Wanting vs. Liking in Welfare Economics

Tyler's quick & dirty summary of the problems with orthodox welfare economics put me in mind of some further problems of economist folk morality.

So, in the formal theory, the highest ranked preference has the highest utility. And the highest ranked preference is revealed by the agent's actual choice. (If something else had been more preferred, it would have been chosen instead.) Now, the folk theory adds a substantive hypothesis that is no part of the formal theory: preference satisfaction is involves a kind of psychological satisfaction as well as abstract semantic satisfaction (i.e., a fit between the semantic content of the preference and the state of the world.) That is to say, preference satisfaction is satisfying. And the satisfaction of the most preferred option is most satisfying. Economist folk theory envisions a kind of pre-established harmony between formal utility and hedonic utility, and that's how it is supposed to work. (I blame Bentham.)

Pre-established harmony is a key component of the folk-normative appeal of orthodox welfare theory. Nobody but a bullheaded nettle-grasper will claim that semantic satisfaction by itself has anything to do with well-being. (If I prefer that Saturn have a number of moons greater than five, and it does, I am not therefore better off. Etc.) But the idea that well-being has something to do with the quality of experience is immensely appealing. If preference satisfaction is satisfying, then preference satisfaction might have a lot to be said for it.

The problem is that pre-established harmony is false. The neuroscience shows that satisfaction of the highest ranked preference does not imply the greatest hedonic satisfaction. It does not imply any hedonic satisfaction. Take a look at this paper, “Parsing Reward,” [pdf] by Kent Berridge and Terry Robinson. They report that “wanting” and “liking” have “are in fact dissociable and have different neural substrates.” Roughly, the dopamine system is more about wanting–“incentive salience”–and liking or hedonic satisfaction has more to do with opioids.

Experiments show that morphine addicts will repeatedly push a button to deliver a dose of the drug that is too small to have any experiential effect whatsoever. But they'll keep pushing it, because the drug is doing something, just nothing you can notice subjectively, and the wanting system keeps you wanting it, even though you get nothing at all experientially out of getting what you want. Berridge argues that a lot of addiction is like that. People who are addicted to cigarettes, for example, may not much like smoking, but they want to smoke anyway. (There is a nice breezy overview of the wanting/liking distinction in Daniel Nettle's, Happiness: The Science Behind Your Smile.)

And that pretty much demolishes pre-established harmony. What choice reveals is what we most want. But what we most want need not correspond to any kind of representation of what we expected would produces the best hedonic outcome, and doing what you want need not produce any hedonic payoff at all.

This will trouble a lot of people, mostly economists, who buy into economist folk morality. Without pre-established harmony, some libertarian economist folk wisdom falls apart. It will be possible in many circumstance to make people better off hedonically by decreasing their budget–by taking alternatives away. The hedonically ideal choice set will be the one in which the most preferred option corresponds with the biggest hedonic payoff. But that will be a choice set in which all the options that you want more, but which satisfy less, have been removed.

That, in a nutshell, is the basis for a powerful post-harmony, neo-Benthamite, crypto-Marxist, argument for the restriction of advertising and marketing. All Madison Ave. does is create wants that do not satisfy us. Good policy will restrict our choice sets to only truly satisfying options, like watching public television, paying higher taxes, and attending deliberative democracy summits in the local junior high gymnasium, instead of allowing the market to, in effect, addict us to junk. A system that allows us to self-defeatingly generate and satisfy “false” desires hardly constitutes a realm of true freedom, now does it?

Any economists out there wedded to the folk morality that want to tell me how to avoid this conclusion once pre-established harmony falls?

Cosmopolitan Universalism vs. the Left

An important observation from Chris Bertram:

The fact is, of course, that far from being advocates of the kind of cosmopolitan universalism championed by Kant, most of the “decent” left are actually advocates of or apologists for some form of 19th-century ethnic nationalism. Of course, the case for and against such nationalism has to be argued on its merits, but there is something radically inconsistent in simultaneously banging on about the Enlightement and endorsing nationalisms antithetical to the ideals of thinkers like Kant and Voltaire.

Long live Kant and Voltaire!

Go Mason!

Peter Boettke and Alex Tabarrok have a cute piece in Slate on the connection between underdog Mason economics and underdog Mason basketball. I'm glad they took the chance to grab some attention while the world is paying attention to good ol' GMU.

I still have a Mason email account from my days at IHS and Mercatus, and in many ways I consider myself something of a Mason product, even if I never once took a class there. The number of seminars I attended there, however, is . . . large. And it's hard to hang around Tyler, Pete, Don, Tullock (well, get mocked by Tullock), and Vernon Smith (and many more) without it permanently altering the neural network. That's my team! And that's a first-class informal education.

Go Patriots!

Money for Blogging and Kicks for Fee

For an ideological capitalist, I'm not extremely enterprising. But that's about to change, my friends! A little. I'm going to try to hawk a few more books directly in blog posts. I may put in Google ads or Blogads somewhere in the sidebar. I will almost never insert an ugly ad like the one below (which is included as a joke, unless I make money off it!). If this commercial activity is distracting and annoying to you, just let me know. It really is about you, dear reader! But I realize that I get enough traffic to pay for a few book, beers, or lunches here and there, and I guess I shouldn't leave money laying on the sidewalk if I can help it, since its not like I'm just swimming in money. Yet!

Ads by AdGenta.com

This is Your Brain on Stress. Any Questions?

I really enjoyed this Seed article on neurogenesis. Much of this points the way to the kind of thing a scientifically credible study of happiness would involve (i.e., not extrapolations from silly surveyrs, but things like the way stress impedes neural regeneration). Of course, even a bit of significant plasticity raises interesting social questions. Or, as the author of the article puts it:

The social implications of this research are staggering. If boring environments, stressful noises, and the primate’s particular slot in the dominance hierarchy all shape the architecture of the brain—and Gould’s team has shown that they do—then the playing field isn’t level. Poverty and stress aren’t just an idea: they are an anatomy. Some brains never even have a chance.

This seems to me to be a paragraph that isn't thought through. First, the social implications we're interested in are human social implications, not marmoset social implications. But primates all, yes. Now, the fact that there is a dominance hierarchy at all says that the playing field isn't level. The fact that the brains of the alpha and omega are different isn't a side-effect of their positions in the hierarchy. It's part of what the hierarchy is. And then poverty comes out of absolutely nowhere at this point of the article. Who thought poverty was an idea? And we've known stress is a physical condition for a long time. What's going on!?

We get some explanation later on:

Subsequent experiments have teased out a host of other ways stress can damage the developing brain. For example, if a pregnant rhesus monkey is forced to endure stressful conditions—like being startled by a blaring horn for 10 minutes a day—her children are born with reduced neurogenesis, even if they never actually experience stress once born. This pre-natal trauma, just like trauma endured in infancy, has life-long implications. The offspring of monkeys stressed during pregnancy have smaller hippocampi, suffer from elevated levels of glucocorticoids and display all the classical symptoms of anxiety. Being low in a dominance hierarchy also suppresses neurogenesis. So does living in a bare environment. As a general rule of thumb, a rough life—especially a rough start to life—strongly correlates with lower levels of fresh cells.

Gould’s research inevitably conjures up comparisons to societal problems. And while Gould, like all rigorous bench scientists, prefers to focus on the strictly scientific aspects of her data—she is wary of having it twisted for political purposes—she is also acutely aware of the potential implications of her research.

“Poverty is stress,” she says, with more than a little passion in her voice. “One thing that always strikes me is that when you ask Americans why the poor are poor, they always say it’s because they don’t work hard enough, or don’t want to do better. They act like poverty is a character issue.”

Gould’s work implies that the symptoms of poverty are not simply states of mind; they actually warp the mind. Because neurons are designed to reflect their circumstances, not to rise above them, the monotonous stress of living in a slum literally limits the brain.

So, ah! Here's the politics. And here's where the brilliant Gould gets pretty confused. Why think character issues have nothing to do with, say, neurogenesis? Aristotle says virtue is a hexis, a habit, a settled disposition of the soul to feel and act. Losing neurons, or failing to repair neurons, that are implicated in hedonic tone and motivation surely has something to with habit, virtue, character. No?

Here's a conjecture. I think the “potentional implications” here are mostly socially conservative. It's true that not having enough can be stressful. But most Americans in “poverty” have enough. So here's where folks on the left want to shift the question to the dominance hierarchy. (That's ostensibly what that Cassidy article was about.) Low status: now that's stressful. The question mark after “steal underpants” and before “profit” here is some mysterious mapping of a primate dominance hierarchy on to a local or even national income scale. But what matters primate-wise is the very local band or troop. The low status rhesus isn't stressed out by the high status rhesus the next forest over. He's tyrranized by his second cousin. So, if we're talking about the stressors of poverty, we have to ask, What accounts for high and low status in low income communities? If the answer is not something the aspiration to which is likely to precipitate a climb from poverty (i.e., hard work, team spirit, punctuality), then think about that. I'm not going to go all Bill Cosby on you, but I think you can see where this can go. Note also that in many poor neighborhoods and communities, the family, if there is a family, is more or less chaotic—lacking order, clear moral expectations, and the background assurance of responsible loving care. That's surely stressful. But it is not the poverty per se that is doing it. It is the culture. Amish folk living peacefully under the poverty line are not losing neurons in droves to the stress of their modest economic status. And I bet some of the kids out there soaked in glucocorticoids have pretty nice cell phones.

I look forward with eager anticipation to the social neuroscience of the very near future, when Odling-Smee niche construction theory and Boyd-Richerson cultural evolution theory meet neurogenesis. In human environments, status is culturally shaped, and so status-related stress and neural damage are too culturally shaped. If we find out that status competition in some cultures leads to large overall gains, and pretty small negative effects, while status competition in other cultures leads to stress-induced brain warp, then . . . well, we'll really know something, won't we?

Are Transparency and Generality in Conflict

Tyler writes:

I am personally a bigger fan of transparency than generality, noting that the two often conflict.  What if only some people need helping?  The best policy response won't be perfectly general, nor should we force it to be.

I don't see the conflict. Both are limiting principles. So a principle of generality will rule out non-general but transparent policies, and a principle of transparency will rule out general but non-transparent policies. To say that a rule or policy that passes through one filter might get stopped by the other is not to say the filters are in conflict. There are many rules that will pass through both.

I sympathize with Tyler's point about generality, though. Of course, the rule “If you're a citizen, and you're in need, then the state gives you some help” is in fact perfectly general. It applies to all citizens. But of course, “If you're a citizen, and you're a member of an industry whose profits are threatened by foreign competition, then the state gives you a subsidy” is general, too. The point of the generality requirement is to prevent the state from being able to see characteristics of its citizens that are irrelevant to the legitimate functions of government. If the state can't officially know that you're 6'2″, it cannot use its power to predate on taxpayers for the benefit of the people that are 6'2″. I don't think it is absurd to suppose that there may be some way to formulate the principle such that allows the state to see citizens in need, so that it can send them transfers, but does not allow the state to see or act on the basis of the interests of the lumber industry. If the state can only see citizens, and not subclasses of citizens, then preferential treatment, good and bad is prohibited. But if it can officially see some subclasses, then the criteria for membership in that subclass is going to become a political football.


I've got to say, I was way ahead of the curve on this one. In my book, the beard's played. I've been absolutely certain for several months now that the Burt Reynolds/Tom Selleck mustache is set for a raging return. I wish to be on the crest of that wave. But keeping the beard is one of those little things I do for the lady.

But tell me truly: is this not what a man should look like?


Yes. Yes it is.

Income v. Control

This New Yorker article by John Cassidy plumping for a move to a “relative deprivation” standard for the poverty line (the author wants poverty to be defined as 1/2 the median) is not only simply preposterous on its face (if the median goes up to $100,000, which it will in the next several decades, then $50,000 per annum, an astonishing sum in absolute terms, will count as the cusp of “poverty”), but also full ill-reasoned and researched ideas about the importance of relative position.

For instance, the Marmot British Civil Servant's study. This is what the author says:

Relative deprivation is also bad for your health. In a famous study conducted between 1967 and 1977, a team of epidemiologists led by Sir Michael Marmot, of University College London, monitored the health of more than seventeen thousand members of Britain’s Civil Service, a highly stratified bureaucracy. Marmot and his colleagues found that people who had been promoted to the top ranks—those who worked directly for cabinet ministers—lived longer than their colleagues in lower-ranking jobs. Mid-level civil servants were more likely than their bosses to develop a range of potentially deadly conditions, including heart disease, high blood pressure, lung cancer, and gastrointestinal ailments.

This is in supposed to help justify the importance of relative income in order to get us to the author's sophisticated policy prescription:

Therefore, the way to reduce relative poverty is to reduce income inequality—perhaps by increasing the minimum wage and raising taxes on the rich.

About which Ross Douthat notes:

The New Yorker is a very smart magazine in many ways, but whenever any of its writers talk about public policy, you get the sense that they were cryogenically frozen back in the Nixon era, and just finished getting de-iced.

So true! But back to the civil servants study. This is what Sally Satel and Nicholas Eberstadt say in the course of their rigorous debunking of the idea that inequality per se has a negative health effect:

S. Leonard Syme of Berkeley’s School of Public Health was one of the first to describe the control-of-destiny theory when he examined the landmark Whitehall studies performed by researchers at University College in London. The studies examined workers in the five grades of the British Civil Service, all of whom have access to nationalized health care. The researchers, led by Michael Marmot of the University of London, were not surprised that the civil servants in the lowest grade suffered heart disease at about three times the rate of administrators in the highest, or fifth, stratum, even after controlling for obvious health risks like smoking. They were puzzled, however, to find that even highly paid professionals in the fourth grade suffered twice as much cardiovascular disease as top-ranking administrators.

What appeared to explain this finding was the fact that these workers had little control of destiny; their jobs were fraught with responsibility, but they could exercise little authority. Marmot’s practical suggestion was that employers create ways for workers to have more latitude and to break the monotony of their tasks.

Another term for the “low control of destiny” phenomenon, developed independently by the psychologist Martin P. Seligman in his work with animals, is “learned helplessness”—that is, a posture of defeat and resignation, often accompanied by physical symptoms, that follows repeated failed attempts by the animal to change its environment. Eventually the animal “learns” to adopt a helpless, passive stance because there is little it can do to influence events. People, too, can become passive when they feel unable to control their lives.

So, which is it?! Simply having relatively less makes you sick? Or having too little control makes you sick? Of course, I'm persuaded of the latter. This is, in fact, one of the best explanations for the fact that wealthier people are generally happier. People who have a greater sense of autonomy and control over their environment are happier. A higher paying job is more likely to involve more autonomy and control than a lower paying job. So people with higher paying jobs are more likely to have a sense of autonomy and control. And people with higher paying jobs have, well, higher paying jobs. So people who earn more are likely to say they are happy. As Marmot's study shows, jobs with lots of money but little control aren't such a good deal. But then, why worry about the money at all?

(By the way, Cassidy quotes Eberstadt about the government determines the poverty line. I wonder if he also asked for Eberstadt's analysis of health and income inequalities.)

Almost everywhere that the leftist sees some malady of the body or soul caused by low relative position on the income scale, the libertarian-minded intellectual will look at the same data and see too little autonomy and control — too much learned helplessness. That's why Murray's new book is called In Our Hands. There is little you can do to help people become more happy that is as effective as devolving to the individual, family, and community the locus of control.

Conceptually, the piece is just a mess. Check this out:

The conservative case against a relative-poverty line asserts that since some people will always earn less than others the relative-poverty rate will never go down. Fortunately, this isn’t necessarily true. If incomes were distributed more equally, fewer families would earn less than half the median income.

This directly precedes the sophomoric unfrozen Johnsonite policy punchline quoted above. Now, it's true that there is some pattern of redistribution such that the percentage of families earning less than half the value of the median does not stay constant. (And there is also a bunch of “equalizing” patterns of redistribution that do nothing at all to change the proportion of families below half the median. Example: the shift from [10, 100, 1000] to [50, 110, 950].) But Cassidy has just gone to great lengths to convince us that it is relative position that matters oh so much. By his own lights, the fact that the proportion of the population making half the value of the median is not necessarily fixed is an irrelevant sideshow. There will always be the exact same percentage on either side of the median, or on either side of the median between the median and the bottom. And almost every example he gave us primarily supports the idea it is the order of positions that matters, not the distance between positions. In order to have an argument for compressing the income scale, you need to say more about the importance of the size of the gaps between positions. (And isn't the bitterness of silver larger the smaller is the gap from the gold?) But the abolition of the ordering itself is a logical impossibility.

Furthermore, the degree to which inequality bothers us appears to be a function of ideology, not a fixed fact about the human dominance hierarchy that sober policy must take into account.

I think the positional goods gambit is the redistributionist egalitarian's end game. If it fails, and I'm pretty sure it will (its assumptions are no more realistic than the neo-classical welfare theory is meant to replace; our world simply is not a grim, zero-sum Hobbesian jungle of positional competition), then there're really nothing left for the Gini-mimimizing type egalitarian to draw on. Is there?

Seligman's Diagnosis: Monopoly Protection

From a good post by Michael Strong:

Martin Seligman, author of Learned Optimism, is the national leader of the positive psychology movement. I recently ran across Martin Seligman's “Presidential Column,” when, in his capacity as president of the American Psychological Association, he describes a decision by the American Psychiatric Association as “shameful.” The context was the psychiatrists' decision not to participate in a joint academic journal designed to facilitate communication and share research findings between the psychological community and the psychiatric community. Seligman's account of the demise of this journal is telling:

“We published our first article and commentary in September 1997. You can read it on the web at http://www.journals.apa.org/treatment.

The dream has ended. In December 1997 the American Psychiatric Association’s Board of Trustees, acting in a closed-door meeting, withdrew from the collaboration (see article on page 42). They cited the need for a “broad review of the costs and benefits of electronic publishing projects.” This, of course, was not the whole story.

In August I began getting messages from their leadership that their board, led by the California trustees, might end their participation. In September, they put their cooperation on hold, citing the “state of the relationship between the two associations.” I was informed that APA’s policy of seeking prescription privileges for psychologists was the central problem. What publishing this scholarly journal had to do with that issue was not clear, but we crafted a disclaimer that reading Treatment did not qualify one to prescribe. It was clear, however, that their final decision to end the collaboration was political. Many of their trustees were worried that any collaboration with APA would legitimize the efforts of psychologists to obtain prescription privileges.”

Both the psychiatric and psychological guilds would be outraged by my notion that we need to legalize markets in happiness and well-being, especially once they realized that that would involve the elimination of occupational licensure. Guilds exist to protect legal prerogatives.

Amazing! I like Michael's phrase “legalize markets in happiness and well-being.” And guilds disgust me.