October 31, 2007
Arnold Kling
Tyler Cowen will be one of the protagonists at the Economist debate in New York on November 10th. The proposition is "America is failing at the pursuit of happiness." For the affirmative will be Jeff Sachs and Betsey Stevenson. For the negative will be Will Wilkinson and Tyler.
If I were taking the con position, I would focus on the economic concepts of consumers' and producers' surplus. Intuitively, I am rather content, and those concepts help to explain why. Most of my career, I earned way more than it would have taken to keep me working as an economist. That is producers' surplus. As a consumer, I can think of all sorts of goods for which I would gladly pay much more money.
Just to take one example. If I go to a Bar Mitzvah celebration, the family will have spent thousands of dollars putting together an evening of food, music, and dancing. On a per-person basis, the cost is probably $50 to $100. Often, someone will turn to me at such an event and say, "Isn't this fun?"
I'll think to myself. "Are you kidding? I have more fun than this every week." Every week, I go folk dancing, and I enjoy it even more than a Bar Mitzvah party, not that I have anything against Bar Mitzvah parties. I probably would pay $50 a week for folk dancing, but it only costs $7. So I am getting a huge amount of consumers' surplus out of that.
I get enormous consumers' surplus out of reading, Internet surfing, eating, bike riding, and so on.
The total amount of producers' and consumers' surplus in my life is very high. (Actually, can you add them? It strikes me that part of the reason that the producers' surplus seems so high is that I get so much consumers's surplus, so there may be double-counting.) And I'm quite sure that they have gotten higher over the years.
If I were debating, I would try to come up with some back-of-the-envelope measure of aggregate consumers' and producers' surplus. It would be interesting to try to estimate the change from, say, the early 1970's to today. My intuition is that it has increased even more than measured real income, because the variety of consumer goods has gone up and the disutility of the average job has gone down.
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CATEGORIES: Behavioral Economics and Rationality (268)
What if you were taking the pro position?
I don't find the con argument persuasive at all. Just because you are happy folk dancing at $7/week does not mean the average person is. Assuming everyone is happy doing the inexpensive activities and you do have a consumer surplus at your income level, why would anyone try to make more money?
The problem with the economists' view of happiness is that there is an attempt to correlate happiness to financial well being, when the evidence does not seem to support this beyond some threshold of well being.
"The problem with the economists' view of happiness is that there is an attempt to correlate happiness to financial well being, when the evidence does not seem to support this beyond some threshold of well being." -Heather
This would be true if economists, the ones doing research today, measured for absolute financial well being. I'm sure that's not what Mr. Kling is talking about here. When he says surplus, he's referring to a benefit in addition to what the average economists (he's getting paid more than the average producer of economic knowledge) or the average folk dancer (he's paying less than what he would willingly pay) receives. And so, when I say "in addition to what the average...receives", I'm really talking about a relative financial well being.
And that's what "the evidence" says determines happiness. It's determined by how you stack up against your peers and others. It's what drives the rich man, who has a very high absolute financial well-being, to get a new Ferrari every year and keep making more money. This keeps his relative well-being, his happiness, high.
So, with this definition of happiness, I think America does an okay job at promoting people to do better than the person next to him. But at the same time, that's not exactly what the "pursuit of happiness" in the Declaration of Independence is talking about at all. I agree with Josh (first commenter), who says that the problem is how we interpret "pursuit of happiness". Today, happiness is measured by our role in a given society/ social group. During the enlightened thinking era of the 1700's, happiness was measure by our role in the whole of humanity. It was measured more by philosophical and ethical well-being.
With that said, in this debate, the pro. side should define happiness as some sort of social harmony and welfare for all of humanity. Something really philosophical, because this motion is too big to be decided with economic calculus. And so, if the con. side took up the whole "surplus" argument, then they would be arguing against the Declaration of Independence, which is probably a really hard thing to pull off. But the con. side could come back with a philosophical argument with examples of extreme failures of large scale social welfare (communism). It could go anywhere; it's a big topic.
