Arms Races, Happiness, and other Goods
I strolled up Mass Ave to Brookings this afternoon to hear Richard Layard speak on his new book Happiness. Layard, an unreconstructed Benthamite, is worried by the fact that, once a certain threshold in absolute wealth had been crossed, people’s self-reported happiness is correlated with their perception of their place in the distribution of income, i.e., by their relative wealth. Layard’s worry is that there is an arms race. Each of us tries to improve our relative position. But since everyone else is trying simultaneously to improve their relative position, very few end up succeeding in moving up relative to the others.
We’ve all perhaps moved up in absolute wealth, but that doesn’t matter so much for our happiness once we’ve crossed the critical threshold. All we’ve done is made a futile rush for a higher relative position, and ended up no happier. But we could have been spending our time doing better things.
Layard suggested that higher taxes might be worth having because it would create a disincentive to work, and this might help create a truce in the relative position arms race, freeing everyone to pursue activities that would positively promote their happiness.
Blah. Blah.
First of all, maybe the lesson we should take from this is that people just value status, period, independent of its hedonic effects. That is, perhaps the value of status cannot be reduced to the value of happiness. Casual empiricism would seem to confirm that people behave in predictably hedonically non-maximizing ways in order to maximize status. And it seem to me that many people find it very difficult to release a privileged relative position, even if they recognize that maintaining the position is making them unhappy. (Source: VH1: Behind the Music).
Some people — pehaps many people — would, other things equal, prefer an additional unit of status over several additional units of happiness. And in arms races over relative position, some people do move up. As long as the arms race does not make you significantly less happy, then it can be worth the gamble to jump in and try to be one of the few folks who succeeds in pulling ahead.
(Suppose that you’re very likely to stay in the same spot if you get in the race. And that when people pull ahead, they pull way ahead, but when people fall behind, they fall only a little bit. So even if you’re more likely to fall behind than jump ahead, the upside can still look big.)
Additionally, it can very well be the case that people are generally less happy when they have a lower relative position, more happy when they have a higher position, but don’t value higher position because it will make them happier. They value higher position because it is higher position, and getting higher position tends to make us happy because we value it, and we are generally made happy by getting what we value.
OK, let’s shift gears. Suppose I have written a transcendently great poem. Yet it very complex, and not very accessible. That said, a fair number people take great pleasure in it. However, this pleasure is swamped by the disutility caused to people who, before reading my poem, had thought that they were potentially great poets, but now are made to despair by the realization that they will never attain the heights of my poetic accomplishment.
Have I done a good or bad thing by writing my poem? Obviously: a good thing. The poem is transcendently great! It’s aesthetic value has next to nothing to do with its effect on net utility. Why care if it makes some people feel bad in comparison? Well, there is no reason to care.
To change the example slightly, suppose my poem raises the bar on poem-quality, and all my competitors rush out to write poems that will be even better than transcendently great. However, the effect of this is sheer frustration. They can never do it; I’m just that good! And here they went and wasted all that time failing to write transcendently great poems when they could have been lying in the sunshine, getting massages, or freebasing Prozac. IS THIS A PROBLEM WE NEED TO BE WORRIED ABOUT?
If the greatness of my poem creates negative externalities, they need to be negative externalities we have reason to care about if we’re going to take them into account in policy making. Parfit or Scanlon, in an argument against the pure preference satisfaction theory, give the example of a person who prefers that Uranus has six moons over any other number of moons (or something like that). If it turns out that Uranus does have six moons, is that guy any better off in any sense that we have a reason to care about? Well Parfit/Scanlon don’t think so, and neither do I.
Similarly, if you are a small person, and my success makes you burn with pained resentment, do we have any reason to take your pained resentment into account when evaluating the value of my success. I think not. The problem here is your unreasonable reaction, not my success.
Back to the poetry arms race. Suppose all those lesser poets are made unhappy by their persistent failure to achieve at a trancendent level despite their years of mindbending labor. Should we conclude that the arms race was a bad thing? Obviously not if it led to the creation of a lot of poety which, if not transcendently great, is still great. Maybe the lesser poets can learn to take satisfaction in the value they’ve created, despite their subordinate position in the pantheon of poets. But if they can’t that’s their problem, not a social problem. Similarly, if folks fail to make any progress in the race for relative economic position, they will have still improved everyone’s absolute economic position, which is just good. They will also have produced many wonderful conveniences, objects of beauty, wonder, delight, and technical merit. They will have increased the sum of human knowledge. They will have opened up new avenues of possibility for human life.
Gentlemen, on your marks!
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Not to mention that, in general, people are not happier when they get what they want. Most people have an “equilibrium happiness level,” from which they fluctuate up and down when good and bad things happen to them, but it tends to regress to the mean. The famous example of this is when psychologists ask people who are about to have their limb amputated to predict how happy they will be after the amputation. Usually they say they’ll be terribly unhappy (unsurprisingly), but as it turns out, a few months after the operation, they’re back to their original level of happiness. Something similar happens with lottery winners.
In fact, people are notoriously irrational and erratic about happiness. I remember reading about one experiment where subjects called in for an dummy experiment and asked to fill out a questionnaire reported feeling happier about their life if they had found a quarter (planted by the experimenter, of course) in the waiting room than if they hadn’t.
Layard was very much against the set-point view of happiness. He seemed to think he had some grounds for this, based in the literature, other than the fact that it renders Benthamite social engineering mostly pointless.
Hm, I was under the (I guess mistaken) impression that the set-point view of happiness was pretty well accepted by psychologists. I don’t suppose you remember the reasons he gave?
Sigh.
(In my best Terrence McKenna voice)
There are some pretty decent evolutionary reasons for not being able to maintain a persistently high level of happiness. But we are stumbling toward a moment in history where we will overcome nature and physically induce a higher state of euphoria (first with pharmaceuticals, then with genetic engineering).
(hits the bong)
Boy howdy - economics is in for some fun. Can’t wait. For now - it is hard to enjoy my hedonistic lifestyle when my friends won’t slow down. I am indeed a “smaller” man.
Why does this argument suddenly seem less convincing when you substitute “widgets” for “poetry”?
Poems aren’t widgets?
No, I’m pretty sure a poem is just another sort of widget.
I give up: why do you find it less convincing, Mr. McGrew?
Because you don’t have an intuitive sense for the value of widgets, because there is no such thing as a widget?
I defend the intrinsic aesthetic value of widgets here. Well, not really, but kind of.
See, although we don’t know what widgets are, we know, for Postrellian reasons, that they will be increasingly attractive.
” I desire to live in peace and to continue the life I have begun under the motto that to live well you must live unseen ” - Descartes
There are two problems with the first half of your argument, that we shouldn’t be concerned about the happiness findings because people value higher position for its own sake. First, it may be true that people want status independently of its effects on their happiness, but that does not mean that the high status that they strive for is good for them. There are obvious evolutionary reasons, for instance, why people would seek status: it is (or at least used to be) good for your reproductive success, if not for your quality of life.
The second problem is that, even if relative position is good for the individual, that doesn’t solve the problem of the arms race. The game of seeking higher relative position is zero-sum, so lots of people are pouring resources into changing positions with each other without causing any net improvement.
The second half of your argument is that what matters is a sort of excellence, like transcendently good poetry, not happiness. If we accept that, then of course the happiness data isn’t troubling. But we still need to worry about how well our society’s rat race is tuned to producing the kind of excellence that you claim to be valuable. We ought to find some way of measuring how well we’re doing at it, analogous to the hedonic studies which show that we’re not doing well at producing happiness. Poets and other artists are often thought of as stepping outside of society’s arms race in order to pursue their own aesthetic goals, so maybe we’re not doing as well as we could be.
The forty hour week
Let’s ask ourselves, of all possible things to which you could make an analogy for money making, why choose poetry writing? Is it only to highlight the principle at work by making a sharp contrast in the particulars? I don’t think so. It is because thi…
I agree that status-seeking may not be good for you. The question is: if people want it, and they are willing to bear the trade-off between happiness and status in their own lives, why impose the value of happiness by designing the value of anti-status-seeking social policy?
I wasn’t promoting a view that excellence is the summum bonum. It is one good among many. I was implicitly arguing for a kind of value pluralism according to which some values may conflict with others, and according to which it makes no sense whatsoever to frame policy in a way that maximizes value along a single dimension.
It is a good among many.
This is not at all how it is internalized. At least not in my particular mind. I believe that is precisely the point. Excellence doesn’t really scale.
I don’t think it is too hard to imagine pathological human chracteristics that are great for “society” and rotten for the individual. I, for one, would include the entrepeneurial spirit and the “Protestant work ethic.”
I mean how can I really enjoy the all the fruits of capitalism when I am racked with jealousy over your prodigious posting.
Actually Kyle, I’m doing it to spite you.
Mr. Wilkinson-
Your post has revealed a profound injustice in the world of popular urban entertainment, where the “arms race” has reached truly catastrophic levels. Today I plan to file a class action suit on behalf of all sucker MCs who can demonstrate that the microphone skills of their rivals have caused them to be “frozen,” “crushed,” “knocked out,” “paralyzed,” “murdered,” no longer able to “touch the mic,” or otherwise subjected to emotional duress due to their rivals’ lyrical flow. If you or your readers think you may been harmed due to someone else’s irresponsible microphone skills, please contact my office.
-Lionel Hutz, Attorney
I might be opening a can of worms with this comment, but…
What role does sex play in this? Does the need to be the biggest, baddest, Alpha male have anything to do with our desire to be better off relative to others? IMHO, many (desireable) women are attracted to status and not some baseline level of prosperity.
My glib asking-to-get-crucified just-so story take on gender differences and status is that men compete for status because it improves their inclusive fitness and women compete for status because it improves their inclusive fitness, though not to the same degree as it does for men (and for many woman the main route to increased status is through pair-bonding with high-status men), and because their fathers did and their sons need to. I agree in spirit with Camille Paglia’s contention that civilization is largely due to male status competition, as is most violence and war.
It’s a little like humor. Men are funny because women like funny. Women are funny because women like funny, and women are the children and mothers of men.
Lastly, I retract all of this in advance of hostile criticism.
Even assuming Layard’s moral framework, he needs to convince me that the negative externalities produced by status competition are larger than the positive externalities (which include faster economic growth and technological progress, at a minimum). We don’t generally capture all the surplus that our labor produces, so much of it redounds to the benefit of society generally. Since Layard agrees that increasing absolute income increases happiness (albeit in a concave fashion), I don’t think he can ignore this point.
Precisely, Ryan.
Why isn’t Layard content to know better and freeride off the hard work of the deluded?
Frikkin’ hippie.
Well, Americans have a savings rate of practically zero. High rates of personal bankruptcy, also.
On the national level, if Bush gets his latest budget passed, we will have reached a dubious milestone:
The United States will be spending more on its military than the rest of the world combined.
And its doing it on money borrowed from foreigners.
My take away point from Layard isn’t that we should abolish capitalism. It is that, as a society gets richer, the utility cost of redistribution is less, even if the cost in lost income/wealth is the same.
If you have a prior commitment to the paramount value of liberty in comparison to utility, Layard can be right, and it won’t matter to you. At most, his research generates self-help advice about valuing status less and family time more.
But if you are a Chicago-style libertarian (economic liberty is good because it increases aggregate utility), then you can’t just ignore Layard because maybe it doesn’t. Vast differences in status may generate more unhappiness than the wealth they make possible is worth. Which is not to say it is either possible or desirable to eliminate differences in status, but is to support a social democratic amelioration of them.
WillWilkinson, I don’t think you have successfully answered Blair’s points, but with respect to your attempt to do so, the point is that people are only willing to take the tradeoff between status and other goods in their lives because they would be worse off given that *only* they did not take this tradeoff. I am surprised that you don’t see that this has the structure of a prisoner’s dillema, and that it is simply collectively irrational and inefficient (as Blair points out). Did not this author mention this fact? That is why it is argued that there has to be some form of *collective* action to solve this problem.
Gareth, Strictly speaking, Chicago guys don’t care about happiness per se. They care about revealed preference, and it doesn’t matter what people prefer. Happiness, status, whatever.
You can have a collective action problem only if there is a problem. My point is that there isn’t a problem.
More for Blar, I agree about evolutionary reasons. But I didn’t say that status is good for us, in the sense that it makes us happy, only that we value it. My point wasn’t that we shouldn’t value happiness, too, just that when there is a conflict between values, we can’t just beg the question and demand that we evaluate one in terms of the other.
Arms race. Yes and no. It’s zero sum with respect to relative position. It’s positive sum with respect to absolute welfare. Wealth is produced in the process. More resources come out than went in. And this does make us a bit happier. Layard’s just saying that it’s an inefficient positive sum game,from the perspective of hedonic maximization, given diminishing marginal utility. It’s a waste of TIME we could be spending on vacation.
Will - I meant to use “good for us” in the most generally sense, to refer to anything worthwhile, not just happiness. You seem to be talking about “what we value” and “what people want” in such a general sense, but the way that you’re using “value” and “want” risks conflating what people actually do seek with what is worth seeking for them. They are not the same, as can be seen if we consider how evolution can “program” us to seek things that help us make copies of our genes but are not particularly valuable for us as people.
“The question is: if people want [status], and they are willing to bear the trade-off between happiness and status in their own lives, why impose the value of happiness by designing the value of anti-status-seeking social policy?”
One answer is that the arms race is “zero sum with respect to relative position.” A bunch of people are sacrificing the creation of new happiness for themselves in order to bring about the transfer of some existing status to themselves. Now, to the extent that the arms race promotes the creation something else of ultimate value, or the creation of happiness via something other than status, this waste of time and effort in status-seeking is less troubling. But it is an inefficiency that suggests opportunities for improving the system.
A second answer is that people are sometimes mistaken. They aren’t all that good at predicting what will make them happy, and they have mistaken ideas about how good it will be once they have more status, so they make decisions that they wouldn’t make if they had superhuman predictive ability and rationality, unclouded by the dictates of inclusive fitness.
I think that the government could make gradual changes to the structure of society that reduce how enticing the status-seeking arms race is and result in people being more likely to end up living lives that are good for them (in the general sense).
“The United States will be spending more on its military than the rest of the world combined.
And its doing it on money borrowed from foreigners.”
That’s hilarious! The rest of the world are massive chump suckers to let us screw them over that badly.
Sucks to be them….
Hehe, McClain. Do we really care if some guy buys a hairpiece or leases a car they can’t afford to try and get laid? Not really.
The more interesting point is how countries compete for status. North Korea and Iran seem to think that nuclear weapons, the country equivalent of hair plugs, is the way to go. And the rest of the world is trying to stop them. Should make for an interesting decade…
Well, McClain, the rest of the world is mercantilists, actually, which you can argue about but has historically been a pretty effective path to economic development. But what definitely will suck for *us* is when we have to start living within our means again.
Okay, doom’n'gloom boyz!
America’s going to hell in a handbasket, boo hoo.
Read a little history, do a little traveling, and get back to me on that, OK?
Wish I could bet money against that sort of wishful pessimism. Oh wait: I do! Stock market’s lookin’ pretty good this year….
Oh, and ‘monkyboy:’ in your eagerness to play the troll, you’ve tripped over your own metaphor.
What’s the difference between a hair plug and a nuke?
I’m sure you’ll be able to puzzle out that riddle if you sit still and think about it a little bit….
McClain, the word ‘warhead’ springs to mind.
Both nukes and hair plugs are painful and expensive to aquire. If you got ‘em, interested parties are more like to agree to a treaty with you…
I give up, what is the difference between hair plugs and nukes???
Fear of hair plugs is funnier than fear of nuclear annihilation.
Also, you can get all the hair plugs you’ll ever need with a single nuke.
But one hair plug won’t even get you on the subway.
Layard is a little late coming to this: Robert Frank has a huge body of work on this, starting with the brilliant *Choosing The Right Pond.* back in the eighties. In The Theory of Moral Sentiments, Smith also analyzed the frustrations of the attempt to “better one’s condition” where that is interpreted as a desire for relative success. He goes on to comment, Will-like, that this competition for status revolutionizes the material world, allows for the creation of Culture, and improves the (material) lot of the ordinary workman. I think that to make this postion tenable, one needs to reject a subjective theory of well-being in favor of an objective one. (I am not averse to doing so, but it seems to me libertarians would hesitate to pay such a price.) Otherwise, as Blair rightly emphasizes, the Prisoner’s Dilemma here is devastating. Neither Layard is saying the desire for status is a bad thing; the problem is that we cancel ourselves out in pursuing it. We value both income and status, but reforms such as Layard suggests could give us more income with no reduction in status. For a subjectivist, how can that be a bad thing?
Kevin, If we don’t go the objective route, then the question is whose subjectivism? My argument about revealed preference theory is in effect that revealed preference is a more neutral form of subjectivism.
But Will, what if we don’t meta-want to have what we want as much as we meta-want to be happy? Or, maybe we meta-prefer to pay some price in happiness to get what we want, but not any price? How neutral is revealed preference then?