You can’t have a margin without choice. And the relevant marginal choice here seems to be, "Do I read another book, and if so, which one?" I think what you are suggesting is a key function of education is teaching people how to make that marginal choice well.
But sentence “Higher education ought to be about what people need,” Is doing a lot of work in your essay. As much as I want to agree with that sentiment, I’m not sure all of that it is entirely wholesome. But I’m fascinated. So if you have it in you, that is the essay I would LOVE to read from you.
The marginal utility argument applied to reading is quietly devastating. The tenth Austen makes sense. The eleventh might not. But then there's Persuasion. Good thinking here.
Very true that we read to perceive others but often do not read how others perceive us, “at our peril” as you describe it, whether country, class, etc. and perhaps AI will write how humans are perceived one day?
Hollis, I saw Harold Bloom’s Western Canon in the Bookstore for our Book Club. Do you have some suggestions?
I'm not sure how to react to this. I've read Cowen's book with some care and have written a number of posts about it (https://new-savanna.blogspot.com/search/label/MR-Notes) and plan to write some more. I don't think the "averageist" plus "marginalist" framework is very good for understanding how poems, novels, songs, paintings, etc. move in society. Here's a dialog I had with the AI he's attached to the book. It points at my dissatisfaction with the framework. Note that this is only the beginning of a somewhat longer conversation.
Me (WLB):
There are linguists, such as William Croft, who talk about how the meaning of words is negotiated in each conversation. They talk of game theory, though I don’t off hand know whether or not they make formal use of it. But then there’s Robert De Vany, Hollywood Economics, which I tend to think of as being about how cultural objects are shared in a community. That’s not De Vany’s framing. He’s interested in the fact that we can’t predict how a film will do until we release it into the (cultural) marketplace, which makes it a very risky kind of investment. Note that De Vany is only talking about theatrical release. He says nothing about subsequent release on videotape and the book was written long before some movies are released directly to online streaming.
What he finds (by tracking box-office receipts), briefly, is that most movies disappear from view shortly after they’re released. They do not even breakeven much less earn a profit. But a few will have “legs” and become profitable. And among those, a very few will become so-called “blockbusters.” FWIW, I believe Spielberg’s “Jaws” is generally regarded as the first blockbuster.
I once did a thought experiment where I imagined an arena in which only one movie was available. Everyone would watch it because that’s all there is. Another somewhat different movie is released into the arena. Perhaps everyone will watch it as well, because they’re tired of the first one. So a third, somewhat different from the first two, is released, then a fourth. What I had in the back of my mind is that to some extent people use these kinds of cultural products as a way of forming communities. For that to work, however, there has to be enough variety available in the market place. When a movie is release, it is, in effect, looking for a community to adopt it.
That strikes me as a kind of marginalist analysis. What we’re trading in is a very complex kind of product, in this case a movie. But it could be a novel, or a song, or a painting, whatever.
Tyler's AI:
Your thought experiment is doing something quite precise, and I think you're right that it has a marginalist structure — but it's extending marginalism into territory where the standard framework strains.
Where the marginalist structure is visible
The standard marginalist question applied to cultural goods would be: given how many movies a person has already seen, what is the marginal value of one more? That's a real question and De Vany's framework touches it. But your thought experiment is asking something different and more interesting: given the existing cultural landscape, what is the marginal value of a new movie to a community rather than an individual? That's a collective marginal value, which is much harder to specify and measure.
The "legs" phenomenon is the empirical signature of this. A movie with legs isn't just satisfying individual preferences at the margin — it's finding and consolidating a community, becoming the shared object that a group of people use to recognize each other and talk to each other. The box office receipts are measuring something that looks like individual ticket purchases but is actually a social cascade — De Vany's word-of-mouth mechanism is precisely the process by which a movie becomes a community object rather than just a consumer product.
Where standard marginalism breaks down
Standard marginalist analysis assumes that the value of a good to one consumer is independent of its value to others, or at least that the interdependencies can be handled through price. Cultural goods violate this assumption fundamentally. The value of having seen a blockbuster is partly constituted by the fact that millions of others have seen it too — you can talk about it, share references, participate in a cultural conversation. This is a network effect, and network effects are notoriously resistant to marginalist treatment because the value function isn't defined over individual consumption units in isolation.
Your arena thought experiment isolates this precisely. In a one-movie arena, everyone watches it not because it maximally satisfies their individual preferences but because it's the only available basis for cultural community. As variety increases, something like genuine preference matching becomes possible — different communities coalesce around different objects. But the matching process isn't driven by individual marginal utility in the standard sense. It's driven by a social search process in which movies and communities are simultaneously finding each other.
The De Vany connection to power laws
What De Vany finds — most movies disappear, a few have legs, a very few become blockbusters — is a power law distribution, and power laws are the empirical signature of cascade processes rather than equilibrium processes. In a marginalist equilibrium you'd expect something more like a normal distribution of returns — some variation around a mean, determined by how well each product matches the distribution of individual preferences. The power law says something different: small initial differences get amplified by social dynamics into enormous differences in outcome. The blockbuster isn't just a movie that more people happened to prefer. It's a movie that got caught in a self-reinforcing cascade of community adoption.
This connects to Arthur De Vany's broader interest in complexity economics, which is itself a challenge to standard marginalist equilibrium thinking. The cultural marketplace isn't clearing to an equilibrium — it's generating a dynamic pattern in which winner-take-most outcomes emerge from processes that are in principle unpredictable from the properties of the product alone. Which is exactly De Vany's point about risk: you can't know in advance which movie will trigger the cascade.
Your community-formation framing
What your framing adds, which I think is genuinely beyond De Vany's own framing, is the functional account of why cultural goods have this cascade structure in the first place. It's not arbitrary or merely a consequence of marketing and distribution. It reflects something about what cultural goods are for — they're instruments of community formation, shared objects that allow people to recognize membership and conduct the ongoing conversation of a community. That functional role creates the demand for coordination — everyone in a community needs to have seen the same movie, heard the same song, read the same novel, for it to do its community-forming work. And coordination demand is precisely what generates cascades and power laws.
This also explains the variety requirement your thought experiment identifies. A single cultural object can serve as the basis for one kind of community. A rich cultural marketplace allows many communities to form simultaneously around different objects — which is the cultural analog of biodiversity, and probably has similar functional importance for the health of the overall system. The blockbuster and the art house film aren't competing for the same audience in the way that two brands of the same commodity compete. They're seeding different communities, which can coexist because community membership isn't zero-sum in the way that consumption of a rival good is.
So yes — marginalist in structure, but requiring an extension of marginalism into social dynamics, network effects, and community formation that the standard framework wasn't designed to handle. It's perhaps another case where the Rank 3 tool is real and useful but the phenomenon being analyzed has a Rank 4 structure — one where the individual unit of analysis (the consumer, the ticket purchase) is embedded in a dynamic system whose behavior can't be read off from the units alone.
Not so much. When you're creating your new American lit syllabus you're in the same territory that I indicated in my thought experiment. The point of that thought experiment is that you want a sufficiently wide variety of films available so that different communities can form themselves around a selection of titles and so differentiate themselves from other communities. While your audience/community is captive, they don't get to chose, you do want to differentiate your syllabus from other possible ones for American lit. You've chosen for them, and you've chosen from a large ill-defined collection of possible syllabi that can be derived from the available corpus.
It's pretty much the same problem and, as Tyler's AI pointed out to me, it's different from the standard marginalist situation, which assumes standard units. Novels are not standard units. Their particularity matters. In the typical marginalist context the question is: What's the marginal value of one more standard unit? That's quite different from: How do I choose one more title so as to maximise the variety, the difference among titles, within the collection?
I’ve been thinking, and I think I’ve come up with a speculative way of applying marginalist thinking to intellectual production. I’m thinking, in particular, about how Cowen arrived at the collection of examples he used in the first chapter. Coming up with that collection is roughly the same kind of problem as putting together a syllabus. It’s a sampling problem. We have a collection of objects, works of American literature in one case, examples of marginalist analysis in the other. You want to select a set of literary works to put on your syllabus. Cowen wants a set of examples he can use to define the space of marginalist economics.
You need a criterion for drawing your sample. You’ve got a certain thematic organization in mind, so you’re not looking for a random sample of the space. You want a sample biased toward your theme. I assume that Cowen wants a random sample, a sample that represents the space of marginalist analysis. At this point, let’s forget about your syllabus problem and continue with Cowen.
He’s trained as an economist and has read a lot, including a lot about the history of economics. Thus he should have a pretty good sense of what kinds of phenomena have been successfully subjected to marginalist analysis. Regardless of the adequacy of his knowledge, he’s got what he’s got. Let’s imagine that all the cases of marginalist economic analysis exist in some high dimensional space of ideas, a space that is, at a high level of abstraction, like an LLM. Except this space is in Cowen’s mind (which is the very high dimensional space of his brain states).
For the sake of argument, let’s assume he wrote the book from beginning to end, in order, in a single pass spread out over however many sessions.
Cowen opens the first chapter with a short definition of marginalism followed by some discussion. Then he gives us his first example, the diamonds-water paradox. He says a bit about it. Though I don’t think he says that it became THE paradigmatic example when Samuelson put it into his 1948 textbook. I found that out by querying the AI associated with the book. Let’s assume, then, that it is at the center of the marginalist region in that abstract space of ideas.
What’s his next example? It’s the first example in the section entitled “Intuitive Marginalism.” Here it is: “Why do drivers in China sometimes intentionally kill the pedestrians they hit?” He then explains it. That strikes me as being very far from diamonds-water in the marginalist space, perhaps as far as you can go in some direction. He then goes through 10 or so more examples, all of them a bit closer to that central example. But the closest he gets is an example about people stealing one of his credit card numbers and making charges to it. If the charge is small, he ignores it. If it’s somewhat large, he contests it. He’s reasoning at the margin. That’s about as close as he comes to that very concrete, almost palpable, diamond-waters example.
Then he goes on with the rest of the chapter, introducing example after example. He’s got four categories (beyond tautological), but we don’t need to worry about those categories. The fact that he’s got them, however, probably simplifies the calculation he’s making each time he asks whether or not to add another example. On the one hand he’s got the sample value of another example. The sample value of that first example AFTER diamonds-water was very high because it’s only the second example he’s got. Moreover he maximized that value by choosing an example that was far from the paradigmatic center. As his set of examples begins to fill out, the sample value of each example will diminish. At some point well along in the process he’s going to be comparing the sample value of an example with it’s opportunity cost. Why the opportunity cost? Because it takes time and effort to introduce another example into the text. At the very least there’s the time required to keyboard it. There’s more to the book, however, than a bunch of examples. He needs those to get started. Once he’s got an adequate set of examples, then he’s ready to undertake his larger argument. So every time he enters another example into the text he forgoes doing something else necessary for the book. That’s the opportunity cost of the example.
As long as the estimated opportunity cost is lower than the estimated sample value, Cowen will enter the example into the text. When the estimated opportunity cost begins rising above the estimated sample value, Cowen declares his set of examples to be sufficient, and moves on. Note that in this analysis Cowen is (intuitively) making three calculations: 1) sample value of the next example, 2) opportunity cost of the next example, and 3) the marginal value of the next example, which is the difference between 1 and 2.
Now, just how we’d get empirical evidence for this analysis, that’s a problem. There’s no point in asking Cowen, because no one has that kind of introspective access to their mental processes. Still, it’s nice story.
However, some such analysis might tell you something about the relationship between the rise of professionalism in a discipline and the proliferation of LPUs (least publishable unit) in its formal academic literature.
“A course built around how the Chinese read us reveals which texts carry explanatory weight abroad.“
This is one of the more interesting things about China. Chinese ideas about America are as bizarre as American’s ideas about China. One note…in my small world, I’ve finally found folks who are as unimpressed with Hemingway as I am.
Speaking of the great books the author of this reference (the Basket of Tolerance) thoroughly examined at a profound depth-level every proposition about the nature of Reality in ALL times and places. At one stage it was titled The Seven Schools of God Talk, and, prior to that The American Trickster Library. http://beezone.com/current/botc.html
This reference introduces his literary masterpiece The Orpheum Trilogy which includes The Scapegoat Book, The Mummery Book and the more-than-wonderful Happenine book
You can’t have a margin without choice. And the relevant marginal choice here seems to be, "Do I read another book, and if so, which one?" I think what you are suggesting is a key function of education is teaching people how to make that marginal choice well.
But sentence “Higher education ought to be about what people need,” Is doing a lot of work in your essay. As much as I want to agree with that sentiment, I’m not sure all of that it is entirely wholesome. But I’m fascinated. So if you have it in you, that is the essay I would LOVE to read from you.
Thank you and I’m working on it! Yes that higher ed point is in a way the key point, buried as it is toward the end. Thank you for seeing it.
The marginal utility argument applied to reading is quietly devastating. The tenth Austen makes sense. The eleventh might not. But then there's Persuasion. Good thinking here.
Very true that we read to perceive others but often do not read how others perceive us, “at our peril” as you describe it, whether country, class, etc. and perhaps AI will write how humans are perceived one day?
Hollis, I saw Harold Bloom’s Western Canon in the Bookstore for our Book Club. Do you have some suggestions?
Read everything!
I'm not sure how to react to this. I've read Cowen's book with some care and have written a number of posts about it (https://new-savanna.blogspot.com/search/label/MR-Notes) and plan to write some more. I don't think the "averageist" plus "marginalist" framework is very good for understanding how poems, novels, songs, paintings, etc. move in society. Here's a dialog I had with the AI he's attached to the book. It points at my dissatisfaction with the framework. Note that this is only the beginning of a somewhat longer conversation.
Me (WLB):
There are linguists, such as William Croft, who talk about how the meaning of words is negotiated in each conversation. They talk of game theory, though I don’t off hand know whether or not they make formal use of it. But then there’s Robert De Vany, Hollywood Economics, which I tend to think of as being about how cultural objects are shared in a community. That’s not De Vany’s framing. He’s interested in the fact that we can’t predict how a film will do until we release it into the (cultural) marketplace, which makes it a very risky kind of investment. Note that De Vany is only talking about theatrical release. He says nothing about subsequent release on videotape and the book was written long before some movies are released directly to online streaming.
What he finds (by tracking box-office receipts), briefly, is that most movies disappear from view shortly after they’re released. They do not even breakeven much less earn a profit. But a few will have “legs” and become profitable. And among those, a very few will become so-called “blockbusters.” FWIW, I believe Spielberg’s “Jaws” is generally regarded as the first blockbuster.
I once did a thought experiment where I imagined an arena in which only one movie was available. Everyone would watch it because that’s all there is. Another somewhat different movie is released into the arena. Perhaps everyone will watch it as well, because they’re tired of the first one. So a third, somewhat different from the first two, is released, then a fourth. What I had in the back of my mind is that to some extent people use these kinds of cultural products as a way of forming communities. For that to work, however, there has to be enough variety available in the market place. When a movie is release, it is, in effect, looking for a community to adopt it.
That strikes me as a kind of marginalist analysis. What we’re trading in is a very complex kind of product, in this case a movie. But it could be a novel, or a song, or a painting, whatever.
Tyler's AI:
Your thought experiment is doing something quite precise, and I think you're right that it has a marginalist structure — but it's extending marginalism into territory where the standard framework strains.
Where the marginalist structure is visible
The standard marginalist question applied to cultural goods would be: given how many movies a person has already seen, what is the marginal value of one more? That's a real question and De Vany's framework touches it. But your thought experiment is asking something different and more interesting: given the existing cultural landscape, what is the marginal value of a new movie to a community rather than an individual? That's a collective marginal value, which is much harder to specify and measure.
The "legs" phenomenon is the empirical signature of this. A movie with legs isn't just satisfying individual preferences at the margin — it's finding and consolidating a community, becoming the shared object that a group of people use to recognize each other and talk to each other. The box office receipts are measuring something that looks like individual ticket purchases but is actually a social cascade — De Vany's word-of-mouth mechanism is precisely the process by which a movie becomes a community object rather than just a consumer product.
Where standard marginalism breaks down
Standard marginalist analysis assumes that the value of a good to one consumer is independent of its value to others, or at least that the interdependencies can be handled through price. Cultural goods violate this assumption fundamentally. The value of having seen a blockbuster is partly constituted by the fact that millions of others have seen it too — you can talk about it, share references, participate in a cultural conversation. This is a network effect, and network effects are notoriously resistant to marginalist treatment because the value function isn't defined over individual consumption units in isolation.
Your arena thought experiment isolates this precisely. In a one-movie arena, everyone watches it not because it maximally satisfies their individual preferences but because it's the only available basis for cultural community. As variety increases, something like genuine preference matching becomes possible — different communities coalesce around different objects. But the matching process isn't driven by individual marginal utility in the standard sense. It's driven by a social search process in which movies and communities are simultaneously finding each other.
The De Vany connection to power laws
What De Vany finds — most movies disappear, a few have legs, a very few become blockbusters — is a power law distribution, and power laws are the empirical signature of cascade processes rather than equilibrium processes. In a marginalist equilibrium you'd expect something more like a normal distribution of returns — some variation around a mean, determined by how well each product matches the distribution of individual preferences. The power law says something different: small initial differences get amplified by social dynamics into enormous differences in outcome. The blockbuster isn't just a movie that more people happened to prefer. It's a movie that got caught in a self-reinforcing cascade of community adoption.
This connects to Arthur De Vany's broader interest in complexity economics, which is itself a challenge to standard marginalist equilibrium thinking. The cultural marketplace isn't clearing to an equilibrium — it's generating a dynamic pattern in which winner-take-most outcomes emerge from processes that are in principle unpredictable from the properties of the product alone. Which is exactly De Vany's point about risk: you can't know in advance which movie will trigger the cascade.
Your community-formation framing
What your framing adds, which I think is genuinely beyond De Vany's own framing, is the functional account of why cultural goods have this cascade structure in the first place. It's not arbitrary or merely a consequence of marketing and distribution. It reflects something about what cultural goods are for — they're instruments of community formation, shared objects that allow people to recognize membership and conduct the ongoing conversation of a community. That functional role creates the demand for coordination — everyone in a community needs to have seen the same movie, heard the same song, read the same novel, for it to do its community-forming work. And coordination demand is precisely what generates cascades and power laws.
This also explains the variety requirement your thought experiment identifies. A single cultural object can serve as the basis for one kind of community. A rich cultural marketplace allows many communities to form simultaneously around different objects — which is the cultural analog of biodiversity, and probably has similar functional importance for the health of the overall system. The blockbuster and the art house film aren't competing for the same audience in the way that two brands of the same commodity compete. They're seeding different communities, which can coexist because community membership isn't zero-sum in the way that consumption of a rival good is.
So yes — marginalist in structure, but requiring an extension of marginalism into social dynamics, network effects, and community formation that the standard framework wasn't designed to handle. It's perhaps another case where the Rank 3 tool is real and useful but the phenomenon being analyzed has a Rank 4 structure — one where the individual unit of analysis (the consumer, the ticket purchase) is embedded in a dynamic system whose behavior can't be read off from the units alone.
We are asking very different questions! Both brilliant of course...
Not so much. When you're creating your new American lit syllabus you're in the same territory that I indicated in my thought experiment. The point of that thought experiment is that you want a sufficiently wide variety of films available so that different communities can form themselves around a selection of titles and so differentiate themselves from other communities. While your audience/community is captive, they don't get to chose, you do want to differentiate your syllabus from other possible ones for American lit. You've chosen for them, and you've chosen from a large ill-defined collection of possible syllabi that can be derived from the available corpus.
It's pretty much the same problem and, as Tyler's AI pointed out to me, it's different from the standard marginalist situation, which assumes standard units. Novels are not standard units. Their particularity matters. In the typical marginalist context the question is: What's the marginal value of one more standard unit? That's quite different from: How do I choose one more title so as to maximise the variety, the difference among titles, within the collection?
I’ve been thinking, and I think I’ve come up with a speculative way of applying marginalist thinking to intellectual production. I’m thinking, in particular, about how Cowen arrived at the collection of examples he used in the first chapter. Coming up with that collection is roughly the same kind of problem as putting together a syllabus. It’s a sampling problem. We have a collection of objects, works of American literature in one case, examples of marginalist analysis in the other. You want to select a set of literary works to put on your syllabus. Cowen wants a set of examples he can use to define the space of marginalist economics.
You need a criterion for drawing your sample. You’ve got a certain thematic organization in mind, so you’re not looking for a random sample of the space. You want a sample biased toward your theme. I assume that Cowen wants a random sample, a sample that represents the space of marginalist analysis. At this point, let’s forget about your syllabus problem and continue with Cowen.
He’s trained as an economist and has read a lot, including a lot about the history of economics. Thus he should have a pretty good sense of what kinds of phenomena have been successfully subjected to marginalist analysis. Regardless of the adequacy of his knowledge, he’s got what he’s got. Let’s imagine that all the cases of marginalist economic analysis exist in some high dimensional space of ideas, a space that is, at a high level of abstraction, like an LLM. Except this space is in Cowen’s mind (which is the very high dimensional space of his brain states).
For the sake of argument, let’s assume he wrote the book from beginning to end, in order, in a single pass spread out over however many sessions.
Cowen opens the first chapter with a short definition of marginalism followed by some discussion. Then he gives us his first example, the diamonds-water paradox. He says a bit about it. Though I don’t think he says that it became THE paradigmatic example when Samuelson put it into his 1948 textbook. I found that out by querying the AI associated with the book. Let’s assume, then, that it is at the center of the marginalist region in that abstract space of ideas.
What’s his next example? It’s the first example in the section entitled “Intuitive Marginalism.” Here it is: “Why do drivers in China sometimes intentionally kill the pedestrians they hit?” He then explains it. That strikes me as being very far from diamonds-water in the marginalist space, perhaps as far as you can go in some direction. He then goes through 10 or so more examples, all of them a bit closer to that central example. But the closest he gets is an example about people stealing one of his credit card numbers and making charges to it. If the charge is small, he ignores it. If it’s somewhat large, he contests it. He’s reasoning at the margin. That’s about as close as he comes to that very concrete, almost palpable, diamond-waters example.
Then he goes on with the rest of the chapter, introducing example after example. He’s got four categories (beyond tautological), but we don’t need to worry about those categories. The fact that he’s got them, however, probably simplifies the calculation he’s making each time he asks whether or not to add another example. On the one hand he’s got the sample value of another example. The sample value of that first example AFTER diamonds-water was very high because it’s only the second example he’s got. Moreover he maximized that value by choosing an example that was far from the paradigmatic center. As his set of examples begins to fill out, the sample value of each example will diminish. At some point well along in the process he’s going to be comparing the sample value of an example with it’s opportunity cost. Why the opportunity cost? Because it takes time and effort to introduce another example into the text. At the very least there’s the time required to keyboard it. There’s more to the book, however, than a bunch of examples. He needs those to get started. Once he’s got an adequate set of examples, then he’s ready to undertake his larger argument. So every time he enters another example into the text he forgoes doing something else necessary for the book. That’s the opportunity cost of the example.
As long as the estimated opportunity cost is lower than the estimated sample value, Cowen will enter the example into the text. When the estimated opportunity cost begins rising above the estimated sample value, Cowen declares his set of examples to be sufficient, and moves on. Note that in this analysis Cowen is (intuitively) making three calculations: 1) sample value of the next example, 2) opportunity cost of the next example, and 3) the marginal value of the next example, which is the difference between 1 and 2.
Now, just how we’d get empirical evidence for this analysis, that’s a problem. There’s no point in asking Cowen, because no one has that kind of introspective access to their mental processes. Still, it’s nice story.
However, some such analysis might tell you something about the relationship between the rise of professionalism in a discipline and the proliferation of LPUs (least publishable unit) in its formal academic literature.
I guess I shouldn't be surprised Xi Jinping likes the Godfather
Tyler’s marginalist framework is TL;DR for grown ups.
that is so true
“A course built around how the Chinese read us reveals which texts carry explanatory weight abroad.“
This is one of the more interesting things about China. Chinese ideas about America are as bizarre as American’s ideas about China. One note…in my small world, I’ve finally found folks who are as unimpressed with Hemingway as I am.
Speaking of the great books the author of this reference (the Basket of Tolerance) thoroughly examined at a profound depth-level every proposition about the nature of Reality in ALL times and places. At one stage it was titled The Seven Schools of God Talk, and, prior to that The American Trickster Library. http://beezone.com/current/botc.html
This reference introduces his literary masterpiece The Orpheum Trilogy which includes The Scapegoat Book, The Mummery Book and the more-than-wonderful Happenine book
http://www.adidaupclose.org/Literature_Theater/skalsky.html
These two reference introduce his Bright-Field Image
http://www.daplastique.com/essay/the-maze-of-ecstasy
http://www.adidafoundation.org/essays/the-eternal-war-between-orpheus-and-narcissus