Wednesday, February 10, 2016

picking on Scott some more

Or at least using him as an example, with only the friendliest intentions, I swear :)

Scott Sumner is both a libertarian and a utilitarian (rounding to the nearest word, in both cases). As far as I can tell, I have very similar views on both topics. But I'm also a behavioral economist, which is a field Scott is skeptical of. But I think that part of the reason libertarians are frequently skeptical of utilitarianism is related to the reason why libertarians are frequently skeptical of behavioral economics. So, my hope is that if someone can reconcile the former pair, as Scott and I have, I can convince them to also reconcile the latter.

This is certainly only part of the story, but utilitarianism is viewed skeptically by many libertarians for two reasons.

First of all, it's frequently used an an excuse for redistribution and other types of government meddling. Honestly I think it's a little odd that any one school of thought is mad about utilitarianism being used as a justification for another particular school of thought, since utilitarianism can be used to argue for a pretty wide range of schools of thought, since the argument over what provides the most aggregate utility does not exactly have a straightforward answer, and since it's natural for anyone with a particularly high utility from X to believe that X is overly important for everyone else's utility as well, leading to plenty of disagreement automatically. But, maybe because of the historical accident that Bentham invented utilitarianism in order to justify redistribution, they've become tightly associated.

Second of all, moral libertarians place liberty on a pedestal above all else, regardless of consequences. That is, they want liberty even when people on aggregate don't want it. This is utterly bizarre to me. I'm quite sure that the reasoning went in backwards order:

  1. Want liberty. 
  2. Invent coherent philosophy justifying the supremacy of liberty by assuming the supremacy of liberty as the first principle.
  3. Conclude that liberty is supreme, even when not wanted. 
  4. WTF? Oh well, double down.

instead of (the pragmatic libertarian approach)

  1. Want utility. (By definition).
  2. Conclude that this is best extended to all of society by aggregating individual utility.
  3. Conclude that liberty is a critical component of the best society, since liberty is so important to utility, both individually and especially in equilibrium societal outcomes.
  4. Want liberty.
You can argue about points 2 and 3 but you really can't start with anything but number 1. That's the definition of utility!

This finally brings me to the punchline; sorry for the delay. The only way to be uncomfortable with step 1 is if you can't imagine the many ways in which nonmaterial things contribute to utility. For some reason, aggregating everything you could want into a single concept seems to be really distasteful and difficult for many people. Perhaps this is another historical accident: the word "utility" is usually used by economists who, for the sake of tractable models, are using a proxy for utility (usually money). So people say, but money isn't all that matters! What about love! And the economist should say "well yes, of course, but I'm talking about shoe stores, so I really don't think that's going to substantially make a difference to my analysis in this context" but more likely than that there are no non-economists in the audience and so no one asks the question and so over the years the economists forget that money was only a proxy for happiness in the first place. Or they don't forget, but they don't have a reason to point it out because all the other economists who are listening already know this, but then non-economists read economic papers and don't realize that the caveat is implicit.

But even more than not being able to think of creative sources of utility, I think the more fundamental problem people have with the concept of utility is with the notion you might try to measure it. These things feel very beyond quantification, and so how can you possibly summarize all of them in a single number when you can't even assign one number to each attribute, much less add them together. I acknowledge this is very hard. But we don't really do it, we barely even try, so it doesn't really matter. These arguments are always qualitative as soon as they move beyond basic monetary cost-benefit analysis. We can't even incorporate the statistical value of a life without a great deal of confusion and counterintuition, let alone love and fulfillment and ego and excitement and anxiety and spirituality and all the rest of the uncountable facets of human experience. And as long as we're dealing with grand qualitative concepts, is it really so hard to imagine that there are indeed tradeoffs between different priceless things? 

Consider religion. On the one hand we have the joy and inner peace and sense of community and cultural continuity that comes with religion, and on the other hand we have the conflict and human lives that come from religion. Do you think it's worth it? I don't know. I know that if religion meant permanent world war, I would definitely vote for no religion. And I know that if there was only one world religion and no resulting conflict or death and this particular religion didn't get in the way of science and the only downside was the discomfort of the minority who inevitably feel a little excluded because they just don't have the gene for that spiritual stuff, myself included, I'd vote for religion. So there are tradeoffs. I have no idea where the line is, but I know there is one.

Or imagine Sophie's choice (which I haven't seen [is it a movie?] so if I have it wrong just go with it.) One's children are priceless and it seems impossible to choose one over the other. But if I had five kids and had the choice between killing one or killing the other four, that's an easier choice. Again, lines may seem impossible to draw, but that doesn't mean they don't exist.

This a great SMBC that is relevant. Yes, do come to the dark side :)

Ok so the point: libertarians shouldn't be hostile towards utilitarianism because liberty provides enormous utility and so the two principles are compatible. And if you can accept that liberty is an input into utility, why can't you accept that behavioral economics, as the branch of economics that mostly explores non-standard sources of utility, is, if anything, a friend to libertarianism? There perhaps has not yet been much work on the inherent value of having choice (although I think I recall an experiment or two that touch on this), but when we get there, it will be behavioral economists studying it.

Well that was much longer than I intended.


JAS said...

As you say libertarians seem to assume that the best way to increase happiness is to increase freedom. Which, in my observation, is obviously not the case in well-functioning democracies. Democratic choices are a clear form of revealed preferences and therefore it is likely the majority of people have all the freedom they want. The vast majority of citizens not suffering from the heavy hand of government. In fact, given a minuscule increase in risk (for example from terrorism) and people will rush to trade freedom for security. I suspect the vast majority of people would gain more utility/happiness from increased financial security than from increased freedom. That trade-off is the pretty much the definition of being gainfully employed for most people. Increased freedom becomes a concern only after one is secure, hence the fact that libertarians are most often at the upper income/wealth margin. I find libertarian thought so one-dimensional that it approaches silliness.

Vera L. te Velde said...

First, voting does NOT reveal preferences. In the simplest possible example, if two people slightly prefer A to B, and one person greatly prefers B to A, voting gets the answer wrong. This is why we have the bill of rights.

Second of all, liberty is a crucial prerequisite for financial freedom. This is not a choice that is made in isolation. That's why "especially in equilibrium societal outcomes".

JAS said...

I have an idealistic belief that over the long haul of many democratic choices (most often picking the lessor of two evils) the result will be a form of governing and freedoms that on the whole people want. I have a perhaps naive faith in the market place of ideas. I do believe that it is a good idea to subject the freedoms in the U.S. bill of rights to a difficult super majority test in order to change them. However, I will also note that the bill of rights gets trampled during any threat to security deemed serious enough to be called “war”. Hence my belief that people value security over freedom. We want both, but when forced to choose, we will give up freedom to buy security. Remember, people actually sold themselves into real slavery to pay off debts. I seem to remember Hayek’s writing had a strong fear that democracies would vote for socialism, find they liked it, and then be stuck with it. It seemed to me to reveal a weakness in either his faith in democracy or the true value of libertarian principles to the majority of people. Of course he seemed to be permanently stuck in 1939 with fascism and communism on verge of conquering the world.
The range of economic freedom in western democracies seems to be adequate for commerce to thrive, sometimes better, sometimes less well. Again, I have hope that successful examples will be more widely adopted, bad examples rejected. I’m not sure I know what your second point was.
I do believe that behavioral economics is vital. What good is economic theory if it does not incorporate observations of how humans actually behave?

JAS said...

As you imply, if you are discussing utility and expanding the scope to beyond material wealth you automatically arrive at a discussion of values. It seems that talking about values quickly blends into talking about morals. Miles Kimball of the “Supply-Side Liberal” blog had a series of posts where he reflected on John Stuart Mill’s “On Liberty”. I confess I find that un-interesting, since I don’t think the foundations of morality are dry, dispassionate logical deductions from first principals. What I do find interesting is Jonathan Haidt’s work on how real people actually come up with moral judgements. I don’t think a discussion of values would be complete without addressing his Haidt’s work.

Vera L. te Velde said...

Absolutely, huge fan of Haidt :)

Vera L. te Velde said...

The second point was the more important of the two really - people freely trading with each other unhindered are really great at enriching the world. The economic security you refer to is due to these actions more than anything else, by far. There are plenty of types of freedom and security to differentiate between, but economic security and economic freedom are not opposing things.

And as a side note, although I am a behavioral economist, I still marvel at how well classical microeconomic theory *does* explain how people actually behave, so I'm going to pedantically point out for the zillionth time that behavioral economics is not a replacement for classical economics, merely added nuance :)

Roger Sweeny said...

"rounding to the nearest word"

What a great expression.