just more virtuous, worthy of encouragement regardless of their effect on anything else.

A fourth theory is that we are trying to make ourselves look good to foreigners. If the very visible low status actions of some could make all of us seem low status to outsiders, then we might want to limit such actions to raise our status. This theory requires that we care a lot more about foreigner opinions than we usually admit.

A fifth theory, and one I favor, is that politics isn’t about policy. We (unconsciously) don’t care much about the consequences of such policies – we instead support policies to make ourselves look good. If our support for regulations pushing high status actions is taken as a signal of our personal status, then we can want to support such regulation regardless of what results when such regulations are implemented.

In their private purchases, many people prefer brands that are widely perceived to be high quality. Many like such brands not only because their high wealth induces a higher private taste for quality, but also because such brands are visible to others, and so signal their wealth to others. Such people often prefer not only to consume such brands themselves, but also to recommend such brands to acquaintances, even poor acquaintances, for whom such quality is usually not worth the price.

For example, Apple computers are more expensive, but higher quality. As a rich professional who spends lots of time with his computer, this higher quality may well be worth the higher price to you. But you might then recommend Apple computers to everyone you know, even poor folks who spend much less time with computers.

In such cases, people aren’t recommending the high quality brands to help others, but to signal their own tastes and wealth. Similarly, such folks may well support political policies using the same priorities. More generally, most folks may support policies to make everyone act like high status folks act in order to affiliate themselves with high status acts, and thereby seem a bit higher status themselves.