Counter-signalling

Yesterday’s post on dress codes and signalling drew a comment pointing to Tyler Cowen’s reference to ‘counter-signalling’. TC refers to Steve Jobs dressing down as a counter-signal because he doesn’t need to dress up to show his seniority and importance. It’s a bit of a misleading term because a counter-signal isn’t really a signal at all: it doesn’t convey any information since it is not costly to fake. Anybody can dress down but for many people it’s not conducive to good career prospects. Essentially, Steve Jobs doesn’t need to signal his enthusiasm to his superiors because he has none, so he doesn’t signal at all. The fact that he doesn’t need to signal isn’t itself a signal because anybody can do nothing.

The original paper that this is drawn from goes a little further than pointing out that signalling is unnecessary for some people. It says that when a signal is easy to make – such as wearing a suit – then it is detrimental to high quality people to make the signal. The information conveyed by a signal that’s easy to make is that one is, at worst, mediocre. When you are, in fact, a high quality candidate then it can be damaging to you to be seen as feeling the need to prove yourself to be mediocre. Your optimal strategy is to avoid making the signal at all and look for a better signal of high quality. Thus, the people who end up making a signal are the worst of the people who are able to make that signal.

I guess the implication of this for dress-codes is that the people in nice suits are the lowest level employees who can afford to buy that quality of suit. Once you’re at a level where you can afford better suits you should cease wearing the lower quality suit at all. When you’re at the top and your subordinates wear top-drawer kit then you’re best off avoiding suits altogether and making no signal via your clothing.