Minds and Morals

Chris of Mixing Memory has initiated a series of posts on cognitive science and moral psychology. The first post, which asks, “where is morality in the brain,” is good. I'm looking forward to the rest, which, Chris says, will address all this stuff:

Hopefully, by the time I'm done, you will have some idea of what the intuitionist view of moral judgment is, in what ways moral psychology and moral philosophy should interact, and who, if anyone, might be a moral expert. There are a bunch of other issues that I'll try to touch on as well. Is morality a natural kind in the brain, or to use a stranger label, a cognitive kind? How much influence does conscious reasoning have on our moral judgments and behavior? How does communication affect moral judgment?

Layard Bait and Switch

OK. I'm still tired. But thinking about things in a more contracualist mode made me realize that I was confused. But it's not my fault. It's Layard's. His “pollution” tax argument turns on a deceptive change of subject.


Every time [people] raise their relative income (which they like), they lower the relative income of other people (which those people dislike). This is an “external disbenefit” imposed on others, a form of physical pollution. [p. 152]

So Layard prescribes a tax on income to provide a disincentive to work:

Thus a tax on noxious emissions will reduce this emissions, and a tax on income from work will reduce work. [p. 153]

But, hey!, the analogy fails entirely. Work is not the “pollution.” Income is not the “pollution.” Moving up in relative income is the “pollution.” So, if the proposed Pigovian tax was going to be analogous to a tax on noxious emmissions, it would have to be a tax on upward income mobility, not on income from work, per se.

When Layard goes on to explain why these taxes are “corrective” rather than “distorting,” he claims that they are “performing a useful function that we were unaware of,” which is to “preserve our work-life balance.” [p. 153]

But hold on! Work-life balance is a totally different subject from the negative external effects of upward moves in relative income. This is easy to see. Imagine a world where everybody works 120 hours a week, never gaining ground in terms of relative income, but never losing it, either. This is a world with zero “pollution” from relative income gains, because there aren't any, but a terrible work-life balance.

The “arms race” argument, that everybody would be better off if we mulilaterally agreed to work less and read more Proust, is about work-life balance. To argue that a tax on labor income would increase utility for arms race reasons is fine. But it has nothing to do with relative income gain “pollution.” In order for the negative externalites argument to go through, Layard has to show that a tax on income increases utility by decreasing income mobility, not by creating a better work-life balance. These are separate issues, but be illegitimately conflates them. He pulls a conceptual bait and switch. So, besides failing for all the more technical reasons about the reciprocal nature of externalites, Layard's pollution argument fails at a more fundamental level, because he provides no evidence that his prescribed tax is even relevant to the “problem” it is supposed to solve.

And just consider that every time someone retires and begins to live primarily off savings, someone else's relative income goes up. Here we have relative income gain (and attendant “pollution”) brought about by a choice to work less. Because change in relative income is largely a life-cycle thing, most people move up and move down through the distribution in a similar pattern. If people move up, creating supposed negative externalities, then they later move down, creating offsetting positive externalities.

So, it looks like the “arms race” argument really is the only one worth taking seriously. And it, unlike the pollution argument, it isn't really an argument involving meddlesome preferences. It's a regular old collective action problem. So the post below is confused, starting with a discussion of meddlesome preferences, and ending with a discussion of coordinating on utility maximizing general rules. But this just reflects the fact that Lord Layard is confused, too. Or trying to pull a fast one. Anyway, the “pollution” argument in Happiness is, as stated, not just wrong, but nonsensical.

And it annoys me that it took so long to see this. And that Layard argues that it is an argument that demands a “revolution in what is called 'public economics',” and “provides an important new element in the case for progressive politics as such.”

Meddlesome Preferences

I think it has been clear at least since Sen's Paradox of Paretian Liberalism that there is at least some tension between Pareto criteria of efficiency, according to which preferences have unrestricted scope, and the idea that individuals should have a certain kind of sovereignty or decisiveness over their own actions. Sen's original paper dealt with “meddlesome preferences,” that is, preferences about other people's behavior, like the preference that other people sleep on their belly, or that other people not read Lady Chatterly's Lover. As Buchanan pointed out, Sen's paper seemed to equivocate between the idea of liberalism as having to do with deciseveness over entire states of the world, and elements of those states. But

. . .the rule of liberalism does not, and, indeed, cannot assign rights to choose among complete social states to anyone. Persons are assigned rights to control defined elements which, when combined with the exercise of mutually-compatible rights of others, will generate a social state as an outcome of an interaction process, not of a 'choice', as such, by either one or many persons.

Liberalism, as it is normally understood, has to do with protected spheres of personal authority in which one's own preferences are decisive. The question of how those spheres of authority, those rights, are initially assigned is not itself a matter of pareto-efficiency. But once those rights are assigned, meddlesome preferences do not throw us into a quandary. If you prefer that I am bearded, and I prefer that I am clean shaven, the question is already solved if, at the negotiation stage over the initial assignment of rights, it is agreed that we are each decisive over the state of our own face. You can't object to having been harmed because my shaving caused your preference to become unsatisfied, because you've already bought into a regime of rights according to which you waive any say about what I do with my face. If you still have a problem, it's because you never thought that how my face looks is properly up to me. Your problem is really with the assignment of rights, not the fact that my walking around unshaven (on the semantic interpretation) screws up the fit between your preference and the world, or (on the psychological interpretation) pains you.

Buchanan, again:

Once individual rights have been assigned or partitioned, the Pareto criterion does offer a means of evaluating potential transfers of rights among individuals. At this point, 'meddlesome preferences' may reenter. If a person is assigned the right to determine his own reading matter, he can guarantee the enforcement of this right as a part of the observed social outcome. If, however, someone else places a higher value on this person’s reading habits than he does himself, the Pareto norm would suggest the mutuality of gains from a transfer. In the end, the 'meddlesome preferences' may prevail, but only if those who hold them are willing to pay for their exercise.

How does this relate to the idea of economic success as pollution? Recall that Layard interprets upward moves in the income distribution as creating hedonic “pollution” for people below. Clearly, Buchanan's suggestion in the second quoted passage isn't going to apply. Obviously, if I tried to pay someone ahead of me to move down the distribtion, I would achieve the opposite effect, causing even more “pollution.”

I think the key point is in the first Buchanan quote above. The “income distribution” is the emergent outcome of the interactive exercise of rights, not anybody's decision. It's a pattern created by lots of individual decisions. Now, what should we say if people have preferences over the pattern, but that the pattern is created by interdependent rights-governed individual action? What should we say if most people are disappointed by the pattern?

I say: So what?! If the initial rights are just, that is. If every man prefers to be clean shaven, but prefers that everyone else by bearded, i.e., prefers a pattern of shaven-ness in which he is the only clean-shaven man, everyone is going to be disappointed with the pattern. But the pattern is the outcome of the exercise of rights we all endorse (every man agrees that he should have final say over his face). Similarly, if we agreed that we ought to be decisive over the alocation of our time to labor and its alternatives, then the pattern is the pattern, and there is no ground for complaint.

But you're a utilitarian and you see that people are wasting time maintaining position in the distribution for no average hedonic gain. If there was a multilateral decision to work less and vacation more (or whatever), the distribution would still be the distribution (some higher, some lower) but everybody would be hedon-happier because it would take less work just to maintain position.

What kind of argument is this? This is, I think, an argument appropriate to the rights negotiation phase. At the imaginary contractarian constitutional convention, you might submit this argument as a reason why everybody ought not to be decisive over their allocation of time and energy. Or at least, that everybody's decisions ought to biased toward leisure, or whatever, by putting the public thumb on the scale.

I have a number of things to say about this, few of them good. But I'm tired. So, what do you make of Layard's argument as a bit of contractualist reasoning? What would Buchananite rational choice conventioneers make of it? Veiled Rawlsians? Scanlon's reasonable rejecters? Would each person have to accept util maximization as her overriding personal goal?

Status Competition & the Political Class

In his 1999 review of Robert Frank's Luxury Fever, a book that worries itself to death about competitition for status and relative position, Jack Hirshleifer, quoting Adam Smith to good effect, aptly points out that taxes meant to supress competition over income level is probably just a case of pushing the lump around the rug.

Overall, however, the biggest status game in town is not big spending but acquiring power over other people. In short, politics. So a likely consequence of sumptuary legislation would be more and more intense contests over the perennial question, “Who shall be king?” As usual, Adam Smith said it best, in The Wealth of Nations: “It is of the highest impertinence and presumption…in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.”

Earlier on, Hirshleifer makes the excellent point that advocates of higher taxes and bigger government, who are appalled by economic inequality, are well-nigh blind to the rather more objectionable inqequalities in political power that are a necessary part of their schemes. If the objection is that consumers have irrational preferences, so that they are lead into self-defeating, utility minimizing status competitions, then the objection applies equally to the political class:

In fact, one could well argue–Adam Smith certainly did–that those charged with public spending are likely to be even more interested in conspicuous spending than private persons. Think of the tax-financed white-elephant ballparks, the ornate federal office buildings that have sprung up not only in Washington, D.C., but just about everywhere, the hypertrophied public transit systems lacking nothing but riders, the Agriculture Department's wildly wasteful irrigation schemes. Simple corruption is very likely the major explanation, true, but politicians' desires for “monuments” (Hoover Dam, J.F. Kennedy Airport, the Sam Rayburn Office Building) are a big part of the story behind such travesties.

Arguments for new or bigger government initiatives driven by a charge of irrational or self-defeating preferences almost always make an implicit, arbitrary, exception for the ruling class. There's no good justification for invidious comparisons between ideal coercion and non-ideal agency, and vice versa. If you think the pattern of voluntary interaction “fails” according to some standard due to some psychological foible, you've taken on a burden to demonstrate that the same foible does not imply that state action will lead to an even more serious failure. This is the burden the Frank/Layard-style statist rarely carries, explaining why their conclusion is so often a destination that can be reached only by a leap of faith.

Hey Rocky, Watch Me Pull Utilitarianism Out of This (and Every) Hat!

Brad DeLong writes, rather mysteriously, that Julian's parentalism piece “confirms his utilitarianism. convinces me that I would be insane were I to prioritize liberty over utility: that I am right to be a utilitarian.” He quotes Julian at length and then says:

My mind explodes when I read Julian's command to “take as least as much satisfaction in the feeling of responsibility for our choices, in knowing that we have shaped a life that is ours even when we have chosen badly.” It is the libertarian version of the old communist story:

Speaker: After the revolution we will all eat strawberries and cream.

Worker: But I don't like strawberries and cream!

Speaker: After the revolution you will eat strawberries and cream–and like it!

Is DeLong hearing Julian say something like “we should take satisfaction in our dissatisfaction”? Is that why his mind explodes? But that's not what Julian is saying.

What's going on!?

Maybe it would be helpful for DeLong if he were not to think like this:

(1) X is valuable iff X is a pleasurable mental state. (Axiom!)
(2) Someone just said A is valuable.
(3) But A isn't a pleasurable mental state!
Therefore, (4) Head explodes. Aghh!

Not thinking/exploding like this might be helpful because sometimes people are just trying to say, more or less directly, that (1) isn't true. And this is OK. This is allowed. For it is not the case that (1) is obviously true, self-evidently true, axiomatic, apodeictic, incontrovertble–cannot, like the law contradiction, be denied without affirming what is denied–, etc. It really might not be true. Really.

And so when somebody comes along and says something that implies that it isn't ture, it's not that they are therefore trying to say that it is true (because it just obviously, axiomatically is) and, on the other hand, it isn't. Because that really would be stupid. The principle of charity indicates that we should assume that they are not stupid, but are trying to offer some reason not to believe (1). After all, there are reasons not to believe (1). And so it may not be especially helpful to address an argument that implies the falsity of (1) by forcefully repeating (1), or having one's head explode (and then living to tell the tale).

Julian, I take it, thinks that something like autonomy or self-governance, or maybe existential self-creation, is valuable for its own sake. At least I think something like that.

Our lives are good lives just in case they are fully ours, constituted by our choices, even if they aren't fully happy lives. Other things equal, happy lives are better than unhappy ones. But some happy lives are bad ones. And some unhappy ones are good, because they realize other values, like autonomy.

Now, it is rational to take satisfaction in what is valuable, and so we ought to take satisfaction in our autonomy, because our autonomy is valuable. But autonomy is not valuable because we take satisfaction in it. Autonomy is not like strawberries and cream. It may be that you have a taste for it or that you don't. But if you don't, you should. Because autonomy is a necessary requirement of a fully good human life, and you ought to take satisfaction in what will make your life go best, even if you don't.

I trust no one will confuse this for an argument in favor of utilitarianism.

Objections to Hedonism

From Walter Sinnott-Armstrong's excellent Stanford Encyclopedia of Philosophy entry on “consequentialism“:

Some critics argue that not all pleasures are valuable, since, for example, there is no value in the pleasures of a sadist while whipping a victim. Other opponents object that not only pleasures are intrinsically valuable, because other things are valuable independently of whether they lead to pleasure or avoid pain. For example, my love for my wife does not seem to become less valuable when I get less pleasure from her because she gets some horrible disease. Similarly, freedom seems valuable even when it creates anxiety, and even when it is freedom to do something (such as leave one's country) that one does not want to do. Again, many people value knowledge of other galaxies regardless of whether this knowledge will create pleasure or avoid pain.

I find all of these objections totally persuasive. Is there any reason for resisting them other than a prior commitment to hedonism?

Success as Pollution: Layard Meets Coase

In his book and in this paper [pdf], Richard Layard points out that one's perceived position in the income distribution is a better predictor of self-reported well-being than one's absolute income level, given that a certain minimum income threshold has been reached. So, every time you move up in relative income, someone else moves down. This makes you happier, but makes everyone with a diminished relative position less happy, even though their absolute income has not changed, or may even have increased, but less than yours.

Layard interprets your gain in relative position as a straightforward negative externality — in the book he actually calls it “pollution” — and prescribes a straightforward Pigovian tax to minimize its harm. It is supposed that such a tax is not distorting, does not cause a loss of efficiency or create deadweight losses, because the externality was, in this case, caused by an oversupply of labor stimulated by the race for relative position. That is, the race for position causes an inefficiency, relative to the Benthamite standard, and the tax is merely corrective, bringing us to the amount of work that will create the greatest happiness. The loss of economic wealth is irrelevant, insofar as the excess wealth produced by the surplus in labor was not having a positive net hedonic effect.

Layard's argument entirely turns on whether it is correct to conceive of the your decline in reported subjective well-being as solely the result of my perceived “polluting” act of upward income mobility — whether your feeling bad when I do better is a true, normatively relevant negative externality. This is how he blithely dismisses an imagined libertarian challenge to his understanding of the issue:

Libertarians object to this whole line of argument on the grounds that it panders to envy. They do not apparently mind pandering to greed. We should of course try to educate people away from both envy and greed, since neither is conducive to happiness. But at the same time we should set our other policy instruments at whatever level is optimal for the state of mind which currently prevails.

Layard's argument here provides some evidence that Layard is not entirely ignorant of the revolution in thinking about externalities brought about by Ronald Coase's paradigm shattering “The Problem of Social Cost.” [pdf] Let's back into Coase by thinking about Layard's flip rebuttal to his imagined libertarian critic.

Layard recognizes the possibility of preference change — that people could become less envious or greedy — and this points to some kind of understanding of the essentially relational nature of an external effect. If you cared less about where you stood with respect to other people, then how much money I make would have less of an effect on how you feel about how much you make. This is Coase's central insight about externalities: it takes (at least) two to tango. My relative success has no “polluting” effect whatsoever if you don't care about it. (You're a good Buddhist, say.) The “pollution” is a joint product of my move up and your preference to not move down. The correct approach to the problem, if there is a problem at all, depends on what the lowest cost solution happens to be. If you changing your preference is cheaper than taxing me, then you ought to change your preference.

To which Layard replies, “. . .we should set our other policy instruments at whatever level is optimal for the state of mind which currently prevails.” This has to be incorrect, because the least cost solution to the putative externality problem may be a transition to a different prevailing state of mind. Furthermore, it seems clear that it may be morally obligatory to refuse to optimize relative the current state of mind, even if it expensive to move away from it.

Consider the Jim Crow American South, or apartheid South Africa. Suppose it was the case that any increase in income among blacks leads to a reduction in self-reported subjective well-being among whites, a reduction that totally swamps the utility gain to blacks. Suppose further that a reduction in income among blacks causes a increase in “happiness” among whites that totally swamps the utility loss to blacks. If “we should set our other policy instruments at whatever level is optimal for the state of mind which currently prevails,” then it is pretty obvious that an immiserating tax on blacks is optimal for the state of mind that prevails. Racist oppression is obligatory.

The Benthamite has two possible replies. (1) Yes, an immiserating racist tax is in fact optimal. This will produce the greatest amount of net happiness relative to the prevailing state of mind. (2) No, an immiserating racist tax is not optimal, because there is (a) an alternative (non-racist) set of preference profiles for members of the community which, if satisfied, would create a greater amount of net utility than the current set of (racist) profiles, (b) there is a feasible path from here to there, and (c) the utility gain of having arrived there will offset the utility loss of getting there.

If (1) is the reply, then we must reject Layard's Benthamism. Racist opression is wrong, i.e., morally impermissible. If a candidate normative standard implies that racist oppression is morally obligatory, is it clearly disqualified.

If (2) is the reply, then it is false that “we should set our other policy instruments at whatever level is optimal for the state of mind which currently prevails.”

Clearly (2) is the better answer for the Benthamite, because it at least preserves the possibility of remaining a Benthamite. But then Layard will be forced to take the Coasian least cost avoider principle seriously. As it happens, one of Layard's main points elsewhere is that preferences must not simply be treated as given, but must be understood as endogenously determined. Culture, media, the general structure of economic and social incentives, can shape our tastes or preferences, and these are subject to evaluation as well as our actions and policies. Layard argues that “good tastes are those which increase happiness, and vice versa,” and argues at length that many tastes, such as those that are induced by advertising, performance related pay, and general individualist cultural milieu, are not good tastes. So, clearly, Layard doesn't really think that we should optimize relative to prevailing preferences, because we may have bad ones. And this more or less guts the rejoinder to the libertarian. Why cater to relative preferences about income?

In the case of the immiserating racist tax, I would argue that the other-regarding preference that blacks be made worse off is morally impermissible simply as matter of justice and independent of hedonic consequences. Not only should it not be given weight when tallying up what is or is not an efficient policy, we morally must not give it weight. I would argue the same thing about the other-regarding preference about one's relative position in the income distribution. But, it turns out, it's unecessary to argue this, for the happiness data itself suggests that Layard's case for higher taxes might be pretty weak if he acknowledges Coase.

According to this fascinating paper by Alesina, Di Tella, and MacCulloch the negative effects of income inequality on happiness is far from written into the stars:

We find some intriguing results. First, Europeans and Americans report themselves less happy when inequality is high; however the effect of inequality on happiness is more precisely estimated for Europe. Second, aversion to inequality is concentrated amongst different ideological and income groups across the two regions. There is no clear ideological divide in the US concerning the effect of inequality on happiness. In contrast, those who define themselves leftist show a strong distaste for inequality in Europe, while those who define themselves rightists are unaffected by it. The breakdown of rich versus poor also shows some differences between Europe and the US. In Europe, the happiness of the poor is strongly negatively affected by inequality, while the effect on the rich is smaller in size and statistically insignificant. In the US one finds the opposite pattern, namely that the group whose happiness seems to be most adversely affected by inequality is the rich. A striking result is that the US poor seem totally unaffected by inequality. Any significance of the inequality coefficient in the US population is mainly driven by the rich.

Now, Alesina, et al. are measuring objective inequality (via state by state Gini coefficient) rather than perceived place in the distribution. But I think they at least establish that the relevant class of preference is highly contingent and likely quite malleable. For instance, they show that right-wingers care more about relative position than left-wingers. If more right-wingers became left-wingers, presumably the “pollution” of upward status moves would diminish. The authors conjecture that inequality has no significant negative effect on the American poor because they believe they can move up, while inequality has a significant negative effect on the rich because they believe they might move down. (So, when the NYT and WSJ and LAT are trying to convince us that there is less mobility than we think, they are contributing to the unhappiness of the poor, and the happiness of the rich.) Presumably, a change in belief about the importance of relative position would mitigate the effects of relative position (as well as mitigating the effects of inequality).

What the Benthamite need to know is whether on average one is more likely to be happier if one cares less about relative position. If so (and it seems plausible), then caring less about relative position may well be the least cost “solution” to the relative income externality “problem.” And that's even if we treat preferences about relative position as having normative weight, which we shouldn't. Also, insofar as the current rate and progressivity of taxation is politically driven by preferences about relative position, it may be that people who care too much about relative position are the ones imposing negative externalities — showering “pollution” — on people in the highest tax brackets. The rich therefore may be entitled to a preference shift that will result in tax cuts.

Richard Layard, meet Ronald Coase.