November 10, 2003
David Ross (Economics)
"Bucks, Values and Happiness":
When Counting Changes What We Are Counting
Prepared by Anne Dalke
Additions, revisions, extensions
are encouraged in the Forum
David began this session by suggesting that, since the 18th century, with the rising importance of production, consumption and markets, and the concomitant changing roles for family, tribe and community, economics has played three central roles, each of which makes a different claim. It is
An Observational Science
- Most of the time, sufficiently large groups of individuals respond to incentives as if each individual person were pursuing her self interest.
- Most of the time, sufficiently large groups of firms respond to incentives as if the management of each firm were actively seeking to maximize the firm's profits.
An Advisory Role
An individual seeking to pursue her self interest should devote time, energy and wealth to the task up to the point where the increased pleasure accrued no longer offsets the foregone pleasure of devoting those resources to other pursuits.
A Prescriptive Role
Markets with many buyers and many sellers improve economic welfare by providing a bigger pie for all than markets where the number of buyers and sellers are artificially limited. A bigger pie is good because it makes it possible for all to reach higher levels of satisfaction.
In other words, the field of economics has come to engage in the alteration of what it (paradoxically) assumes to be immutable personal preferences and values. The thesis of David's presentation was that the advisory and prescriptive aspects of economics, and possibly the market institutions it describes, all contribute to changes in individual preferences and values that are inconsistent with whom we want to be. He illustrated this argument with two clips from Oliver Stone's film Wall Street, including Michael Douglas (=Gordon Gecko)'s "greed is good" speech. This representation, although extreme, is not inconsistent with the arguments Adam Smith made in The Wealth of Nations and Theory of Moral Sentiments, that if each pursues his own self interest (and the market meets certain conditions), the public good will be enhanced.
Such a story of the market responding to demand, with sellers acting to meet our interests, "conserves massively on information." But underpinning such presumptions is the idea that advertising is simply information; there is no awareness that it actually has the capacity to change fundamental wants, or intervene in the logic of how we we think that getting more of what we want will make us better off. Economics actually goes beyond pure presciption to create ways for people to get what they want. Observing (and describing) people's behavior can change it. Perfectly valid transactions end up changing our preferences, and we experience what David George (University of Michigan Press, 2001) calls "preference pollution":
we will find our actions and desires no longer consistent with
- spending "too much time" in market exchange
- living and working in communities and institutions grown so large that arms' length transactions necessarily replace mutual caring and a common sense of mission, and
- heeding the advice of goal-oriented consultants in economics, psychology, organizational behavior, management consulting . . .
David closed by asking us what we would choose for ourselves, if we were allowed to contemplate our lives from a place of reflection? Who cares about such questions? And what can we do about the answers that come to us?
- our sense of self-worth
- our spiritual values
- God's will.
Discussion turned quickly to the ethics of economic measures.
Thirty years ago, it was thought unethical to make money from science; now we are advised by economists and others that it is not only possible but desirable to do so, and stupid not to take advantage of doing so. There has been a similar change in the internal value structure of sports, journalism and film. No, said the historians: this "nostalgic" account neglects to acknowledge that people have always given weight and value, have always kept score in the game of achievement we call life; at different eras, there are different measures, and right now, money is used as a primary index to what we find important. Economics keeps score over short time periods, so those who measure success over longer time spans have no demonstrable measure for what is important. What the goals are and who is winning are judged on increasingly short time scales, scales often determined by the media. This was a problem that Quakers recognized several hundred years ago, in deeming "sinful" attention to
music, drama and dance; these activities "get us all riled up" and get in the way of our reflecting on what we really value. The argument seemed to be one about purity and impurity; does each of us really have "immutable desires," predetermined and fixed, which the market should not attempt to alter? How do we decide which product is better, without the information that advertising supplies? Any society organized for one set of interests will lessen others; if an essential goal of our society is "increasing stuff," that's a pretty lousy way for people to express themselves in the world. Our democratic system has actually contributed to the collapse of structures created for determining what we want--if we end up changing what we want, if the result of the "feedback loop" is creating a need we did not originally have.
This conversation is continuing online and will pick up again next Monday, November 24, when Michelle Mancini, of the Dean's Office and the College Seminar Program, will discuss "The Face Behind/Above/Within the Numbers": Sentiment versus Statistics, Then and Now."
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