The Political Economy of Virtue Signaling

The phrase “virtue signaling,” coined in 2010, caught on because it well describes a behaviors very common in social media. It describes the expression of disgust or favor in an attempt to display one’s moral loftiness and superiority of those holding a contrary view. It is accompanied with little to no impactful action. One only need to poke a “Like” button or tweet out one’s displeasure. No reasoned argument is necessary. It is simply a superficial effort to jockey for moral positioning even though the expression itself contributes little or no actual change in the big scheme of things.

Virtue signaling is widespread in politics. Politicians and activists marshal nice-sounding buzzwords and publicity campaigns to broadcast their overwhelming concern for the poorest and marginalized of society. While the accusation of virtue signaling tends to be hurled against progressives, it is not exclusive to the Left. Those on the Right are equally guilty of hollow appeals to patriotism like “Make America Great Again” or “Fair Trade” even when the results of the advocated policies are the opposite.

Yet why do we witness such behavior most commonly in politics? In democratic politics, we rarely have to bear the consequences of our view individually. Voters champion, condemn, and vote for political issues in “bundles” as offered by political parties. Resulting policy failures can hardly be said to be the fault of any one entity, the same way we can easily say that McDonald’s should bear the responsibility of a contaminated Big Mac. The institutional environment of democracies is such that the consequences to our actions are externalized to others. In other words, virtue signaling is rampant because it is cheap or even costless.

Since neither politician, activist, nor voter are held responsible for our actions when a policy goes wrong, blame (or praise for that matter) is also highly distributed. This distribution of blame then diminishes the responsibility of those who might plausibly be held most culpable for the bad consequences.

In contrast, virtue signaling is less common in market environments because blame for bad decisions can be easily be traced back to the decision-maker. Failure to put their money where their mouth is, and entrepreneurs bear the full consequences of their action or inaction. Empty claims of moral virtue have little value.

To be sure, businesses and corporations do make moralizing claims through marketing and advertising campaigns, as seen by displays of corporate social responsibility. The difference is that virtue signaling in markets is far more expensive (and therefore less pervasive) because it needs to be backed up with action for it to have impact.

Suppose Walmart supercenters were tomorrow draped with environmentally-conscious slogans of “Going Green” and “Saving The Planet”. They would not be able to reap the social benefits of appearing environmentally friendly for long if this new corporate branding were just empty talk. Its operations would actually have to reflect such a corporate message, by incentivizing consumers to bring their own plastic bags or replacing its delivery vehicles with fuel-efficient vehicles for instance.

The Italian economist Vilfredo Pareto made a crucial distinction between logical and non-logical action where the former is defined as when there is a direct connection between the action undertaken and the consequences that result from that action. Logical actions are undertaken predominantly in a market environment because market prices enable a comparative assessment of judgment through a process of time in decision-making. We observe the price of that plane ticket as it rises and falls. We make a cost-benefit analysis of other modes of transportation. We take some time, and eventually make up our mind on the purchase, using our own resources to express a judgment.

In contrast, non-logical action resides in the domain where there is no clear connection between action and outcome. This is ubiquitous in non-market environments such as politics where market mechanisms are lacking. Absent prices that allow comparative evaluations, the rationale behind our political decision-making is often subjected to ideological guides and justifications. This is not to say that the action was stupid or irrational. By non-logical, we simply mean that there are no coherent causal relationships between the actions we take in pursuit of our intended results. We look to thought leaders to tell us what the “correct” answers are to unfamiliar policy issues. We cast our votes and identify politically along the lines of political messaging that resonates with our ideological sentiments.

In the absence of such mechanisms to guide our action, it is hardly surprising that virtue signaling has surfaced as an alternative guide to action. Politicians perform ostentatious displays of publicity and political activists take to social media with grand condemnations of “social injustice” because there is social currency to be gained from doing so. In the realm of non-logical action, political figures compete to supply ideological images that best appeal to our sentiments because that is the currency of the game. The rules of the game call for it.

Market institutions like prices and a profit-loss calculus play a useful role in disciplining any flagrant kind of empty virtue signaling. So the next time you witness overt moral posturing, remember that these people are simply responding to the rules of politics. Without them, cheap talk becomes currency, and cheap talk will be in high supply.

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