Liars and Outliers

by Bruce Schneier

Cover image

Publisher: John Wiley
Copyright: 2012
ISBN: 1-118-14330-2
Format: Hardcover
Pages: 285

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One of the perils of buying a book written by a blogger one reads regularly is that the book may be little more than a rehashing of their blog, with insufficient original material to warrant the time investment. Sometimes it's still nice to support them financially, but it may not make sense to read the book. I've been following Schneier's blog for years (as should anyone with an interest in security), including through the entire process of writing Liars and Outliers, and was a bit worried that might be the case here. Thankfully, I can reassure any other worried potential readers that is not the case. This is substantial new material establishing a firm framework for thinking about incentives and controls in any society or organization.

Liars and Outliers talks about security mechanisms, but it's not, at its core, a book about security. Rather, it's a book about incentives, order, and how order is established. It's a comprehensive reductionist analysis of how societies create predictability and compliance to allow us to trust other people who we have never met before and will never meet again. It's a unique (at least in my experience) combination of anthropology, sociology, security analysis, and political science. Schneier cuts across fields in an idiosyncratic but illuminating way that reminded me of (on an entirely separate topic) Jane Jacobs.

This is not a prescriptive book, nor is a collection of answers, solutions, or even deep analysis of particular problems. Rather, it's an attempt to construct a general framework for analyzing societal dilemmas: conflicts between individual desires and social good, how those conflicts are resolved, and how societies can weigh the scales and influence the statistical outcomes. The closest Schneier comes to telling the reader how to solve problems is a checklist, at the end of the book, for designing effective societal pressures. Its primary contribution is vocabulary and structure. It also passes one of my litmus tests for any book about human behavior: Schneier complicates, broadens, deepens, and expands understanding, and points out complex interactions and complex feedback in effects we're inclined to consider simple, rather than simplifying or eliminating human complexity.

One point I found refreshing about this book is that Schneier is scrupulous in refusing to define either society or individuals as good or bad, to the point of carefully defining terminology used in all of the social dilemmas. Following societal rules is called compliance; not following those rules is called defection. In some cases, defection is morally correct (Schneier's most frequent example is in the civil rights struggles of the 1960s in the United States). In all cases, social pressures are tools, which can be used to encourage compliance with moral or immoral systems, and which are deployed by totalitarian dictatorships and utopian communes alike. Schneier explicitly puts out of scope for this book the questions of how societal goals should be determined, how they change, and whether any given societal rule or interest is moral or immoral. He focuses, rather, only on the mechanisms, with a primary goal of informing and deepening debates over how best to encourage behavior that societies want to encourage and discourage behavior societies want to discourage.

He also emphasizes discourage, as opposed to eliminate. Early on, Schneier shows some of the results of game theory, as well as basic common sense, that indicate that no healthy society can totally eliminate defection. Not only would that stifle valuable and important reform, such as changes in civil rights, but the degree of pressure required is immense. Defectors are natural and will always exist, and are sometimes valuable and necessary. Rather, the goal of a society is to reduce defectors to a level where most people can ignore their existence most of the time, a state that leads to the level of risk and trust required to have a functioning and healthy society.

The word society, similarly, is intentionally broad, and can refer to just about any collection of people, from a circle of friends to a corporation, institution, or country. However, as Schneier points out early in the book, small societies rarely need much in the way of formal pressure and appear almost magically self-governing. That's the first property that he disassembles, resulting in a general classification of societal pressures into four categories: moral, reputational, institutional, and security systems. The last is an odd category that's partly orthagonal to the other three.

Moral pressure is internalized conscience: the normal tendency of nearly everyone to follow their own moral code, a code that's at least partly constructed and certainly heavily influenced by the surrounding society. Reputational pressure is, in a sense, externalized morality: it's the informal reactions of others around one to one's past actions. Included in reputational pressure is shunning of every kind, from cutting off a friendship to boycotts against corporations, but it also includes confrontation from another member of one's society, the more subtle effects of our individual desires to be liked and respected, and all the various aspects of "face", honor, and respect within a community.

Small communities are frequently self-governing, in Schneier's model, because they're small enough that moral and reputational pressures are sufficient and no other pressures are required. We're so used to applying moral and reputational pressure to other humans almost unconsciously that we sometimes don't even notice its existence, leading to that "magical" self-governing property. But Schneier puts pressures in a sequence: pressures that work extremely well with small groups often don't scale. Moral pressure works best with small groups and reputational pressure with somewhat larger groups, but when societies scale beyond the limits of reputational pressure — when, for example, one frequently interacts with people whose reputations are unknown to you and whose subsequent opinion of you will not be relevant — institutional pressure is required to force compliance. Institutional pressure is the sort of pressure that we all tend to think of first when we look for ways to enforce rules: laws, policies, contracts, and other codes of behavior that carry with them formal punishments and some enforcement mechanism. But even in societies so large that institutional pressures are frequently required, such as whole countries, moral and reputational pressures still exist and are extremely important. One of Schneier's most interesting points is his analysis of how institutional pressures can paradoxically undermine reputational and moral pressures, resulting in more defection than if the institutional pressure hadn't existed.

This is just the basic framework of Schneier's analysis, hopefully giving you a feel for the structure of the book. He goes much deeper into the complicated interactions between the various levels of pressure, and then dives into an extensive look at competing societal dilemmas: cases where there is more than one society in play simultaneously, possibly demanding contradictory actions. Liars and Outliers also includes a wonderful analysis of organizational entities within the same framework, including their much-different reactions to moral, reputational, and institutional pressures. One of the most cogent analyses of the difficulties of regulating both corporations and governmental institutions falls out of that analysis, once one looks at them in light of Schneier's basic framework. Pressures quickly become complex and multi-layered, and human reactions to pressures are frequently counter-intuitive. Schneier draws extensively on game theory to show that some counter-intuitive responses are actually emergent properties of logical analysis of the situation, but that others are more uniquely human and have little or nothing to do with a mathematical cost-benefit analysis.

I haven't even mentioned his discussion of security systems, and how they can extend moral, reputational, and institutional pressures, as well as add a new type of pressure (making a defecting action impossible) that scales even better than institutional pressures.

Liars and Outliers has all of the supporting infrastructure you would expect in a scholarly book: notes, extensive references, and a good index. I suspect it will end up being used as at least additional reading in college classes. The notes are, unfortunately, end notes, making the full context of the book much harder to read than was necessary, but at least Schneier does separate the notes from the references so that one doesn't chase notes for further explanation and find a simple citation.

As with any book like this, one always wishes it could end in a simple prescription to fix everything, but of course it doesn't. But that's also a measure of a good scholarly work. Human and organizational motivations are complex and tricky, and any framework for analyzing them needs to be able to represent that complexity. Schneier here has constructed a very powerful one, one that I started using in discussions before I'd even finished the book. Perhaps the most valuable contribution of Liars and Outliers to public discussion is clear terminology and categories, which can be of great help in finding the core components of a problem.

Liars and Outliers can be slow going, particularly early on when Schneier is still defining terms and setting up the background of his analysis. One can get a bit tired of the analysis matrices of societal dilemmas. But stick with it through the groundwork, since the analyses of competing societal dilemmas and of the impact of societal pressures on organizations are exceptional.

Highly recommended, particularly for anyone who is designing or implementing societal pressures: managers, political activists, or anyone in a security-related field.

Rating: 8 out of 10

Reviewed: 2012-12-17

Last modified and spun 2014-12-21