Tuesday, July 26, 2011

The Economics of Unhappiness: A Syllabus

I want to thank, first, John Quiggin, whose original post at Crooked Timber (April 12, 2011): “Towards an economics of unhappiness,” provide the inspiration for the following compilation. Second, thanks to Chris Bertram (another CT blogger) for suggesting some titles. As to the reason for assembling a list of readings on the “economics of unhappiness” instead of its converse, see Quiggin’s article below, although I’ve included works on the “economics of happiness” as well, the former necessarily implying some sense or understanding of the meaning of the latter (or, at minimum, a sense of what happiness simpliciter is or might be).

The selections from Amartya Sen, Robert E. Lane, and Daniel M. Haybron below this introduction are by a way of a “groundwork” to the readings, perhaps exposing several presuppositions in the course of outlining fundamental (arguable if not controversial) economic, moral, and psychological (prima facie, not perfectly consistent) assumptions central to the motivation for composing this list. “Social democratic” and neo-Keynesian approach to our current economic woes strikes me as clearly preferable to both elitist economic proposals of neo-liberal pedigree and wildly implausible—because naïve and fantastic—yet vaguely populist libertarian yearnings. And yet I take to heart the following remarks from Ian Shapiro:

“The ambiguous moral status of Keynesianism and welfare economics has always inhered in the fact that they appeal to the short-term interests of the disadvantaged (such as unemployed workers and firms on the verge of bankruptcy during recessions) by ensuring subsistence, creating employment, and expanding credit, yet these policies are geared in the medium term to sustaining the system which generates those very disadvantages—hence the ironic force of Joan Robinson’s quip that the one thing worse than being exploited is not being exploited at all.” (Ian Shapiro, The Evolution of Rights in Liberal Theory, 1986: 152-153)

In other words, we need to ask if Keynesian and welfare economics is capable of accomplishing what the New Deal and World War II did in the last century, namely, saving capitalism from itself. The manias, crashes, and panics endemic to capitalist cycles (Meghnad Desai) have heretofore been subject to (i.e., tempered or tamed by) Keynesian and conventional or neo-classical economic discipline, but one wonders if the combined effects of global economic consolidation and environmental degradation are creating conditions that render obsolete calcified models of neo-classical economic growth and capital accumulation. To be sure, in several important yet under-appreciated ways, the World Trade Organization (WTO), as an institution of global economic governance, represents economic and political progress (as Desai points out, its ‘structure is the most egalitarian of any of the international institutions—one country one vote’). Are the IMF and the World Bank amenable to truly social democratic-like economic reform? Can existing global institutions become susceptible to democratic transformation while a significant number of member states in the world system remain internally authoritarian? In short, is it possible to achieve a globally egalitarian (neo-) Keynesian Golden Age? Poverty remains recalcitrant in several regions of the world while regional and global inequality is increasing, economic facts we might grant without in any way diminishing the historic significance of capitalism for wealth creation (and thus betterment of standards of living if not quality of life indices). Are we, at last, reaching the structural limits of capitalist economic logic? Have we exhausted the economic—and, yes, moral—virtues of the neo-classical economic worldview? Or, are we merely at the lowest ebb of an economic cycle that will be cured by some fortuitous combination of conventional and creative politico-economic policies crafted by prudent democratic leaders of countries North and South? Is this a propitious time for seriously contemplating the imminent dissolution of the “aristocracy of capital” and the “economization of social relations?” Is the time ripe for (re)articulation of the authority of the Good by way of abandoning the capitalist criteria for market success? Are we prepared to break, once and for all, the structural socio-economic and political constraints of “capitalist democracy?” Must the welfare of the many and their generalizable interests remain subordinate to the welfare of capitalists and their particular or special interests? Are the interests of working people fated to be canalized into the exclusive pursuit of economic advantage? Must labor markets remain plagued by the material uncertainties and insecurities intrinsic to the private control of investment within the terms of finance capitalism?

The distorted and artificial needs and the individually and socially harmful desires generated by hyper-industrialized casino capitalism finds the masses in a state in which they feel an overwhelming need to be psychologically indemnified by the possession and consumption of as many goods and services as possible, in a socio-economic world in which conspicuous consumption exists side-by-side with absolute and relative poverty. In such a system capitalists are thus, at least psychologically speaking, every much victims as are the workers and the unemployed. Capitalist democracy remains committed to the aristocracy of Capital, meaning that, in the end, the special interests of capitalists trump generalizable interests tied to the common good, while economic insecurity compels workers to canalize their interests in the struggle for higher wages or short-term material gain. The aristocracy of Capital finds workers dehumanized insofar as they’re indemnified by the false promises of conspicuous consumption and irresponsible affluence, utterly distorting the pursuit of happiness and the potential of individuals for uniquely realizing values and manifesting virtues.

Can we, instead, accord socio-economic primacy to creating the necessary (and thus not necessarily sufficient) conditions for generalizing psychological and moral individuation or self-realization? Assuming the capacity to meet basic material human needs, can we resort to criteria associated with the recognition and fulfillment of our moral and spiritual needs by way of the regulation of economic life and therefore the subordination of economic life to the goals of establishing the conditions necessary for generalizing the pursuit of self-actualization or self-realization in a psychological, moral and spiritual sense, for generalizing the innate incentive toward worthy living, for generalizing, within the constraints of dignity and self-respect (as Dworkin says), the capacity for realization of what it means to live worthy lives? As John Dewey said, “Democracy has many meanings, but if it has a moral meaning, it is found in resolving that the supreme test of all political institutions and industrial arrangements shall be the contribution they make to the all-around growth of every member of society.”

Economic, Moral, and Psychological Groundwork
“It is useful to distinguish between two different criticisms that can be made of welfarism, and in particular of taking utility to be the only source of value. First, it can be argued that utility is, at best, a reflection of a person’s well-being, but the person’s success cannot be judged exclusively in terms of his or her well-being (even if social success is judged entirely by the constituent individual successes). A person may value the promotion of certain causes and the occurrence of certain things, even thought the importance that is attached to these developments are not reflected by the advancement of his or her well-being, if any, that they respectively cause. Second, it can be disputed that personal well-being is best seen as utility rather than in some other terms.

We can see the person, in terms of agency, recognizing and respecting his or her ability to form goals, commitments, values, etc., and we can also see the person in terms of well-being, which too calls for attention. This dichotomy is lost in a model of exclusively self-interested motivation, in which a person’s agency must be entirely geared to his own well-being. [….]

Respecting the agency aspect points to the appropriateness of going beyond a person’s well-being into his or her valuations, commitments, etc., but the necessity of assessing these valuations, commitments, etc. is not eliminated by the mere acceptance of that appropriateness. [….] [E]ven though ‘the use of ones agency is, in an important sense,’ a matter for oneself to judge,’ ‘the need for careful assessment of aims, objectives, allegiances, etc., and of the conception of the good, may be important and exacting’ [Sen here quotes from his previous works]. [….]

To judge the well-being of a person exclusively in the metric of happiness or desire-fulfilment has some obvious limitations. These limitations are particularly damaging in the context of interpersonal comparisons of well-being, since the extent of happiness reflects what one can expect and how the social ‘deal’ seems in comparison with that. A person who has had a life of misfortune, with very little opportunities, and rather little hope, may be more easily reconciled to deprivations than others reared in more fortunate and affluent circumstances. The metric of happiness may, therefore, distort the extent of deprivation, in a specific and biased way. The hopeless beggar, the precarious landless labourer, the dominated housewife, the hardened unemployed or the over-exhausted coolie may all take pleasures in small mercies, and manage to suppress intense suffering for the necessity of continuing survival, but it would be ethically deeply mistaken to attach a correspondingly small value to the loss of their well-being because of this survival strategy. The same problem arises with the other interpretation of utility, namely, desire-fulfilment, since the hopelessly deprived lack the courage to desire much, and their deprivations are muted and deadened in the scale of desire-fulfilment. [….]

Well-being is ultimately a matter of valuation, and while happiness and the fulfillment of desire may well be valuable for the person’s well-being, they cannot—on their own or even together—adequately reflect the value of well-being. [….] It is, therefore, arguable that since the claim of utility to be the only source of value rests allegedly on identifying utility with well-being, it can be criticized both:
1. on the ground that well-being is not only the only thing that is valuable;
2. on the ground that utility does not adequately represent well-being.
In so far as we are concerned with people’s achievements, in making ethical judgment, utility achievement may well be partial, inadequate and misleading.”—Amartya Sen
* * *
“…[L]et me state at the outset that I do not think that hedonic criteria are enough for evaluating the good society. For one thing, pursuit of happiness without pursuit of another goal is impossible or at least self-defeating. The very logic of happiness, then, implies that there is something else worth pursuing whose pursuit or attainment is itself a source of happiness. [….] Others may have different candidates, but I find it convenient and fruitful to think of the following coordinate, ultimate goods as a trinity: subjective well-being, human development (including virtue), and justice, no one of which may be resolved into or subordinated under another. [….]

Amidst the satisfaction people feel with their material progress, there is a spirit of unhappiness and depression haunting advanced market democracies throughout the world, a spirit that mocks the idea that markets maximize well-being and the eighteenth-century promise of a right to the pursuit of happiness under benign government’s of people’s own choosing. The haunting spirit is manifold: a postwar decline in the United States in people who report themselves as happy, a rising tide in all advanced societies of clinical depression and dysphoria (especially among the young), increasing distrust of each other and of political and other institutions, declining belief that the lot of the average man is getting better, a tragic erosion of family solidarity and community integration together with an apparent decline in warm, intimate relations among friends.”

“How account for this combination of growing unhappiness and depression, interpersonal and institutional distrust, and weakened companionship in advanced market democracies, in which people are, with important exceptions, reasonably well-off? The populations of these countries do not press against their resources; they can expect to live longer than their parents, and their old age is reasonably protected; there is (still) a safety net to catch them if they lose their jobs or become ill; their children are not likely to die in childhood, and these children have available to them more educational facilities than were available to their parents; they do not live in police states but rather have some assurance of due process of law; and they are offered reasonably adequate opportunities to participate in political decisions affecting their own fates.”

“…[P]eople are not very good judges of how, even within the private sphere of their own lives, to increase, let alone maximize, their happiness. It is not just that they are embedded in an economistic culture that misleads them, or even that they are governed by misleading ideologies; rather, the problem is that people often choose of their own accord paths that do not lead to their well-being: they escalate their standards in proportion to their improved circumstances, choose short-run benefits that incur greater long-term costs, fear and avoid the means to their preferred ends, infer from early failures an unwarranted and disabling incompetence.”—Robert E. Lane
* * *
“The United States is by a wide margin, among the most affluent nations in human history, and many Americans enjoy unprecedented freedom to shape their lives—for those individuals, a great success in moral and economic terms. Yet no one ever accused us of ‘knowing how to live.’ This is perhaps because, arguably, we don’t. Surveys find an overwhelming majority of Americans reporting that Americans have badly placed priorities. And there is no evidence that Americans grew any happier over the recent decades that witnessed astonishing growth in material standards of living. Self-reported happiness has remained essentially flat, while rates of suicide, depression, and other pathologies have soared.

Concurrently with these developments, and not coincidentally, we have entered what biologist E.O. Wilson calls, for obvious reasons, the Century of the Environment. In coming to grips with that problem, we may have to make significant adjustments in how we live. Surely one part of the equation is coming to a better understanding of human well-being and what we need to flourish. For we need to figure out how to get the most benefit from the least amount of resources, and knowing only the economic side of the equation is not likely to cut it. The daily energy requirements for has historically—well, for ninety-plus percent of human history—been under 5,000 calories. Today’s American lifestyle requires the resources of a large community at around 260,000 calories, leaving an ecological footprint nearly twice that of our European counterparts, and several times the global average. Our consumption habits resemble those of a French monarch more than anything our relations a couple of generations back would have recognized. Some two billion people in China and India are striving mightily to achieve the same. Technological innovation can do a lot to reduce the number and impact of those calories, but we are not likely to get very far if we persist in the notion that our goal is to liberate ourselves from constraint as much as our morality allows, commanding as many resources as possible. If the massively resourced life is not quite as beneficial as we thought, or even proves sometimes to be counterproductive, that would be useful to know. Maybe we could adjust our goals to yield a good quality of life without leaving our descendants a thermally reconstituted planet of weeds and dust.”

“For we cannot assume that people’s choices, even when self-interested, will track their interests. It is perfectly possible that people seeking fulfilling lives will freely choose, en masse, to live in distinctly unfulfilling ways. And even if they do end up better off on the whole than they were before, the price of those gains may be far higher than they realize. Second, and most importantly: a people armed with nothing better than a smiley-face psychology doesn’t stand a chance of answering these sorts of questions.”

“The modern era’s overriding preoccupation, arguably, has been the betterment of the human condition, inarguably, a noble aim. Yet the real focus has been on our material conditions, with far less attention paid to the question of how we are living and what our way of life does for us, or to us. Once it has well enough satisfied the basic constraints of morality, the chief question facing any civilization is: do its members enjoy a reasonable level of well-being? We probably won’t get much of an answer to this question if we simply ask what they have got. For human well-being mostly depends not on what people have but, among other things, on what they do with what they’ve got. A better question, arguably, is this: do they live in a sensible manner? A decent response to this question will require us to understand whether their way of life suits their natures. And central to that project, surely, will be seeing whether their way of life conduces to their flourishing psychologically. If a civilization cannot muster a reasonably affirmative answer to this question, then we might reconsider whether it is properly called ‘civilized.’ For if people do not flourish psychologically, they do not flourish. Period. It is with the psychology, I would suggest, that the really interesting story about the flourishing of these creatures lies.”

“…[I]ndividuals’ evaluations of their own lives, at least insofar as they take the form of life satisfaction attitudes, do not carry the kind of authority they are widely believed to have. On the one hand, it is doubtful how well grounded the typical person’s assessments of her life will normally be. Even given a few minutes’ reflection, most of us are unlikely to bring all our important priorities to mind, as well as all the important facts about our lives. We forget things or, being caught up in our current pursuits, lose perspective. At such times—which is to say, most of the time—our assessments of our lives will not have the kind of authority we imagine they possess in those rare moments of clarity, where we can review our lives in broad perspective and with full awareness of what we really care about, such as on the deathbed. Well-being, even for the subjectivist, is hardly transparent to the individual whose welfare is in question. On the other hand, even the best-grounded evaluations of our lives will offer problematic information about how well our lives are going for us, since they are not simply announcements about well-being. Since the act of evaluating one’s life itself has ethical dimensions, and since we enjoy wide latitude to assess our lives in various ways relative to what we care about, our attitudes toward our lives will not straightforwardly express how well our lives in fact are going for us.

We ignore these points at our peril. It is commonly thought that someone’s being satisfied with her life creates a presumption that her life is, in fact, going well for her. But most people, in most places, are satisfied with their lives. In some places satisfaction may be near universal. This may lead most people to conclude that they are in fact doing pretty well, yielding perhaps a remarkably contented race. Maybe the conclusion is true; but what if it is not? As Wittgenstein shows us, life has to be pretty grim for a person not to have good reasons for being satisfied with it. (It sure beats the alternative.) Many people may reasonably be satisfied with lives that are not, by anyone’s standards, going well at all. If so, it would be a grave mistake to take their assessments—or our own—as final in matters of personal welfare.”

“The pursuit of happiness is not easy. Given that the basic conditions of our lives, and the way we live, are so heavily dependent on our social environment, we may want to look more closely at the societal dimensions of the question. [….] Even if we are suspicious of using policy instruments to promote happiness, we might at least consider the limits of individual effort, and the importance of context, in shaping how happy we are. Take, for example, recent initiatives to develop and teach methods by which people can make themselves happier. Such efforts can produce very real benefits, and in fact many of the ancients were in a version of same business. While there are legitimate worries about such techniques sometimes reducing to cheap spiritual analgesics, I see no reason why this cannot be avoided. A more interesting question, it seems to me, is how far individual efforts like this are likely to improve human well-being on a broad scale. If the problem lies chiefly in the way you live, and this in turn depends heavily on the kind of society you inhabit, then positive thinking techniques and the like are only going to get you so far.”

“…[H]uman flourishing depends substantially on the verdicts of our emotional natures, to a significant extent independently of what we think about our lives. There is a large part of well-being, in short, that hinges on matters of sentiment, needing no stamp of approval from reason. Of course I have not denied an important role for reason in a fuller account of well-being, so that a complete view would likely have both sentimentalist and rationalist elements (in contrast, say, to hedonism, which in its canonical forms is a wholly sentimentalist approach). Nor have I suggested that reason and sentiment can be wholly separated; perhaps sentiment always has some rational element and vice versa. But it does appear that our reflective judgments do not bear the sort of authority regarding our welfare that many of us take them to. [….]

While moderns have been right to place psychological states like happiness at the center of well-being, the character and value of these states is surprisingly elusive. We should not assume that matters of personal welfare are at all transparent to the individual. The potential for error is great. Indeed, it should by now be easy at least to imagine people settling, en masse, for unfulfilling lives. The question now is whether, given the facts of human nature, such a result is anything more than a bare possibility.”

“…[The spirit of the modern age appear to be] a spirit of optimism about the individual pursuit of well-being, founded in Enlightenment trust of the individual and her powers of reason. Since ‘Enlightenment optimism’ is vague, additionally encompassing epistemological and historical views, and since the optimism in question concerns the effects of certain freedoms associated with liberalism on well-being, I [earlier] called it liberal optimism. Liberals need not be optimists in the present sense; besides weakened forms of liberal optimism there is room for liberal pessimism as well as, in between, what we might call liberal sobriety. Yet one does not often hear it suggested that the ideal of empowered and unfettered living is, from a prudential standpoint, a bad thing, or merely the least bad option of a sorry lot. You certainly won’t hear it from many economists.

Liberal optimism is clearly appealing, but it rests on some non-trivial assumptions. Here I want to consider the plausibility of liberal optimism’s chief psychological doctrine, which I will the Aptitude assumption. Roughly, Aptitude maintains that human psychology is well-adapted to environments offering individuals a high degree of freedom to shape their lives as they wish. We have the psychological endowments needed to do well, indeed best, in such environments by choosing lives for ourselves that meet our needs.

[….] [R]ecent work in empirical psychology…raises significant doubts about Aptitude. This research challenges Aptitude via a Systematic Imprudence thesis:
Human beings are systematically prone to make a wide range of serious errors in matters of personal welfare. These errors are weighty enough to substantially compromise the expected lifetime well-being for individuals possessing a high degree of freedom to shape their lives as they wish, even under reasonably favorable conditions (education, etc.). [….]

…[T]he individualized pursuit of well-being is probably substantially undercut by systematic tendencies toward imprudence: the Systematic Imprudence thesis is very likely true. This in turns suggests that a key assumption of liberal optimism, Aptitude, may well prove to be false. I will not be claiming that the Aptitude assumption is in fact false or unwarranted. The point is rather that we should take this possibility seriously. The truth of Aptitude should be considered an open question. A secondary aim is to sharpen our grasp of the remarkably bold psychological assumptions underlying much modern thought about human nature, the good life, and the good society. [….]

Perhaps liberal optimism’s psychological assumptions will turn out not only to be wrong, but really wrong. We may, in the fullness of time, conclude that our civilization is founded on a fundamentally mistaken view of human nature and what we need to flourish. As if a misguided zoo established a habitat for tigers with the idea that they were dealing with dingoes. The correct response to such a discovery would not, in the first instance, be to pore over our tax and regulatory schemes in the hopes of correcting for this or that cognitive bias. We should want, rather, to rethink how it makes sense for creatures like us to live.”

“Perhaps it would help to clarify the state’s moral purposes were we to emphasize, among our basic entitlements, our right to the pursuit of unhappiness.”—Daniel M. Haybron

The Syllabus:
· Bartolini, Stefano. “Beyond Accumulation and Technical Progress: Negative Externalities as an Engine of Economic Growth.” Available: http://www.econpol.unisi.it/bartolini/papers/pub2/WP%20SIENA.pdf
· Bartolini, Stefano. Manifesto for Happiness: Shifting Society from Money to Well-Being. This is the partial English translation of an Italian book: Manifesto per la Felicità: Come Passare dalla Società del Ben-Avere a quella del Ben-Essere. Donzelli: Roma, 2010.
· Bruni, Luigino and Pier Luigi Porta, eds. Economics of Happiness. Northampton, MA: Edward Elgar, 2007.
· Cohen, G.A. “Use-value, Exchange-value, and Contemporary Capitalism,” in his Karl Marx’s Theory of History: A Defence. Princeton, NJ: Princeton University Press, 2000 ed.: 297-325.
· Dasgupta, Partha. An Inquiry into Well-Being and Destitution. New York: Oxford University Press, 1993.
· Elster, Jon. “Self-realisation in work and politics: the Marxist conception of the good life,” in Jon Elster and Moene, eds., Alternatives to Capitalism. Cambridge, UK: Cambridge University Press, 1989.
· Frey. Bruno S. Happiness: A Revolution in Economics. Cambridge, MA: MIT Press, 2008.
· Frey, Bruno S. and Alois Stutzer. Happiness and Economics: How the Economy and Institutions Affect Human Well-Being. Princeton, NJ: Princeton University Press, 2002.
· Gorz, André (Gillian Handyside and Chris Turner, tr.). Critique of Economic Reason. London: Verso, 1989.
· Haybron, Daniel M. The Pursuit of Unhappiness: The Elusive Psychology of Well-Being. New York: Oxford University Press, 2008.
· Hirsch, Fred. Social Limits to Growth. London: Routledge & Kegan Paul, 1977.
· Kahneman, Daniel, Ed Diener, and Norbert Schwarz, eds. Well-Being: The Foundations of Hedonic Psychology. New York: Russell Sage Foundation, 2003.
· Lane, Robert E. The Loss of Happiness in Market Democracies. New Haven, CT: Yale University Press, 2000.
· Mishan, E.J. The Costs of Economic Growth. Westport, CT: Praeger, 1993.
· Parijs, Philippe van. “In defence of abundance,” in Marxism Recycled. Cambridge, UK: Cambridge University Press, 1993: 211-232.
· Parijs, Philippe van. Real Freedom for All: What (if anything) Can Justify Capitalism. New York: Oxford University Press, 1995.
· Polanyi, Karl. The Great Transformation: The Political and Economic Origins of Our Time. Boston, MA: Beacon Press, 2nd ed., 2001.
· Quiggin, John. “The Economics of Unhappiness,” The Chronicle Review, May 22, 2011. Available: http://chronicle.com/article/article-content/127580/
· Satz, Debra. Why Some Things Should Not Be For Sale: The Moral Limits of Markets. New York: Oxford University Press, 2010.
· Schor, Juliet B. The Overworked American: The Unexpected Decline of Leisure. New York: Basic Books, 1992.
· Schor, Juliet B. The Overspent American: Why We Want What We Don’t Need. New York: Basic Books, 1998.
· Schor, Juliet B. Plenitude: The New Economics of True Wealth. New York: The Penguin Press, 2010.
· Scitovsky, Tibor. The Joyless Economy: The Psychology of Human Satisfaction. New York: Oxford University Press, 1992 ed. (1976).
· Sedlacek, Tomas. Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street. New York: Oxford University Press, 2011.
· Sen, Amartya. Ethics and Economics. Cambridge, MA: Blackwell, 1987.
· Sen, Amartya. “Conceptualizing and Measuring Poverty,” in David B. Grusky and Ravi Kanbur, eds. Poverty and Inequality. Stanford, CA: Stanford University Press, 2006: 30-46.
· Sombart, Werner. “The Sociology of Capitalism,” in Hendrik M. Ruitenbeck, ed., Varieties of Classic Social Theory. New York: E.P. Dutton, 1963.
· Xenos, Nicholas. Scarcity and Modernity. London: Routledge, 1989.

I welcome suggestions for additional titles.


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