Norms and Signals: Some Skeptical Observations

Abstract

This essay discusses Eric Posner's book Law and Social Norms, focusing on Posner's theory of norm adherence as a costly signal of an individual's discount rate. The attention to discount rates and a broad set of social dilemmas makes the book a welcome addition to the law and economics literature on social norms. The essay, however, questions whether costly signaling solves social dilemmas as frequently as Posner contends and identifies several empirical puzzles with which the theory must contend. One is that ethnic discrimination, adherence to traditional gender roles, and participation in demonstrations and other mass actions, each of which the theory suggests is used to signal a low discount rate, appear to be more prevalent among individuals with relatively high discount rates. Other puzzles are developed in a discussion of shaming punishments, one of the examples Posner uses to illustrate the signaling theory.