Slack Has Positive Externalities For Groups

You ever have one of those group projects where you all need to find a time to meet, but some or all of the group members have packed schedules, so you pull out the whenisgood and it turns out the only times that work are 2-2:15 pm on Thursday or 6:30-7:30 am on Tuesday?

For this sort of scheduling problem, the best group members are those with lots of slack in their schedule—people who either have lots of time available, or have very flexible time commitments which can move around to accommodate a group meeting. But if my schedule is flexible, note that most of the benefits of that flexibility are captured by the group as a whole, not by me: my flexibility mostly allows the group to accommodate less-flexible members.

The slack in my schedule creates positive externalities for the group. I mostly control how much slack to create/​maintain in my schedule, but a large chunk of the benefit goes to other people. This means I’m incentivized to create/​maintain less-than-optimal slack in my schedule.

Once you look for it, this shows up in other guises too: many different flavors of slack create positive externalities for groups. In general, we should expect people to create/​maintain less slack than would be socially optimal, and this in turn will make groups less functional. What do other forms of this look like, and what can we do about it?

Many Flavors of Slack

A few common forms of slack:

  • Financial: money not budgeted for anything in particular, or which can easily be spent on something else instead, is financial slack.

  • Time: time not scheduled for anything in particular, or which can easily be rescheduled, is time slack.

  • Space: space not used for anything in particular, or which can easily be used for something else, is space slack.

  • Emotional: capacity for excess stress is emotional slack.

  • Social: multiple social groups which one can fall back on, or the ability to make new friends quickly, provide social slack.

We can also separate short-term vs long-term slack for each of these. For instance, a bank may have lots of capital to invest, but limited liquidity, so they can’t move their capital around quickly: high long-term financial slack but limited short-term financial slack. Conversely, someone who has some savings on hand but is spending as much as they earn has short-term financial slack, but not long-term financial slack. Exercise for the reader: what would short-term and long-term time and emotional slack look like?

How do each of these create externalities for groups?

Space is an easy one: groups often need space in which to meet (either short-term, when the usual space is unavailable, or long-term) or store things (again, either short-term or long-term). If someone has spare space to use, that slack provides benefits to the whole group. But unless the group is paying to use the space, the person providing the slack captures only a small share of the benefits. So, people are incentivized to maintain less space slack than optimal.

Financial is another easy one: if some group members can occasionally cover some group costs, and it’s not a big deal, that makes it a lot easier for a group to function smoothly. Again, this applies both short-term (e.g. paying the bill for a group dinner, with the expectation that everyone will eventually pay back) or long-term (covering some costs without reimbursement). Again, the person providing slack captures only a small share of the benefits.

The short-term/​long-term distinction matters mainly for a group’s agility/​responsiveness/​dynamicity. If there’s a crisis and the group needs to respond quickly, or the group needs to make and execute plans on-the-fly as new information comes in, that requires short-term slack on the part of the group members. For instance, last year many groups started to work on COVID tools, like microcovid, radvac, or the various forecasting projects. Many of these required full-time work—people needed the slack to pause or quit their day jobs on relatively-short notice. That takes short-term financial slack, obviously, but also short-term emotional slack (very stressful!) and social slack (hopefully my coworkers aren’t my only friends, or I can make new ones quickly!).

Another example: suppose a company or organization wants to move (*cough*) - not just across town, but to another state or country. That typically means employees will need to move with them. That requires emotional slack: moves are among the most stressful events most people go through. It requires social slack: people either need friends in the new location, remote friends, or the ability to quickly make new friends. And it requires financial slack, to pay for the move.

In both these examples, the group needs slack from its members in order to do things. (Or, to put it differently: group members’ slack facilitates solutions to coordination problems.) The ability to do things as a group mostly benefits the whole group, so the benefits of any particular person’s slack largely go to the rest of the group.

What To Do About It?

One standard econ-101 answer is “internalize the externalities”—i.e. reward people for their slack. People don’t usually do this with monetary payments, but we often do it with less legible rewards, like social status. For instance, if someone provides space for a group to meet, or occasionally covers some bills for the group, that’s usually rewarded with status within the group.

Another standard solution is to require group members to maintain slack. Again, this usually isn’t explicit, but we often do it in less-legible ways. For instance, if one or two people have very little slack in their schedules, maybe the rest of the group decides to meet without them. Or, if one or two people have very little emotional slack and sometimes break down if a competition gets too stressful, maybe they end up usually not participating in board game night or capture-the-flag. This is especially relevant to the last two examples from the previous section: the various COVID groups or the organization moving. If someone lacks the slack to participate, they would probably not end up in the group. Of course, there still need to be some people who do have enough slack in order for the group to include anyone at all.

But these are illegible and imperfect methods. One point of this post is that it may help to explicitly pay attention to slack and its externalities. At a personal level, if we wish to be altruistic, this might mean maintaining extra slack in all its various forms, in order to provide value to the groups in which we participate. It might also mean avoiding people who have very little slack along one or more dimensions, or trying to supplement others’ slack when possible (easy for finances, hard for time). For group organizers, it might mean explicitly requiring slack—e.g. the national guard requires that its members be able to drop everything and respond full-time to an emergency.

Important side point: slack has increasing marginal returns; the tenth unit of any particular flavor of slack is worth more than the first unit. The reason is that, if we flip coins and count up the number of heads, the noise in that count is only ~. And more generally, if we add up ~ independent noisy things, the noise will typically be of order ~. So, if we want to take advantage of noisy opportunities—like a project which might go over budget, or a group which might need to move its meeting to a different time/​space sometimes, or an event which might be fun or might be stressful—then we only need ~ units of slack to take advantage of ~ opportunities. Going from zero unit of slack to one lets us take advantage of ~one more opportunity, whereas going from nine units of slack to ten lets us take advantage of ~twenty more opportunities. The more slack we have, the more we can benefit from adding marginal slack.

That means we should expect people to specialize in either having lots of slack, or no slack at all. For instance, we should expect people to either have carefully-planned tightly-packed calendars, or mostly-open calendars with lots of flexibility. We should expect people to either budget every dollar carefully, or have a large surplus and mostly not worry about their budget. Etc. One type takes advantage of lots of “noisy” opportunities, while the other makes their schedule/​budget/​etc maximally predictable. For a low-slack person to take advantage of just one noisy opportunity would require them to free up a bunch of extra room in their schedule/​budget “just in case”. The high-slack person already has a bunch of “just in case” built in, and can “re-use” that elbow room for one more thing, since it’s highly unlikely that all the “risky” outcomes will happen all at once.

To the extent that this actually holds in the real world, we can think of slack (of a particular flavor) as binary: am I a high-time-slack person or a low-time-slack person? Am I a high-emotional-slack person or a low-emotional-slack person? That means the incentives don’t need to be perfect—as long as a group can roughly select for high-slack members, or roughly reward high slack, that should be enough to incentivize the high-slack equilibrium rather than the low-slack equilibrium, and create lots of positive externalities for the group.