In economics we define signaling, in simple terms, as a message sent to a receiver containing information about the party sending it, which is assumed to be credible. A well-known example is sending signals with education. When you walk into a doctors office and see his framed diplomas from prestigious medical schools you trust him more. These diplomas are a signal from the doctor to the patient about their credibility and ability to perform. But this definition involves two parties, one sending and one receiving the information.
A concept that is largely overlooked in the field of economics is “self-signaling”. It was developed on the basis of the fact that people don’t know themselves the way they think they do. They are really only able to learn about themselves by evaluating their own actions, and drawing conclusions about what type of person they think they are. This idea is very closely related to the commonly used term of “self deception”.
Behavioral economist Dan Ariely conducted a fascinating experiment, which demonstrates how strong and influential these internally sent signals can be. His research was surprisingly inspired by Ancient Roman law, which included a section of rules called sumptuary laws. A sector of these laws dictated what each person could wear, depending on their station and class. People who decided to dress outside their dictated norm were doing something very similar that we are seeing today.
If you have ever walked the streets of New York City, you would know that obtaining counterfeit designer products is extremely easy and quite inexpensive. But what happens internally when we wear them, and show the world the label attached to them? Ariely set out to observe whether or not participants who wore fakes would act differently from those wearing the real item, specifically, would they continue down the road of dishonesty?
Female MBA students were assigned to either counterfeit, authentic, or no information conditions and sent to observe posters through the type sunglasses they were told they were wearing. They were then called in to perform a set of math puzzles to see how many they could complete in 5 minutes, receiving money for each one they got right. The participants were able to self report their score and “shred” their papers before leaving the room (they didn’t know the shredder was fake). He found that 30% of those in the authentic condition and 42% in the no information condition cheated; while 74% in the counterfeit condition reported more answers then they got correct. This is likely due to the fact that when someone wears a fake they are telling themselves that they are okay with a certain level of dishonesty, which can only lead to more mental acceptances to follow.
Economic theory tells us that people don’t think about society and are solely self-interested. This would argue that just by comparing costs and benefits people should buy more counterfeits. But clearly people are willing to pay more for either the knowledge or quality of having a designer product. The lesson learned here is to be observant and cautious of what we may subliminally convince ourselves of through our actions, because it may end up causing us to act in ways we normally wouldn’t have without us even being aware.