The Trickle-Down Effect of Good Communities

There are several problems with your suggestion:

1. As XiXiDu's comment implies, if the system were taken seriously, it would likely be swamped by people's most strongly held opinions - politics, religion, etc. Karma granted due to political affiliation (and status) would have strongly motivated and well organized people behind it.
2. LW has central themes to its posts, and widely accepted standards of commenting (e.g. no ad hominem). If a wider community that doesn't adhere to any such rules, and whose discourse is at the typical Facebook level, tried to use a karma system, then karma votes due to "I hate this person" would dominate votes due to "I hate what this person just did today".
3. Voting only on people (or their profiles) would be much less useful than voting on individual comments (or on actions that people do in their daily lives), due to the above two reasons. Also, even a large fluctuation (say, +-50 karma) due to one day's actions would not be easily visible if it was small compared to a person's total karma (say, 5000).
4. There would also be the usual problems with spamming, sock puppets, etc.

One way to expore the possibilities of a real life karma system would be to limit it to a select community, like we have on LessWrong, but not limited to activity on a single web site. Members would be able to give each other positive or negative karma for any activities they thought worth it. Technically, the whole thing would be managed by a server accessible over the web, by a smartphone app, and in any other way that would reduce trivial inconveniences in using the system.

Membership would be by acclamation: anyone asking to join would first have a karma account opened for them by their sponsor, and existing members invited to add or remove karma. On reaching some threshold within some period of time, the applicant would be admitted.

Members could covertly indicate their membership by displaying some secret symbol on Facebook pages, clothing, tattoos, and the like.

Which got me thinking... it might be helpful to have a karma system in "real life," beyond the pages of Less Wrong (or reddit).

Isn't this... you know... the very foundation of civilisation itself? This is how "real life" already works. Karma is merely taking a simplified version of it and adapting it to an online environment.

http://en.wikipedia.org/wiki/Reputation_system

See also, my "Universal Karma" video.

You gain karma points if you write something that people value, and you lose karma points if you write something that people think is inappropriate.

Except people sometimes use karma in ways that do not conform to this story. For example I had a case of a single person downvoting an entire page (from the user view) worth of comments of mine in the space of about 1 minute. These comments were quite different topically from each other. What are the chances that this user read all these comments, found each of them objectionable, and then voted accordingly? Near zero. What more than likely happened is either:

(a) an emotional reaction

(b) some sort of game theoretic defection or response to a perceived defection (?)

(c) Someone really didn't like something I said, and so decided a "greater punishment" was in order.

Karma is at best a noisy measure. But it's worse than that because there are no enforced standards for how karma should be used. If I look at a post and see that some users voted it down, that gives me no information about what went wrong with the post. Not only do people have different interpretations/thresholds for when something should be downvoted, but also people downvote "globally," regardless of merits of individual posts, based solely on user name.

The best interpretation for karma I can find is "a number that roughly correlates with how you [note: not your specific post!] are keeping all the coalitions on lesswrong happy." Is this a useful number? Not really. I generally ignore karma ratings on my posts, and generally (not always) don't vote myself.

My suggestion is to have clearly articulated community norms about when something ought to be upvoted or downvoted. Luke's quote above is not clear enough, and as a result, the karma measure is far too noisy/meaningless, especially considering that you build other things on top of it, like the controversial -5 point rule for threads. The other suggestion is that the mods should make a distinction between what the karma system ideally should be, and what it is.

When I draft a comment or a post for Less Wrong, I'm more likely to...(2) go out of my way to provide useful links and context than I when I draft a comment for my own site!

Do you really believe this statement? Of any blog I follow, I can't think of a better linked/referenced one than yours. I ask as I see your propensity to link, provide references, etc. as pretty much equivalent in both places. A prime example is simply to look at any of your Conversations from the Pale Blue Dot. How many other bloggers comb through their audio and provide links to just about every topic even mentioned?

I suppose this post is about how you perceive your writing/attitude on each respective site... but as a third party I wanted to challenge how much there is with respect to that 2nd perceived difference you see.

Free Market, a transhumanist RPG, has an economy pretty much exactly along those lines.

Possibly thought-provoking: Raph Koster: The world, virtual

(but also an overdose of conjunction-fallacy futurism)

Which got me thinking... it might be helpful to have a karma system in "real life,"...

There are a lot of people who do not look upon rationalists favorably.

I don't really trust the majority of people to rate me based on whether I provide good content. In fact, I think the LW users with the highest karma would be downvoted on facebook for having uncommon beliefs.

When I draft a comment or a post for Less Wrong, I'm more likely to (1) talk to others charitably and with respect and (2) go out of my way to provide useful links and context than I when I draft a comment for my own site!

Why do you believe Karma in particular is responsible for this difference? It looks like at best a hypothesis to keep in mind, not a foregone conclusion.

Not general karma, in the true meaning of the word. But reputation on particular subjects, such as "has good taste in fantasy movies". And not summed; each measurement is of a vote given by one person for another person/thing/opinion. Because to use these numbers, you may want to weigh each vote by a person by your historic agreement with that person on that topic (or your estimated agreement with that person, computed from their scores and your scores, or recommendations of them by people whom you have opinions of).

I just got reminded of the reputation market idea from Accelerando.