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Rather than promoting happiness, I think economic policy should seek to stamp out unhappiness.

Yes.  As economic policy, "eliminating unhappiness", not "promoting happiness", should be the strategy.

But GDP is a meme which needs to be usurped.  And I'm afraid that without a succinct, mind-concentrating and positive alternative meme, GDP will continue to rule the roost as the bottom-line benchmark for measuring the success of a society.

As such, to turn people's attention and concern from GDP to more important measures, we need a number which can be easily used as a rough benchmark for comparisons.  Something like the United Nations' Human Development Index (HDI), which factors in "poverty, literacy, education, life expectancy, childbirth" among others such as GDP:

██ High human development██ Medium human development██ Low human development██ Unavailable
██ High human development██ Medium human development██ Low human development██ Unavailable

Wouldn't have be exactly the HDI, but how about something like it?

Truth unfolds in time through a communal process.

by marco on Fri Oct 20th, 2006 at 06:08:04 AM EST
[ Parent ]
Why do we need a single number to be used as a benchmark?

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 06:17:37 AM EST
[ Parent ]
Because you need a single number to build league tables.
by Colman (colman at eurotrib.com) on Fri Oct 20th, 2006 at 06:19:01 AM EST
[ Parent ]
And why do we need to build league tables?

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 06:25:28 AM EST
[ Parent ]
How else will the papers fill column inches?
by Colman (colman at eurotrib.com) on Fri Oct 20th, 2006 at 06:27:54 AM EST
[ Parent ]
They could print xyplots.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 06:29:29 AM EST
[ Parent ]
What? With something other than time on the x-axis?
by Colman (colman at eurotrib.com) on Fri Oct 20th, 2006 at 06:30:47 AM EST
[ Parent ]
Yes, like Life Expectancy on the x axis and Adult Literacy on the y axis, for instance.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 06:47:51 AM EST
[ Parent ]
I recall a study showing that very few people can understand a graph unless it plots something vs. time.

Words and ideas I offer here may be used freely and without attribution.
by technopolitical on Sun Oct 22nd, 2006 at 02:29:58 AM EST
[ Parent ]
Because the overwhelming majority of people, including journalists, pundits, politicians and government bureaucrats I dare say, don't have the time, attention span, will power, and/or intelligence to deal with much more than a single number.

And then they build up or tear down policies that affect us all, based on and spinning the one measure that everyone cares about (even if they don't understand it) because that's what the rest of the herd is following.

Truth unfolds in time through a communal process.

by marco on Fri Oct 20th, 2006 at 06:41:11 AM EST
[ Parent ]
If we could get economists to stop pushing "utility" and stop concentrating on "economics is optimisation [of a single quantity]" maybe, just maybe, they wouldn't force single lists on people.

Ordinary people have plenty of time, attention span, willpower, and intelligence to deal with arcane sports statistics. Yes, there is a league table because we're talking about tournaments to select a winner, but sports league tables have a gazillion columns full of stats.

So, why do we need a single benchmark again?

[Sports fan counterexample by Ralph Nader, used without permission]

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 06:45:58 AM EST
[ Parent ]
Ordinary people have plenty of time, attention span, willpower, and intelligence to deal with arcane sports statistics. Yes, there is a league table because we're talking about tournaments to select a winner, but sports league tables have a gazillion columns full of stats.

I think only a minority of people -- a minority of sports fans, in fact -- only the real sports otaku, really get much data beyond who won or lost.

Sure, there are other domains: movies (who won which Oscar prizes, made the most money at the box office, said what in which film, acted with who in which film); fashion (who wore what at which gala event, who was People's sexiest man alive in 2002, etc.); and tons of other pop culture domains where people gather, retain and analyze plenty of data.

But here is the big difference:  Just as baseball otaku are a tiny minority of the world population, and just as football otaku are another tiny minority, ditto for movie otaku and fashion otaku and restaurant otaku, etc., economics otaku are also a tiny minority of people in the world.

The difference is this:  Economics affects everybody in the developed and developing world.  But who won Wimbledon in 2001, who directed the most Oscar-winning films, which restaurants in New York serve organic food, barely affects anyone.

What gives people the "bandwidth" to be informed about and have a good understanding of lots of (often subtle) data on a topic beyond a single (or a tiny handful of) figure(s) is a deep personal interest in that topic.

Unfortunately, the vast majority of people do not have a deep personal interest in economics.

So we need to come up with something that most of us can deal with: something that is concise and succinct, but that is reality-based and reflects accurately their living conditions, opportunities and hazards.

Truth unfolds in time through a communal process.

by marco on Fri Oct 20th, 2006 at 07:05:01 AM EST
[ Parent ]
If we could get economists to stop pushing "utility" and stop concentrating on "economics is optimisation [of a single quantity]"...
But "utility" isn't a single quantity in any ordinary sense, it is the ineffable summation of all that is good for a rational being free of internal conflicts, and it just happens to be true that the only thing that matters to a rational being is money, so GDP = aggregate utility = good.

Snarky tone aside, the first half of the above captures a significant point, which is that utility is (of course) defined to be something a lot like "good" as judged from a personal perspective. The concept diverges from reality, though, because it suggests that different kinds of good are more comparable than (in psychological reality) they are. For example, it implies consistent valuations for benefits a day, a week, and a decade from now -- but human valuations don't work that way. This suggests to me that the concept of "utility" has limited utility. Worst, though, the idea turns toxic when it diffuses away from its origin.

As carefully stated by theorists, "utility" inherently includes (for example) the value of being able to expect a sustainable future, the value of having a clean conscience, the value of being a social cooperator, and so on. Acting according to "self interest" might include selfless devotion to others.
Striving to maximise utility in this sense is hard to argue against.

But as understood by people outside the little circle of theorists and their fans, utility mutates into the idea of getting stuff you want, including services and so on. And since rational people "should" maximise their utility, anyone who doesn't grab everything possible is an irrational fool. And since money can be exchanged for stuff, it makes a convenient measure of utility. Hence the sick equation, "GDP = aggregate utility = good".

In short, I'd argue that economic thinking has some surprisingly bad effects not because of what it is, but because of how easily it is debased into the idea that rational behaviour requires amoral acquisition.

Words and ideas I offer here may be used freely and without attribution.

by technopolitical on Sun Oct 22nd, 2006 at 03:19:34 AM EST
[ Parent ]
Utility is not only unhelpful but wrong in that it presumes that all preferences (what you call "different kinds of psychological goods") are comparable or reducible to a single scale, that individual preferences are consistent and that collective preferences are comparable, reducible to a single scale, and consistent.

There is no escaping the fact that decision problems are multidimensional.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Sun Oct 22nd, 2006 at 05:38:05 AM EST
[ Parent ]
Although utility fails as a description of human behavior, it does come closer to being a norm for human behavior (e.g., one can argue that individual preferences should be consistent). Of course it then collapses as a model if one attempts to build from there to collective preferences. Further, the collective-preference problems cast further doubt on the applicability of utility to "in-dividuals", since we seem more divisible when examined in psychological/neurological depth. And this, perhaps, undermines whatever claim it may have to defining a norm.

Words and ideas I offer here may be used freely and without attribution.
by technopolitical on Sun Oct 22nd, 2006 at 02:10:20 PM EST
[ Parent ]
It has been suggested that just as in social choice theory it is hard to turn indivudual preferences into a single collective preference, it might be equally hard to turn an individual's multiple wnats and needs into a single individual preference ranking. In other words, if I am hungry, thirsty, cold, bored and tired to various degrees, does it follow that my preferences regarding what to do next, assuming each of my options addresses some nontrivial combination of my wants and needs, have to be consistent?

Sometimes the utility and rational choice model is taken as an action, as in implied preferences, where people decide it is pointless to ask people what they prefer and try to see if their behaviour matches their preferences, and instead postulate that preferences are as they need to be to be consistent with behaviour.

Rational choice theory may be an interesting branch of mathematics, but I think to make it the axiomatic foundation of economics is a bit of a stretch.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Sun Oct 22nd, 2006 at 02:19:33 PM EST
[ Parent ]
This question recalls for me ThatBritGuy's comment in Eternal City Blues' Anglo-French "Special Relationship" diary:

The natural trend on the playing fields of Eton, and on MBA courses is to ape the US, because their reformist free-market yadda yadda is so much more glamorous than anything Europe can produce.

What Europe needs, and the UK needs especially, is an academic and intellectual push back against free-marketism.

Someone needs to start telling different, and more accurate, stories about how the world works. Because at the moment, in both the City and in government, it's the freebooting capitalist model that's captivating hearts and minds.

GDP has been "captivating hearts and minds" for too long.

We need to come up with a meme that is more "glamorous" than GDP (I use ThatBritGuy's here "glamorous", but I mean compelling).

HDI is one contender.  Doesn't have to be a three-letter acronym.

Come to think of it, you came up with a pretty good one yourself.

Truth unfolds in time through a communal process.

by marco on Fri Oct 20th, 2006 at 06:50:27 AM EST
[ Parent ]
What's been captivating hearts and minds is not GDP, it's the "get rich quick" mentality.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 06:58:31 AM EST
[ Parent ]
Let's be a little more discriminating in our assessment of HDI:


Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 06:51:35 AM EST
[ Parent ]
Good one.  I didn't see that map below.

Truth unfolds in time through a communal process.
by marco on Fri Oct 20th, 2006 at 07:06:51 AM EST
[ Parent ]
The HDI is definitely a lot better than GDP as a measure, though it's not complete. If you're into this, I recommend reading up on the human capabilities approach, which also influenced the HDI.

Measures which focus on happiness instead of GDP or wealth can easily fall into the trap of narrow utilitarianism, the capabilities approach is more complete in that sense.

by nanne (zwaerdenmaecker@gmail.com) on Fri Oct 20th, 2006 at 08:49:21 AM EST
[ Parent ]
Interesting.  I hope the human capabilities approach continues to get more traction.

Measures which focus on happiness instead of GDP or wealth can easily fall into the trap of narrow utilitarianism

Miguel also mentions "utility" in a comment above.  Are you referring to the same thing?  What exactly do you mean by "utlitarianism"?

Truth unfolds in time through a communal process.

by marco on Fri Oct 20th, 2006 at 09:06:06 AM EST
[ Parent ]
I think any measure which is one-dimensional lends itself to narrow utilitarianism.

Utilitarianism is a theory of ethics which lends itself to being reduced to "maximising utility". Utility has a technical meaning in economics and decision theory.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 09:12:46 AM EST
[ Parent ]
Indeed.

I would add that the technical economic concept of 'utility' has its roots in utilitarian ethical theory.

by nanne (zwaerdenmaecker@gmail.com) on Fri Oct 20th, 2006 at 09:50:18 AM EST
[ Parent ]
Actually, the logarithmic utility of money was introduced by one of the Bernoullis in the mid-1700's, several decades before Jeremy Bentham called his philosophy "utilitarianism". I think utilitarianism was, in fact, an attempt at "rationalising" ethics and the philosophy was always an attempt at doing what the modern mathematical theory of utility does.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 09:53:56 AM EST
[ Parent ]
You learn something new every day.

What I still want to do is moderate this 'technical measure' distinction. Utility as it is used in economics does contain all kinds of philosophical assumptions about mindstates, etc. You can't talk about the declining marginal utility of consumption without making this utility partly a subjective measure of gratification, for instance.

by nanne (zwaerdenmaecker@gmail.com) on Fri Oct 20th, 2006 at 10:11:02 AM EST
[ Parent ]
Wikipedia:
In probability theory and decision theory the St. Petersburg paradox describes a particular lottery game (sometimes called St. Petersburg Lottery) that leads to a random variable with infinite expected value, i.e. infinite expected payoff, but would nevertheless be considered to be worth only a very small amount of money. The St. Petersburg paradox is a classical situation where a naïve decision theory (which takes only the expected value into account) would recommend a course of action that no (real) rational person would be willing to take. The paradox can be resolved when the decision model is refined via the notion of marginal utility or by taking into account the finite resources of the participants.

The paradox is named from Daniel Bernoulli's presentation of the problem and his solution, published in 1738 in the Commentaries of the Imperial Academy of Science of Saint Petersburg (Bernoulli 1738). However, the problem was invented by Daniel's cousin Nicolas Bernoulli who first stated it in a letter to Rémond de Montmort from 9th of September 1713.

Daniel was the first to solve the problem by showing that even though the expected payoff of the game is infinite, the expected log-payoff (i.e., the expected utility of playing the game) is finite.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Oct 20th, 2006 at 10:16:53 AM EST
[ Parent ]
You can't talk about the declining marginal utility of consumption without making this utility partly a subjective measure of gratification, for instance.

I agree.  Bernoulli himself said:

"There is no doubt that a gain of one thousand ducats is more significant to the pauper than to a rich man though both gain the same amount."

And Gabriel Cramer, a few years before Bernoulli, refers to the role of "good sense":

"the mathematicians estimate money in proportion to its quantity, and men of good sense in proportion to the usage that they may make of it."


Truth unfolds in time through a communal process.
by marco on Fri Oct 20th, 2006 at 10:49:18 AM EST
[ Parent ]
Thanks for the explanation.

I am not sure what you mean by "narrow utilitarianism" as opposed to "utilitarianism" tout court.  But isn't the policy approach that you and I agree on (as opposed to the "marketing" approach I am suggesting to replace "GDP" with some other unitary notion like HDI or median PPP income) just another form of utilitarianism as well, to wit, "negative utilitarianism"?

Truth unfolds in time through a communal process.

by marco on Fri Oct 20th, 2006 at 11:00:54 AM EST
[ Parent ]
Basically, if you go to that article, Bentham's utilitarianism is narrow, because it assumes simple pleasure and pain to be the two absolutes of ethics, whereas JS Mill's utilitarianism isn't as narrow.

What I personally meant by a narrow utilitarianism is a utilitarianism which uses a methodological individualism to form a societal calculus of happiness (unqualified, in the sense of Bentham), of which the maximation is taken to be the end-all of decision-making (individual as well as collective).

by nanne (zwaerdenmaecker@gmail.com) on Fri Oct 20th, 2006 at 02:20:10 PM EST
[ Parent ]
Certainly we don't want to encourage the idea that a single parameter should be the final arbiter of the health or quality of an individual life or society.

However, until we come up with truly a "complete"/multi-dimensional approach or mindset to replace the GDP/DJI-oriented mindset, and until people are ready to make such a drastic switch to such a different mindset, would it not be helpful to find some transitional position where we allow people to continue working with an easily graspable, easily comparable single number, like PPP median income or, better, HDI, to start to introduce such "revolutionary" notions as including fairness, socioeconomic equality, freedom from ignorance, freedom from government oppression, and so on, beyond mere GDP?

Truth unfolds in time through a communal process.

by marco on Fri Oct 20th, 2006 at 09:03:51 PM EST
[ Parent ]
What would be interesting as an intermediate solution is using a variety of measures. There are many measures in circulation right now. Competitiveness, perceived corruption, commitment to development, openness of the economy, etc. etc. etc.

These don't provide the basis for a unitary ranking but can be used as an overview. Might be an idea for a diary, actually (I probably won't have the time to do that properly until next weekend, though).

by nanne (zwaerdenmaecker@gmail.com) on Sat Oct 21st, 2006 at 01:19:40 PM EST
[ Parent ]
If you do have time to do it next weekend, you can count on me to be one of your first readers!

Truth unfolds in time through a communal process.
by marco on Sat Oct 21st, 2006 at 07:45:33 PM EST
[ Parent ]

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