Tuesday, November 20, 2018

Can the hope circuit help us to circumvent dysfunctional politics?



This question came to mind when I was reading the final chapter of Martin Seligman’s latest book, The Hope Circuit.

The book is an autobiography, but in discussing his own life the author provides readers who have little knowledge of psychology, people like me, with a painless way of informing themselves about some major developments in this field over the last century.

Marty Seligman played an important role - as a researcher, author of popular books, and transformational leader - in helping to bring about important changes in his profession. He made major contributions in encouraging the profession to study cognition, recognise evolution, embrace positive psychology, and give greater attention to prospection.

I will focus here on learned helplessness, learned optimism and the hope circuit. Marty, as he is accustomed to being called by just about everyone, made his name as a researcher in the 1960s for his work, with Steve Maier, on learned helplessness. Marty and Steve observed that when dogs were unable to avoid electric shocks by changing their behaviour, they subsequently tended to remain passive when they did have the opportunity to avoid shocks. The dogs appeared to have learned that nothing they did mattered.

Marty saw the potential implications of this research for understanding of mental illness among humans and developed the helplessness theory of depression on that basis. That theory was subsequently reformulated, with assistance from John Teasdale, to take account of the way people think about the causes of their feelings of helplessness. For example, those who see their current problems as likely to last forever and to undermine everything they do are likely to feel helpless long into the future. Pessimism leads to helplessness.

Marty’s popular book, Learned Optimism, published in 1990, integrated research findings on learned helplessness and explanatory style.  It advocated disputing pessimistic thoughts as the central skill of learned optimism.

Marty coined the term “hope circuit” in 2015 to describe the MPFC-DRN circuit of brain activity discovered by Steve Maier, who had retrained as a neuroscientist. Marty explains that Steve’s discoveries turned learned helplessness on its head:
“He showed that the arrow of causality that we had postulated was wrong and that it was not helplessness but control and mastery that were learned".

One of the implications of this research is that therapy that “creates end runs” around trauma and helps people to plan a better future is likely to be more helpful than therapy that tries to undo trauma by confronting the past.

What does all this have to do with dysfunctional politics? This passage got me wondering:

"Human history has, until recently, been a tale of woe: warfare, plague, famine, injustice, poverty, ignorance, and violent death. The last half century has witnessed, if not the eradication, a great reduction of these ills. When the world is a vale of tears, it is natural that politics, religion, science, medicine, and the arts should concern themselves with defense and damage. But what happens when the world is no longer a vale of tears?"

My initial reaction to that passage was the same as my reaction to Steven Pinker’s book, Enlightenment Now. I agree that massive progress has been made in human flourishing, but I see huge problems ahead for liberal democracy. We are confronted by widespread failure to adhere to the norms of self-reliance and reciprocity that underpin liberal democracy.

I became even more pessimistic when my thoughts turned to Jason Brennan’s book, Against Democracy. In my response to that book I mourned the declining power of the major political parties to shape political agendas in ways that moderate the ill-informed desires of electors. I raised the question of whether many voters would be likely to accept impartial advice on how to vote to achieve their objectives.

It is not obvious that there is anything that anyone can do now to save liberal democracy from political hooliganism.

So, why aren’t I feeling depressed and helpless?  The main reason is that a few months ago Max Borders’ book, The Social Singularity, gave me grounds to hope that technological advances will eventually enable citizens to circumvent dysfunctional politics. Rather than moaning endlessly about the decline of liberal democracy, we can look forward in the hope of a better future. There may even be practical things that we can do in cooperation with others to facilitate growth in opportunities for human flourishing.   

Thursday, November 15, 2018

Is human flourishing primarily about psychological health, capability or opportunity?


This question is not just an intellectual puzzle. The way we answer it has important practical implications. The main point I want to make is that the appropriate answer if we are thinking about the flourishing of a close relative, friend or acquaintance is not appropriate if we are thinking about public policy.

Before attempting to answer the question, I need to outline the three different approaches.

The psychological health approach:  Martin Seligman is a leading exponent of this approach. In his book, ‘Flourish’, Seligman suggests that well-being theory ‘is essentially a theory of uncoerced choice, and its five elements comprise what free people will choose for their own sake’. The five elements he identifies are summarised as PERMA: positive emotion (pleasant experiences, happiness and life satisfaction); engagement (the flow state); relationships (positive relations with other people); meaning (belonging to and serving something bigger than yourself); and accomplishment (success, achievement, mastery).

In an earlier post I suggested that Seligman has missed another important element that people seek for its own sake, namely control over their own lives.

A more fundamental weakness of this approach is that it ignores all elements of well-being other than psychological well-being. For example, it seems reasonable to suppose that free people would usually choose to be wealthy rather than poor, even if their wealth made no contribution to their psychological well-being.

The capability approach: This approach was developed by Amartya Sen, an economist. Sen argues that a person’s capability reflects the alternative combination of functionings the person can attain and from which he or she can choose one collection. Functionings include objective criteria as being adequately nourished and being in good health as well as a range of other factors such as achieving self-respect and being socially integrated. In his contribution to ‘Capabilities and Happiness’ (2008, edited by Luigino Bruni et al) Sen noted that individuals may differ a good deal from each other in the weights they attach to different functionings. He seemed unwilling, however, to leave the weighting exercise to the individuals concerned. He suggested that ‘the weighting exercise has to be done in terms of explicit valuations, drawing on the prevailing values in a given society’.

The opportunity approach: The concept of opportunity proposed by Robert Sugden, also an economist, rests on “an understanding of persons as responsible rather than rational agents”. According to this view, individuals may sometimes act foolishly but nevertheless accept responsibility for the consequences of their actions. The term “opportunity as mutual advantage” expresses the idea that “one person’s opportunities cannot be specified independently of other people’s desires”. Sugden implies that an economic system that generates a great deal of individual opportunity is a system that rewards individuals for finding ways to benefit others. (‘Opportunity as mutual advantage’, Economics and Philosophy (26)).

If we were discussing the measurement of flourishing, I would add life satisfaction to this list of approaches. As discussed in another post, it has become common for life satisfaction ratings to be used to measure the extent that people are thriving or flourishing. Life satisfaction is measured by surveys asking individuals to give a simple numerical rating to their satisfaction with their livesThe countries with highest life satisfaction ratings tend to be those with highest ratings in terms of psychological flourishing and opportunity. Nevertheless, it would be difficult to argue that life satisfaction provides an ideal measure of any of the three aspects of human flourishing identified above.

So, what aspects of flourishing are most relevant if we are considering the extent to which relatives, friends and acquaintances are flourishing. In that context it seems reasonable to argue that psychological health, capability and opportunity are all relevant. For example, you might be able to think of individuals who would score highly in terms of PERMA even though they have limited capability and limited opportunities. You might be able to think of others who may have a fairly low PERMA score, even though they have had superior opportunities in life and seem to be functioning at a high level in many aspects of their work and family life. You might be able to think of people who have weak capabilities because they have wasted the opportunities available to them, and of others who have strong capabilities despite limited opportunities.

When we are assessing the extent that an individual is flourishing, it makes sense to consider the opportunities they have had, their current capabilities and their emotional well-being. It seems to me that an assessment would obviously be incomplete if it focused on only one of those aspects.

However, if we are looking at human flourishing from a public policy perspective, we need to have in mind what aspects of human flourishing public policy could, or should, be attempting to influence.

It doesn’t make sense for governments to accept responsibility for raising PERMA scores, because PERMA scores depend on factors that are largely outside the influence of governments. That is why the role of governments in relation to mental health has traditionally been focused on protecting community members and protecting the mentally ill from those who might seek to harm them. As options for treatment of mental illness have improved, the role of government in funding treatment has become more like its role in relation to other forms of illness. The main difference arises in relation to compulsory hospitalisation/treatment of people who are a danger to the community or themselves.

It seems to make more sense for governments to accept greater responsibility for raising the capability of citizens, but that is not without problems. Governments of wealthy countries have arguably played a role in enhancing the capability of many citizens through their involvement in funding of education and healthcare. However, it seems to me to be more accurate to describe those government interventions as attempting to promote more equal opportunities, rather than raising capabilities. Opportunities provided in education, for example, do not always end up raising the capability of students to earn an income after graduation.

The role played by governments in promoting more equal opportunities seems to me to be rather like a parent intervening in a card game to take good cards from some children to give to others, or to take out of the game. Despite the redistribution of opportunities, the scores throughout the game still depend largely on how well individuals play the cards in their hands. Further paternalistic intervention to nudge the weaker players might improve their scores, but is also likely to weaken their incentive to enhance their capabilities.

In my view, from a public policy perspective, human flourishing should be primarily about enabling opportunities to grow, rather than about redistributing the available opportunities. It makes sense for governments to accept responsibility for facilitating growth in opportunity because government policies impinge greatly – often negatively – on growth of opportunity. Although the growth of opportunity is often uneven, we have seen with the history of economic growth since the industrial enlightenment, that as some people take advantage of new opportunities – for example as a result of technological innovations, additional opportunities are created for others. The growth of opportunity has also provided the wherewithal for individual and collective efforts to improve economic security for those who are not capable of providing for themselves.

Growth of opportunity is not identical to economic growth as conventionally measured. Growing opportunities for people to live the kinds of lives that they aspire to have obviously encompasses considerations of environmental quality and all the other important things that are excluded form GDP measures. As noted in a recent post, the objective of growing opportunity amounts to the same thing as the Wealth Plus objective advocated by Tyler Cowan in his recent book, Stubborn Attachments.
Summing up, considerations of psychological health and capability are highly relevant to assessment of the extent that individuals are flourishing, but the primary focus of public policy should be facilitating growth in the opportunities for people to live the kinds of lives they aspire to have.   

Tuesday, November 6, 2018

How does skin in the game help solve the Black Swan problem?


As I was reading Skin in the Game, Nassim Taleb’s latest book, the thought crossed my mind that the author might classify me as an IYI (intellectual yet idiot). He puts economists in the IYI category along with psychologists.
Taleb writes: 
Knowing ‘economics’ doesn’t mean knowing anything about economics in the sense of the real activity, rather than the theories … produced by economists”. 
I agree. Some economists know little about the real world.

Despite his low opinion of economists, the author acknowledges that some of the economists I admire, including Friedrich Hayek, Ronald Coase and Elinor Ostrom, had useful insights about the real world. He even suggests that Paul Samuelson made a useful contribution by pointing out that people reveal their preferences in their market behaviour rather than in what they say.

Rather than viewing Nassim Taleb’s offensive anti-intellectualism as evidence that he suffers from SFB, I think economists and psychologists should view it as a clever ploy to attract the attention of their students. I hope Taleb succeeds, and also hope that his book helps students to pose difficult questions for some of their professors.

There is some irony in the fact that Taleb has a low opinion of intellectuals, since Daniel Kahneman views Nassim Taleb as “one of the world’s top intellectuals”. Kahneman, a psychologist, won the Nobel prize for economics, largely for his research on asymmetry in the way people value potential gains and losses in making decisions. Taleb is critical of that research.

The question I raised at the outset was prompted by the following passage:

Skin in the game helps to solve the Black Swan problem and other matters of uncertainty at the level of both the individual and the collective: what has survived has revealed its robustness to Black Swan events and removing skin in the game disrupts such selection mechanisms. Without skin in the game, we fail to get the Intelligence of Time".

It is worth trying to take that apart to understand the reasoning behind it.

Skin in the game is about more than just sharing in the benefits of an activity. It involves symmetry and reciprocity – paying a penalty if something goes wrong as well as sharing in the rewards for risk taking.

Most people who provide us with goods and services still pursue occupations where they have skin in the game. The problem is that many of the people who don’t have skin in the game - for example, politicians, bureaucrats, bankers and university professors - occupy positions where their mistakes can have far-reaching consequences.

The Black Swan problem arises when we ignore extreme events – potential disasters - that occur infrequently. Taleb’s main point is that there are some risks that we can’t afford to take even though there is a low probability that they will occur at any point in time. His book, The Black Swan, was published in 2007 and made him famous following the 2008 financial crisis. Taleb contends that banks and trading firms are vulnerable to hazardous Black Swan events. The bank blow-ups occurred in 2008 as a result of hidden and asymmetric risks in the financial system.

At the level of the individual, skin in the game helps to solve the Black Swan problem because it helps people to focus on their need to survive in order to succeed. Taleb argues for profiting from risk-taking that doesn’t threaten survival. He points out that Warren Buffet made his billions by picking opportunities that passed a high threshold, rather than by applying cost benefit analysis.

At the collective level, skin in the game helps to solve the Black Swan problem because it requires decentralization of decision-making. Under a decentralized system the costs of the mistakes made by individuals are borne by those individuals, without necessarily affecting other participants. Centralized systems are exposed to the Black Swan problem because they can only be run by people who are not directly exposed to the cost of errors.

What has survived has revealed its robustness to Black Swan events. That applies to ideas, institutions, technologies, political systems, procedures, intellectual productions, car models, scientific theories etc. The only effective judge of things is time, because time is equivalent to disorder. The longer things survive, the more likely it is that they will have survived Black Swan events.

Removal of skin in the game disrupts selection mechanisms. When people have skin in the game they are less likely to reject ideas that have withstood the test of time in favour of new ideas that that have been published in peer-reviewed journals. A lot of findings published in peer reviewed journals fail subsequent replication tests.  

Without skin in the game, we fail to get the Intelligence of Time. Time removes the fragile and keeps the robust. The life expectancy of the nonfragile lengthens with time. Taleb writes:
The only definition of rationality that I’ve found that is practically, empirically, and mathematically rigorous is the following: what is rational is that which allows for survival."

I think Nassim Taleb is correct in his view that skin in the game helps to solve the Black Swan problem. Unfortunately, however, when it is comes to consideration of potential Black Swan events that threaten the survival of humanity, the political systems we have inherited do not ensure that political leaders have enough skin in the game for their minds to focus appropriately. Political leaders focus on their survival at the next election rather than on the survival of humanity. It is up to citizens who are concerned about potential Black Swan disasters to initiate appropriate action themselves.

Saturday, October 27, 2018

Why don't all sides of politics agree to pursue Wealth Plus?


It would be great if the major political parties in all countries of the world were to pursue Wealth Plus as a national objective. However, I don’t think that is likely to happen soon, even in the wealthy countries that have implicitly pursued similar objectives in the past.

Wealth Plus is the objective advocated by Tyler Cowan, in his recently published book, Stubborn Attachments: A vision for a society of free, prosperous, and responsible individuals. Tyler defines Wealth Plus as:

‘The total amount of value produced over a certain time period. This includes the traditional measures of economic value found in GDP statistics, but also includes measures of leisure time, household production, and environmental amenities, as summed up in a relevant measure of wealth."

Tyler also suggests that we should aim to “maximize the rate of sustainable economic growth, defined in terms of a concept such as Wealth Plus”. He suggests that we should think more broadly about economic growth as an ongoing self-sustaining process that produces goods that contribute to human welfare, rather than in terms of growth in GDP as conventionally measured.

I think the objective that Tyler is writing about could better be described in terms of pursuing growth in opportunities for human flourishing – growing opportunities for people to live the lives that they aspire to have. I prefer that terminology partly because it fits neatly with the view I expressed in Free to Flourish that good societies are characterised by widespread opportunities for human flourishing. In my view, progress is movement toward better societies, with growing opportunities for human flourishing.

An emphasis on human flourishing raises a question, touched on in an appendix, of why human flourishing should be prioritized above the flourishing of non-human lives. One good reason is that flourishing humans show greater consideration for non-human lives than do humans who are struggling to survive. Discussion about what constitutes ethical behaviour toward non-human lives is a feature of modern life in prosperous countries. More fundamentally, if ethical behaviour is intrinsic to human flourishing – as Aristotle argued persuasively long before modern psychologists took up the idea - then human flourishing must encompass ethical behaviour toward all other living creatures.

Tyler makes a strong case that we should care about the well-being of people in the distant future just about as much as we care about the well-being of the current generation. His argument is based partly around the implications of discounting the value of future human lives. Under any positive discount rate, one life today could appear to be worth as much as the entire subsequent survival of humanity if we use a long enough time horizon for the calculation.

The argument for using a low discount rate seems to me to have considerable force when we are considering the benefits of public investments to protect future generations from potential catastrophes. As previously discussed on this blog, that argument is pertinent in considering what discount rates should be used for public investments to avert or mitigate climate change risks.

I am not persuaded by Tyler’s argument that the well-being of future generations isn’t adequately considered today in the choices “we” are making about “how rapidly to boost future wealth”. The “we” Tyler is referring to is the collective “we” that makes public policy choices. As I have previously suggested, the argument that positive externalities cause free markets to produce too little economic growth does not appear to have any more merit than the argument that negative externalities cause free markets to produce too much economic growth. Tyler hasn’t persuaded me that government intervention can improve on the growth outcomes of the savings and investment decisions made by individuals and families in a free market.  

In any case, the choices that governments make about “how rapidly to boost future growth” seem to be largely implicit rather than explicit. Boosting economic growth may be a motive for public investment in research and some forms of education, but I can’t think of many other examples. Perhaps what Tyler has in mind are the choices that governments make that unintentionally reduce the rate of economic growth. For example, he notes that when government spending is cut, investment spending is often the first area to go while entitlements for the elderly remain intact.

Tyler is on firm ground in arguing that the strengthening of good institutions today can be expected to provide benefits for centuries into the future. There is strong historical support for the view that growth promoting institutions and a history of prosperity tend to have enduring effects.

Tyler suggests that three key questions should be elevated in their political and philosophical importance, namely:

1.       What can we do to boost the rate of economic growth?

2.       What can we do to make our civilization more stable?

3.       How should we deal with environmental problems?

He goes on to observe:

“The first of these is commonly considered a right-wing or libertarian concern, the second a conservative preoccupation, and the third, especially in the United States, is most commonly associated with left-wing perspectives. Yet these questions should be central, rather than peripheral, to every political body. We can see right away how the political spectrum must be reshaped to adequately address these concerns. Politics should be about finding the best means to achieve these ends, rather than disputing the importance of these ends."

I agree that is what politics should about, but I am not optimistic that political leaders can pursue those ends diligently, even if they can be persuaded to embrace them. Liberal democracy has been weakened in recent decades by widespread failure to adhere to the norms of self-reliance and reciprocity that underpin it. As predicted by James Buchanan (see this post for explanation) failure of the liberal democracy is becoming increasingly likely as a higher proportion of the population becomes dependent on government, and voters increasingly seek to use the political process to obtain benefits at the expense of others.  

It is difficult to escape the conclusion that we are heading toward a tragedy of democracy. When interest groups view the coercive power of the state as a common pool resource to be used for the benefits of their members, the adverse impact of tax and regulation on incentives for productive activity produce outcomes that a detrimental to just about everyone. The process seems to be intensifying with the fragmentation of broad interest groups supporting the centre left and centre right of politics.

As Henry Ergas has noted recently, with particular reference to Australia, it has become “increasingly difficult for “catch-all” parties — as both our main parties have been — to position themselves in such a way as to aggregate a winning coalition. The concept of the ‘average’ or ‘median’ voter, which used to help orient the parties’ choices, has lost its substance, as has the notion of ‘the centre’. (“The Australian”, 25 Oct. 2018).

Similar problems are evident in other mature democracies. The process of fragmentation of broad interest groups has accelerated in many countries over the last decade or so as innovations in the social media have greatly increased the power of the rabid sports fans of politics - aptly referred to by Jason Brennan as Hooligans. Hooligans tend to seek out information that confirms their pre-existing political opinions and ignore or reject information that contradicts those opinions. They tend to communicate in echo chambers that reinforce their outrage when the leadership of the major parties is unresponsive to their concerns.

In some countries we are seeing ill-informed Hooligans taking over major parties and the reins of government. In other countries splinter parties comprised of Hooligans are attracting supporters away from major parties and making it more difficult for them to pursue coherent policy agendas. No matter which way it is happening, the growing political influence of the Hooligans makes it increasingly difficult for political leaders to pursue Wealth Plus, or any goals relating to the future well-being of the broader communities who elect them.

As more people come to recognize that liberal democracy is confronted by deep problems, perhaps some of them will attempt to make concerted efforts to reform political institutions so that they produce better outcomes. However, it is not obvious what reforms would stop the rot or how reforms could be achieved. A major economic crisis might help to focus the minds of responsible political leaders, but it could just as easily further strengthen the hands of the Hooligans.

I now think the best hope for future generations lies in the potential for new technology to enable people to circumvent the obstacles created by the Hooligans of national politics. As Max Borders has suggested (see discussion on this blog here and here) technological innovations provide us with the potential to “reweave the latticework of human interaction to create a great reconciliation between private interest and community good". The social singularity has potential to enable people to enjoy growing opportunities to live the lives that they aspire to have.