I strolled up Mass Ave to Brookings this afternoon to hear Richard Layard speak on his new book Happiness. Layard, an unreconstructed Benthamite, is worried by the fact that, once a certain threshold in absolute wealth had been crossed, people's self-reported happiness is correlated with their perception of their place in the distribution of income, i.e., by their relative wealth. Layard's worry is that there is an arms race. Each of us tries to improve our relative position. But since everyone else is trying simultaneously to improve their relative position, very few end up succeeding in moving up relative to the others.
We've all perhaps moved up in absolute wealth, but that doesn't matter so much for our happiness once we've crossed the critical threshold. All we've done is made a futile rush for a higher relative position, and ended up no happier. But we could have been spending our time doing better things.
Layard suggested that higher taxes might be worth having because it would create a disincentive to work, and this might help create a truce in the relative position arms race, freeing everyone to pursue activities that would positively promote their happiness.
First of all, maybe the lesson we should take from this is that people just value status, period, independent of its hedonic effects. That is, perhaps the value of status cannot be reduced to the value of happiness. Casual empiricism would seem to confirm that people behave in predictably hedonically non-maximizing ways in order to maximize status. And it seem to me that many people find it very difficult to release a privileged relative position, even if they recognize that maintaining the position is making them unhappy. (Source: VH1: Behind the Music).
Some people — pehaps many people — would, other things equal, prefer an additional unit of status over several additional units of happiness. And in arms races over relative position, some people do move up. As long as the arms race does not make you significantly less happy, then it can be worth the gamble to jump in and try to be one of the few folks who succeeds in pulling ahead.
(Suppose that you're very likely to stay in the same spot if you get in the race. And that when people pull ahead, they pull way ahead, but when people fall behind, they fall only a little bit. So even if you're more likely to fall behind than jump ahead, the upside can still look big.)
Additionally, it can very well be the case that people are generally less happy when they have a lower relative position, more happy when they have a higher position, but don't value higher position because it will make them happier. They value higher position because it is higher position, and getting higher position tends to make us happy because we value it, and we are generally made happy by getting what we value.
OK, let's shift gears. Suppose I have written a transcendently great poem. Yet it very complex, and not very accessible. That said, a fair number people take great pleasure in it. However, this pleasure is swamped by the disutility caused to people who, before reading my poem, had thought that they were potentially great poets, but now are made to despair by the realization that they will never attain the heights of my poetic accomplishment.
Have I done a good or bad thing by writing my poem? Obviously: a good thing. The poem is transcendently great! It's aesthetic value has next to nothing to do with its effect on net utility. Why care if it makes some people feel bad in comparison? Well, there is no reason to care.
To change the example slightly, suppose my poem raises the bar on poem-quality, and all my competitors rush out to write poems that will be even better than transcendently great. However, the effect of this is sheer frustration. They can never do it; I'm just that good! And here they went and wasted all that time failing to write transcendently great poems when they could have been lying in the sunshine, getting massages, or freebasing Prozac. IS THIS A PROBLEM WE NEED TO BE WORRIED ABOUT?
If the greatness of my poem creates negative externalities, they need to be negative externalities we have reason to care about if we're going to take them into account in policy making. Parfit or Scanlon, in an argument against the pure preference satisfaction theory, give the example of a person who prefers that Uranus has six moons over any other number of moons (or something like that). If it turns out that Uranus does have six moons, is that guy any better off in any sense that we have a reason to care about? Well Parfit/Scanlon don't think so, and neither do I.
Similarly, if you are a small person, and my success makes you burn with pained resentment, do we have any reason to take your pained resentment into account when evaluating the value of my success. I think not. The problem here is your unreasonable reaction, not my success.
Back to the poetry arms race. Suppose all those lesser poets are made unhappy by their persistent failure to achieve at a trancendent level despite their years of mindbending labor. Should we conclude that the arms race was a bad thing? Obviously not if it led to the creation of a lot of poety which, if not transcendently great, is still great. Maybe the lesser poets can learn to take satisfaction in the value they've created, despite their subordinate position in the pantheon of poets. But if they can't that's their problem, not a social problem. Similarly, if folks fail to make any progress in the race for relative economic position, they will have still improved everyone's absolute economic position, which is just good. They will also have produced many wonderful conveniences, objects of beauty, wonder, delight, and technical merit. They will have increased the sum of human knowledge. They will have opened up new avenues of possibility for human life.
Gentlemen, on your marks!