Should people seek contentment or accomplishment?

This is a tricky question, for reasons that will become apparent as you read on.

I have been thinking that one of the problems in using life satisfaction as a measure of human flourishing is that satisfaction implies contentment, and contentment may kill motivation to do things that are worthwhile. That has made me wonder whether or not it is possible for people to become too satisfied with their lives.

When I considered this issue in writing Free to Flourish, I concluded that despite such problems, life satisfaction might still be an adequate measure of human flourishing. I reached that conclusion on the basis of a comparison of different measures of subjective well-being by the British Office of National Statistics (ONS). The results showed a fairly high level of correlation (0.66) between responses when people were asked ‘How satisfied are you with your life nowadays?’ and ‘Overall, to what extent do you think the things you do in your life are worthwhile?’.

However, that doesn’t really answer the question of whether it is better for people to seek contentment or accomplishment. It may be possible that people obtain greater satisfaction from life when they seek worthwhile accomplishment than when they seek contentment. It may also be possible that contentment helps people to devote their lives to doing things that they consider to be worthwhile. Such ideas are neither new, nor necessarily inconsistent.

People may not actually need to choose between contentment and accomplishment. Perhaps we only think a choice has to be made because we tend to equate contentment with sloth and accomplishment with frenzied effort. It is not obvious that a choice has to be made if contentment means equanimity and accomplishment means achievement of a worthwhile goal.

My intuitions suggest to me that the important requirement for both contentment and accomplishment is for people to make conscious choices about their goals in life, rather than just drifting without purpose. As children, we are strongly influenced by parents, peers teachers etc. but as we grow to adulthood, we cannot fully flourish unless we make good use of our emotional and intellectual resources to manage our own lives.

So, where is the evidence that goal setting works?  When I went looking for such evidence, the first thing I found was a post by Ray Williams entitled ‘Why goal setting doesn’t work’ on the ‘Psychology Today’ blog. Williams presents several different arguments to cast doubt on goal-setting, but his most powerful point seems to be the following:

‘The inherent problem with goal setting is related to how the brain works. Recent neuroscience research shows the brain works in a protective way, resistant to change. Therefore, any goals that require substantial behavioral change or thinking-pattern change will automatically be resisted. The brain is wired to seek rewards and avoid pain or discomfort, including fear. When fear of failure creeps into the mind of the goal setter it commences a de-motivator with a desire to return to known, comfortable behavior and thought patterns’.

That left me somewhat confused, so I took advantage of the fact that Jim Belshaw was conducting a discussion about goal setting on his blog, to ask participants what they thought about Ray Williams’ contribution. One of the participants, Evan Hadkins, who has a particular interest in personal development issues, made the following comments (slightly edited):

‘The goal setting literature does emphasise being realistic (the usual acronym being SMART). This of course is a bit of a cop out - if the goal isn't achieved then it wasn't realistic for one reason or another.

His reductionist pleasure-pain/fear psychology is wrong. (He is not alone in this error.)

I think he is a bit unfair to the goal setters. Lots of them talk about goals serving your wider values and choosing carefully what goals you aim for.

As to being in the now: Our longings, regrets, memories, fantasies, visions, plans and everything else all occur now. He doesn't understand this. He is not alone in this misunderstanding.

Overall I think it is pretty sloppy and confused. Lots of the goal setting literature emphasises worthwhile aims and being careful what you wish for. And his advice about intentions has all the problems of change that he levelled against goal setting. But I do agree with what I think is his basic point: goals should be realistic and serve worthwhile ends’.

I agree with Evan’s comments. Evan’s point about reductionist pleasure-pain/fear psychology brought to mind the ‘no failure just feedback’ idea that I picked up from NLP practitioners a few decades ago. The point is that our responses to evidence of failure to attain goals depend on our attitudes. We are unlikely to be devastated if we value the feedback we obtain as providing opportunities to consider how we can improve our future performance.

Evan’s point about choosing carefully what goals you aim for brought to mind the NLP concept of a ‘well-formed outcome’, with its emphasis on specifying the goal in a way you find compelling and running quality control checks to make sure that the desired goal is right for you in all circumstances of your life.

My answer to the question I raised initially is that people should be seeking contentment and accomplishment, making conscious choices about the kind of life they want to lead, by pursuing goals they consider worthwhile and feel passionate about. In my view it is not possible for individuals to be fully flourishing if they just drift aimlessly – unless, of course, drifting aimlessly is a goal they choose to pursue with a great deal of passion.  

Is ambition making you miserable?

A guest post by Kelly Opferman (further information below) to open up discussion on an interesting topic.

There have been some interesting discussions recently about the role that ambition plays in our overall feeling of happiness, including one piece in The Atlantic. The question is whether or not your reaching for career success undermines your sense of happiness and your overall well-being. There has not been a conclusive answer to the question, but the consensus seems to be that  is indeed a trade-off that you make when you shift your focus to your career and other accomplishments.

Here are a few reasons why too much ambition may be undermining your happiness and maybe even making you miserable:

Comes at the Cost of Relationships

The primary reason why your ambition could by making you unhappy is that it comes at the cost of your relationships. Tim Kasser, the author of the book The High Price of Materialism, argues that the pursuit of money, possessions and social status creates distress and lowers well-being, primarily because of the damage that such pursuits inflict on relationships.

Researchers John Helliwell and Robert Putnam found in a 2004 study that marriage, family, social ties, civic engagement and working relationships all had a significant impact on happiness.

If it is our relationships that make us happy, then neglecting these in the pursuit of our ambition can cause us to become profoundly unhappy.

Leads to Loneliness

Conventional wisdom says it's lonely at the top. That's because you don't have time for relationships when you are putting in the long hours to achieve your goals or try to gain prominence in your workplace. Even if you manage to maintain relationships while pursuing your ambition, you likely won't have the time that you would like to spend with those people and to enrich your relationships.

As a result, you will have achieved great successes, but it will likely feel empty. You may feel happiness at having accomplished something great, but the victory will feel hollow when you don't have those strong personal connections to form the foundation for a happy life.

Creates a Lot of Stress

Working long hours without making time for family and friends can lead to unhealthy levels of stress, which can bring down your mood and put you at risk for a number of health problems. A new study in the Journal of Applied Psychology found that ambition is negatively associated with longevity -- meaning that ambitious people are likely to live shorter lives. Ongoing high levels of stress can lead to depression, sleep problems, and a number of other chronic health conditions. Not only can it reduce your overall feelings of happiness, but it can also shorten your life span.

The researchers in the Journal of Applied Psychology said that more research is needed to determine the real link between ambition and happiness. However, the research that has already been done shows that there is reason to believe that the more ambitious you are, the less happy you are likely to be.

What are your thoughts? Do you think that ambition can make you miserable? Share your thoughts in the comments!

The Author:

Kelly Opferman is a seasoned writer who at this time focuses on her site at: http://www.autoloancalculator.org. Her educational background includes finance, teaching, and economics.

Postscript by Winton

I have now had an opportunity to read a version of the article in the Journal of Applied Psychology, that Kelly refers to. The overall findings in the article, by Timothy Judge and John Kammeyer-Mueller, suggest that the effects of ambition are generally favourable for the individuals who have it. The qualification about longevity seems to me to be more about inconclusive results than evidence of a negative relationship. The authors found that ambition is positively related to educational attainment, incomes and satisfaction with life.

The study seems to be soundly based. Data are from the Terman life cycle study in the US, involving a sample of 717 individuals followed over seven decades. The most important qualification about the sample is that subjects were chosen for inclusion in the Terman study because they were assessed to have high ability.

The definition of ambition used by the authors is ‘persistent and generalized striving for success, attainment and accomplishment’. It is measured by a combination of self-assessment and parental assessment of whether the individual has ‘a definite purpose in life’ and whether ambition is listed among the individual’s most favourable qualities or lack of ambition is listed among the individual’s most serious faults.

In their suggestions for further research, the authors acknowledge that the effects of ambition may depend on the goals that are sought. For example, other research suggests that people who seek fame or wealth for the pleasure they imagine that it will bring them, are less likely to have happy lives than those who have nobler ambitions.  

Does our hope for social progress depend on improvement of human nature?

John Gray's recent book, 'The Silence of Animals' is subtitled: 'On progress and other modern myths'. My main reason for reading it was to see whether it provided a serious challenge to the positive view of progress presented in my book, Free to Flourish.

From what I had read of John Gray's writings over the last decade I had expected that The Silence of Animals would be a book that could only be enjoyed by people who like wallowing in hopelessness. I was pleasantly surprised that I had a positive reaction to most of the book.

Rather than suggesting that we should wallow in hopelessness, the author argues the merits of contemplation, 'as an activity that aims not to change the world or to understand it, but simply to let it be'.  But how has it come about that increasing numbers of humans now have the capacity to devote some of their time to such an activity? Without acknowledging it, the author seems to me to be endorsing the progress that has given more people the luxury of being able to spend time observing the natural world, without having to focus on the usefulness of animals and environments as sources of food, shelter and other necessities of life.

As I see it, this book does not actually make a cogent case that human progress is a myth. The author's target seems to be a rather different beast - the idea that human nature improves along with the growth of knowledge. He writes:

'Science and the idea of progress may seem to be joined together, but the end-result of progress in science is to show the impossibility of progress in civilization. Science is a solvent of illusion, and among the illusions it dissolves are those of humanism. Human knowledge increases, while human irrationality stays the same. Scientific inquiry may be an embodiment of reason, but what such inquiry demonstrates is that humans are not rational animals. The fact that humanists refuse to accept the demonstration only confirms its truth'.

That is beside the point. As the author must once have known (as a person who has read the works of Friedrich Hayek) what most of us perceive as progress can be viewed as a process whereby the evolution of superior social rules has enabled some groups to flourish and for the rules of the more successful groups to become identified with civilization. This process does not depend upon human rationality. In fact, Hayek observed that in view of the rapid changes in human society that had occurred over the last eight thousand years it is not surprising that adaption of the 'non-rational part' of humans 'has lagged somewhat', and that 'many of his instincts and emotions are still more adapted to the life of a hunter than to life in civilization' (CoL, 1960, p 40).

The examples that John Gray gives of irrationality and inhumane conduct under communism and Nazism are also beside the point. The view that we are better people than our Stone Age ancestors can probably be dismissed as hubris, but that doesn't mean that there has been no social progress over the last eight thousand years.

In order for John Gray to persuade me that progress is a myth he would need to establish that the rules of the game of modern societies have reduced the opportunities for people to have happy and meaningful lives.  In my view that would be an impossible task and it is not surprising that the author does not attempt to do this. Our hope for progress does not depend on improvement of human nature. It depends on maintaining rules of the game that enable people to live in peace, to realise their potential as individuals and to enjoy a measure of economic security.

This book would have been much better if the author had defined his target more carefully as the myth of improvement in human nature or the myth of human superiority. Even as it stands, however, the book is not as bad as I thought it might be.  

How can individuals learn to manage their self-control problems?

The essential characteristic of a self-control problem is failure to do what you want to do, even though you have sufficient knowledge, skill and opportunity. If you opt to have an additional glass of wine after weighing up the short term pleasure against the longer term pain that might result, that doesn't qualify as a self-control problem. But if after choosing to deny yourself the additional glass you often give in to an impulse and have it anyhow, you may have a self-control problem.  

Opinions differ about the extent that individuals can exercise will-power to deal with self-control problems, with support from their families, friends and professional advisors. For many thousands of years self-control problems were often viewed as evidence of possession by evil spirits. More recently, the observation that action precedes thought has brought into question the concept of free will and provided many people with a pseudo-scientific reason to doubt their own capacity to exercise will-power. This has been accompanied by a tendency for many people to re-define individual self-control problems as social problems. For example, individual health problems associated with nicotine addictions, alcoholism and obesity are frequently referred to as public health problems.

The advent of behavioural economics and happiness economics has unfortunately contributed to the view that individual self-control problems are social problems that should be dealt with by public policies. In my view, the efforts of economists to move beyond MaxU, the profession's conventional assumption that individuals maximize their utility, should be welcomed. It has become increasingly difficult to defend MaxU in many contexts in the face of evidence (e.g. a paper by Alois Stutzer and Bruno Frey) that people who are experiencing self-control problems tend to be relatively unhappy.

However, practitioners of behavioural and happiness economics take a step too far when they imply that identification of self-control problems is sufficient justification for government intervention to control people's lives, or remove temptations from them. I have presented my views on why that is so in Free to Flourish. In brief, the nature of humans is such that individuals need to exercise their capacity to make choices and to accept responsibility for them if they are to realise their potential. In other words, humans need to be in control their own lives if they are to flourish. It is also in the nature of humans to make mistakes, but the experience of learning from mistakes has potential to make individuals more competent in making decisions. By contrast, attempts by governments to protect people from themselves run the risk of making them increasingly dependent on government.

One possible objection to the view that people should be free to flourish is that this would be likely to result in worse outcomes for those who have had self-control problems from an early age. The famous marshmallow experiment, conducted at Stanford by psychologist Walter Mischel, suggests that children who have difficulty in deferring gratification to obtain greater reward at four years of age are likely to be prone to self-control problems throughout their lives. Findings of the Dunedin longitudinal study, reported byTerrie Moffitt et al, suggest that childhood self-control predicts such things as physical health, substance dependence and personal finances later in life (at age 32) about as well as intelligence and social class origins.

The findings of the Dunedin study also suggest, however, that it is possible for people to learn to exercise greater self-control. Some children moved up in self-control rank over the years of the study and this had a positive impact on their well-being as adults.

There has been previous discussion on this blog of research findings relating to ways in which people can learn to exercise greater self-control. For example, on the basis of extensive psychological research, Roy Baumeister argues strongly that individuals have the potential to exercise a great deal of self-control if they know how and want to do so.

Research by another psychologist, Tim Wilson, suggests that autonomy support can be helpful. This involves helping young people understand the value of different alternatives facing them and conveying a sense that they are responsible for choosing which path to follow.

Another relevant area of research, that I have recently begun to read about, concerns the role of construal. Research by Kentaro Fujita et al suggests that self-control is enhanced by high-level construal (the use of cognitive abstraction to extract the essential and goal-relevant features common across a class of events) rather than low-level construal (the process of highlighting the incidental and idiosyncratic features that render a particular event unique). What that means is that I would be more likely to maintain my resolve to have only one glass of wine with dinner (except for special occasions) if I construe the second glass as a bunch of calories that will require me to make greater sacrifices later to achieve my BMI target, rather than construing it as an immediate pleasure and entitlement.

If high level construal can help people to manage their self-control problems, that suggests to me that it is important for individuals to find ways to inspire themselves to pursue higher level goals. Techniques such as mBraining, discussed on this blog a few weeks ago, could help.

Can happiness surveys predict the desire to migrate?

The Gallup organization has found in its surveys that about 15 per cent of the world’s adults would like to move to another country permanently if they had the chance. The rate varies substantially between different parts of the world, with about 38 per cent of adults in Sub-Saharan African countries saying that they would like to move permanently if they were able.

About 80 per cent of those who wish to leave low-income countries would like to go to high-income countries, with the United States the most popular destination in terms of absolute numbers. The desire to move tends to be higher in countries with medium to low human development, according to the UN’s Human Development Index.

Gallup has constructed a Potential Net Migration Index (PNMI) which relates the desire to move into and out of particular countries to their population. The PNMI is the estimated number of adults who would like to move permanently into a country if the opportunity arose, subtracted from the estimated number who would like to move out of it, as a percentage of the total adult population. There are a substantial number of countries with a PNMI score above 100 per cent (which implies that the population would more than double under free migration) and a substantial number with a PNMI score below 50 per cent (which implies that the population would fall below half current levels under free migration).

Can PNMI scores be viewed as indicators of the perceived wellbeing in different societies? Unless we have reason to believe otherwise, it would be reasonable to expect societies with high PNMI scores to have potential to provide high levels of wellbeing and societies with low PNMI scores to provide low levels of wellbeing.

On that basis, we might expect that happiness levels (i.e. indicators of subjective wellbeing) in different countries would predict PNMI scores. If indicators of subjective wellbeing are not good predictors of PNMI scores, we would need to consider the possibility that PNMI scores reflect factors other than wellbeing levels in different countries and/or that wellbeing indicators are biased by cultural or other factors.

The subjective wellbeing indicators that seem most relevant are the Gallup estimates of the percentage of people thriving and suffering in each country. Gallup classifies survey respondents as thriving, struggling or suffering, depending on their evaluations of their current and future lives using the Cantril ladder. The percentages thriving could reasonably be viewed as a ‘pull factor’, encouraging immigration, while the percentages suffering could be viewed as a push factor, encouraging emigration.

I have been able to match the PNMI and life evaluation data for 111 countries. There is some correspondence between countries in which a relatively high proportion of the population is thriving and high PNMI scores. The top 10 countries on both criteria include four countries in common (Sweden, Australia, New Zealand and Canada). Among the countries not included in the top 10 in terms of percentage thriving is Singapore, ranked first in terms of PNMI scores, but with only 34 per cent of the population classified as thriving. Of the countries included in the top 10 in terms of percentage thriving, Brazil had the lowest PNMI score (ranked 59^th ) even though 58 per cent of the population of that country was classified as thriving.

At the other end of the scale, there is no correspondence among the 10 countries with highest levels of suffering and lowest PNMI scores. The 10 countries with lowest PNMI scores are Haiti, Sierra Leone, Zimbabwe, Nigeria, Ethiopia, Liberia, El Salvador, Comoros, Senegal and Ghana (all with scores below -40 per cent). Of the countries included in the top 10 in terms of percentage suffering, Bulgaria (with 45 per cent classified as suffering) had the highest PNMI score (ranked 32^nd i.e. well above Brazil).

For those who are technically minded, the estimated coefficients of a regression analysis explaining PNMI in terms of percentage thriving and percentage suffering had the expected signs, but only the coefficient on the thriving variable was significantly different from zero at the 95 per cent level.

This analysis suggests that happiness levels in different countries are better at predicting the attractiveness of different countries as destinations for migration than at predicting the desire to emigrate. That is consistent with Gallup’s research findings suggesting that people who want to migrate are disproportionately young and educated and more likely to have relatives or friends who have lived in foreign countries.

However, the analysis doesn’t do much to improve my confidence in subjective wellbeing indicators. If 59 per cent of people are thriving in Brazil, why isn’t it a desired destination for migration? Again, if only 34 per cent of the population of Singapore are thriving, why would so many people want to move there?

Is it the duty of government to realize the good life for all citizens?

‘If the first goal of the individual is to realize the good life for himself, the first duty of the state is to realize, insofar as it lies within its power, the good life for all citizens’.

The quoted passage is from ‘How Much is Enough?’(2012) by Robert Skidelsky - a biographer, economics professor and member of the British House of Lords - and his son. Edward, a philosopher.

Some readers might think that the quoted passage implies support for the view that it is the role of government to ensure that individuals have the freedom to realize the good life as they choose. That is far from what the authors have in mind, however.

Robert and Edward Skidelsky are unashamedly paternalistic in their views on the role of government. They recommend that governments should promote the good life by taxing the rich more heavily, imposing sumptuary taxes, regulating labour markets more extensively, disallowing tax deductions for advertising, and imposing more restrictions on international trade and capital flows. They see such interventions as necessary to ‘free up’ more time for leisure, reduce income inequality, improve the social bases of health, personality, respect and friendship, and help people to live in harmony with nature.

The authors describe their policy approach as ‘non-coercive paternalism’ because it involves incentives and disincentives rather than commands. Yet coercion must still be involved. The authors do not suggest that people who do not share the Skidelsky view of the good life would be exempt from compliance with their proposed taxes and regulations.

How do the authors make a case for paternalistic interventions to encourage people to live the good life? J M Keynes (later Lord Keynes), a famous economist, plays an important role in their story. In 1928, Keynes predicted that within 100 years humanity would be able to satisfy all its material needs by working at most three hours a day. For a time, it seemed as though this prediction might prove to be correct, because a substantial proportion of the benefits of rising productivity were being realized through greater leisure. The Skidelskys suggest that at the beginning of the 1970s it looked as though the rich part of the world was close to ‘the dawn of universal abundance’.

What went wrong? The explanation offered by the authors is that governments shifted to a market-based philosophy when Margaret Thatcher and Ronald Reagan came to power. They acknowledge that free marketeers made some telling points about the crisis of Keynesian economics (the combination of rising unemployment and rising inflation) resulting from attempts to pursue full employment through fiscal deficits. But they claim that the oil price hikes of 1973 and 1979 played a bigger role in exposing economic rigidities and paving the way for a move toward free market policies.

So, how could a move toward greater freedom discourage people from choosing ‘the good life’? The authors’ explanation seems to have two components.

First, they argue that a free market economy gives employers power to make employees work longer hours. That doesn’t make sense to me. If large numbers of workers wanted to work shorter hours, surely it would be in the interests of employers to find ways to accommodate their desires. Over the last 40 years, it seems to me that working hours have actually become more flexible, with a move toward casual employment and greater willingness of many employers to allow workers to take time off to meet family obligations.

Second, the authors claim that capitalism rests on an endless expansion of wants: ‘It has taken away the consciousness of having enough’. The authors see advertising as the major culprit:

‘Advertising may not create insatiability, but it exploits it without scruple, whispering in our ear that our lives are drab and second-rate unless we consume “more”.’

This seems to me to be another weak point in the story. Advertisers didn’t suddenly begin to whisper in our ears with the move toward freer markets in the 1980s. They were whispering in our ears during the 1950s and 60s, when working hours were declining. And it is possible for people to cope with the whispering and to decide for themselves how much is enough. A lot of people choose non-materialistic lifestyles. Many of those who choose to work long hours and/or multiple jobs do so in order to enjoy a more relaxed lifestyle at a later stage of their lives.

I disagree profoundly with the central argument of this book that governments should construct incentives and disincentives to guide people to adopt that particular perception of the good life. Nevertheless, I enjoyed reading ‘How Much is Enough?’ I agree with much of the discussion of the concept of happiness and strongly support the view presented there that a happy life is more than just a string of agreeable mental states. I admired the way the authors developed the idea that we should consider harmony with nature as part of the good life for humans.

In a personal sense, I find myself substantially in agreement with the authors’ vision of the good life. If they had confined themselves to sermonizing I would be cheering instead of jeering.

What fantasies are associated with the modern pursuit of happiness?

A draft of the final chapter of ‘Free to Flourish’, the book I am writing, has just been uploaded to the book’s web site.

My aim in this chapter has been to draw together the threads from earlier chapters by identifying fantasies related to the issues discussed.

My list of fantasies:

• Happiness is just about experiences.
• Paternalistic governments can help us flourish.
• Restrictions on freedom help people to flourish.
• Governments should be seeking to maximize collective happiness.
• No society is better than any other.
• Progress is history.
• Democratic governments can’t fail.

It is tempting to try to summarize why I think the listed points are fantaasies, but anyone who is interested can easily follow this link and take a look at the draft of ‘Chapter 9: The Choice – Fantasy or Opportunity’.

Should punishment be about retribution or deterrence?

One of the things I found particularly interesting in ‘Who’s in Charge?’ by Michael Gazzaniga, is experimental evidence suggesting that people who believe they have free will tend to be better behaved than those who believe in determinism. People who don’t believe they have free will are apparently less likely to control their impulses to act selfishly or aggressively. This might be an instance where a little knowledge can be a dangerous thing.

The main point made by Gazzaniga – who is referred to as the father of cognitive neuroscience – is that individual responsibility is a dimension of life that cannot be illuminated by analysing single brains in isolation. In isolation, single brains seem to be governed by unconscious intentions – awareness comes after the event. Individual responsibility comes from social exchange. If we want to understand how individuals are responsible for their actions we need to look at the whole picture of a brain interacting with other brains.

Readers who are interested in a general overview of the book should read the review by Benedict Carey in the NYT.

Gazzaniga discusses the question of whether punishment should be retributive or utilitarian near the end of his book. Retributive justice is concerned primarily with giving criminals the punishment they deserve – the crucial variable is the degree of moral outrage the crime engenders. Utilitarian justice is concerned primarily with the future good of society. The author suggests that means it is concerned with deterrence, incapacitation (e.g. jailing criminals to prevent them from re-offending) and rehabilitation.

The interesting point is that although many people label themselves deterrists rather than retributivists, when it comes to actually handing out punishments self-labelling counts for little – people have a strong tendency to behave as retributivists. Irrespective of what they say, they tend to punish for harm done even when there is little likelihood that the person will re-offend in future.

Gazzaniga suggests that retributive justice has deep moral foundations in human evolution. We can use abstract consequentialist thinking when faced with abstract questions of public policy, but we resort to fairness judgements when faced with an individual who is to be punished.

For example, should harsh sentences be applied to minor offences to increase the deterrence effect? If you think about it in abstract terms, sending a person to prison for a relatively minor first offence (e.g. low range drink driving) might seem likely to increase the sum total of human happiness by deterring others from an anti-social behaviour that endangers human life. But would it be fair to hand out punishments that are disproportionate to the additional risks involved in particular instances?

Consider a more extreme example. Should judges make an example of celebrities by giving them greater punishment for minor offences? Since the punishment of celebrities would receive greater publicity it could be expected to have a greater deterrent effect, but in my view it would still be unfair.

Does utilitarianism necessarily imply that it is OK to impose unfair sacrifices on individuals for the future good of society? No. Some people who subscribe to utilitarianism, as a theory of normative ethics which views human happiness as the fundamental value judgement or ultimate criterion, consider the best test of actions or rules of action to be the extent to which they promote social cooperation. For example, Henry Hazlitt argued that ‘for each of us social cooperation is the great means of attaining nearly all our ends’. He noted that social cooperation ‘has the great advantage that no unanimity with regard to value judgements is required to make it work’. It enables the disparate goals of different individuals to be reconciled and harmonized. (‘The Foundations of Morality’: 35-36).

Leland Yeager has argued:

‘Regardless of just what plausible interpretation we give to happiness, social cooperation is prerequisite to its effective pursuit. Lying, cheating, and stealing subvert happiness because they subvert the prerequisite cooperation. Telling the truth, keeping promises, and respecting other people’s rights and property are conducive to cooperation. We come to believe propositions like these through factual and logical analysis of what conditions help individuals pursue their own diverse goals effectively’ (‘Ethics as Social Science’, 2001: 83).

Yeager also makes the point:

‘Emphasis on voluntary cooperation warns against imposing unfair sacrifices on individuals for the supposed greater good of a greater number’ (p. 82).

This line of reasoning suggests to me that if social cooperation is the objective we should be seeking retribution i.e. giving criminals the punishment that they deserve – even if we are sufficiently civilized not to seek pleasure from their suffering.

Michael Gazzaniga comes to a similar conclusion in looking at the issue from an evolutionary perspective. He suggests that humans have evolved to cooperate on a massive scale with unrelated others partly by punishing noncooperators. He leaves us to ponder: ‘If we don’t incapacitate the offenders, will the noncooperators take over and society fall apart?’

Postscript:
I was aware that I was being provocative in coming out in favour of retribution, when the point I was really trying to make is that justice should be primarily about fairness rather than deterrence. (As I acknowledge in response to a comment from kvd, however, there is an element of deterrence involved in fair punishment.) Retribution may mean giving people fair punishment but it can be mistaken for vengeance. Jim Belshaw had an interesting post yesterday about vengeance - which I largely agree with.

Comments from TBT (below) prompt me to acknowledge that I hope that evolution in public perceptions of fairness might enable able us to move further towards some kind of restorative system of justice. 

Are citizens' juries susceptible to groupthink?

In my last post I considered the question of whether citizens’ juries might help to lift public debate on issues which professional politicians find difficult to deal with. After looking at the process involved in a citizens’ jury on container deposit legislation, I concluded that it was likely to be particularly important for citizens’ juries to be asked the right questions.

The post provoked two different responses. Evan suggested that citizens’ juries could make a valuable input to policy, but there was a problem of legitimization i.e. the process required government backing. Anon (kvd) asked why it was necessary to place between ‘the people’ and their elected representatives a layer of ‘non-responsible, unelected, single-issue, unaccountable’ citizens’ juries. My response was that I agreed with both Evan and kvd, but what I meant was that both had raised good points. Citizens’ juries would certainly need to be seen to have legitimacy in order to have the desired effect on public debate. And the onus should certainly be on those who propose such innovations to show why they are necessary and are likely to succeed.

I think we should be looking for innovations to make the democratic systems work better because there is a tendency for democratic governments to over-reach – to raise public expectations of what they can achieve and to take on more responsibilities than they are able to cope with. This is reflected to some extent in the tendency for many governments to take on excessive debts, but I see the problem as much broader than that. I will write more about that at a later stage.

 I have had an interesting discussion with Shona (the person who suggested last year that it might be a good idea to think up a new political system) about the possibility that citizens’ juries might be susceptible to groupthink. The discussion arose because of the example in my last post of a citizens’ jury coming to a unanimous decision, while successive polls looking at the same issue found that support for the proposal diminished after provision of information to participants. Shona suggested that I should take a look at the relevant chapters of Stuart Sutherland’s book, ‘Irrationality’.

Sutherland makes the point that not only do people tend to conform to majority decisions but group attitudes tend also to be more extreme than those of individuals. Rather than the attitudes of each member of the group tending toward a mid-position, as members of the group interact they tend toward a more extreme position. One possible reason is that if the group attitude is tending in one direction, individual members may express more extreme views in order to gain approval from other members. Another possible reason is that the group is willing to take greater risks than its individual members because membership of the group spreads responsibility.

Research relating to legal juries suggests that conformity to majority views is common. For example, a US study by Nicole Waters and Valerie Hans indicates that while about 6 percent of criminal juries fail to reach unanimity over one-third of  jurors say that if the decision had been entirely up to them they would have voted against the jury’s decision.

The potential for members of citizens’ juries to conform to majority decisions and for group decisions to become polarised has been recognized by some researchers in this field. For example, R K Blamey, P McCarthy and R Smith of the ANU discussed these issues in their paper ‘Citizens’Juries and Small-group Decision-making’. The authors conclude that the fact that citizens’ juries are susceptible to biases does not necessarily mean that individual-based decision-making (e.g. via opinion surveys) should be preferred. They make various recommendations designed to minimize the weaknesses of group processes and to maximize their strengths.

There are some situations where the tendency of small groups to conform to majority decisions is desirable. For example, a fairly high degree of conformity to group decisions is required for a system of cabinet government to work effectively. It seems to me, however, that the tendencies for bias discussed above would pose substantial problems in using citizens’ juries in the manner I had contemplated. There is a good chance that the outcome of a citizens’ jury process would not be representatives of the views that a group of randomly chosen group of citizens would come to if they had the opportunity to consider an issue independently. 

How much willpower do we want to exercise?

Where does a person get the willpower to read a book with the title, ‘Willpower: Rediscovering our Greatest Strength’? A book with such a title could not help reminding readers of their past failures in exercise of willpower. However, I didn’t find the book by Roy Baumeister and John Tierney an ordeal to read. Rather than making me feel more guilty, the book left me feeling that some of my past failures might perhaps be understandable under the circumstances.

The authors discuss research findings which suggest that in the short term an individual’s willpower is limited and is depleted by exertion. When your willpower is depleted you are more likely to become frustrated and to act impulsively. This means that the best time to make changes in your life is when there are few other demands being made on you, so you can allocate most willpower to the task.

The book provides some good advice about how to deal with procrastination and the anxiety that can be associated with it. For example, once you make a definite plan to do the things that you have been procrastinating about, you will stop fretting about them. If you find yourself procrastinating by substituting other activities for the activity that should have highest priority, try the ‘nothing’ alternative. Set aside time to be spent either on the high priority activity or doing nothing.

The book also has good advice on how to deal with temptations. Postponement can work better than trying to deny yourself altogether. Where necessary, use pre-commitment. Set bright lines – clear unmistakeable boundaries that you expect your future self to respect. Monitor performance regularly and don’t forget to reward yourself for reaching goals.

One of the points that came through to me in the book is how careful we need to be in making judgements about the ability of other people to exercise willpower. For example, the book suggests that it is often a mistake to attribute obesity to lack of willpower. Paradoxically, many people who are over-weight or obese have in the past exercised a great deal of willpower in following crash diets that have resulted in rapid weight loss. The problem is that when subjected to diets that simulate the effects of famine, human bodies tend to respond by holding on to every fat cell they can.

My main reason for reading the book – apart from the feeling that my own willpower could do with some improvement – was to see what light it sheds on arguments for government interventions to remove temptations that are bad for individual health and well-being. This issue is not discussed directly but, as the subtitle implies, the book argues strongly that individuals have the potential to exercise a great deal of self-control if they know how and want to do so.

This raises the question of how much self-control each of us wants to exercise over our impulses. While reading the book I found myself thinking that I don’t actually want to remove from my life all temptations for impulsive behaviour that I might later regret. I feel that I may obtain some satisfaction from leaving myself somewhat vulnerable to impulsiveness. For example, while I accept that there would probably be health benefits in restricting my (already moderate) alcohol intake to one glass of wine per day, that is a bright line that I don’t want to draw – at least, not yet!

I suspect that a lot of other people think as I do about such matters. We feel that it is appropriate for the control we exercise over ourselves to be somewhat lenient. Some of the boundaries we set are deliberately flexible, for example with allowances for special occasions. We don’t want our lives to be totally governed by bright lines. The last thing we want is a paternalistic government that seeks to help us by taking the temptations out of our lives.
Paternalists tend to respond: ‘It's not about you. Our aim is to help vulnerable people’.  

So why don’t they help vulnerable people to develop the inner strength they need to deal with their addictions and leave the rest of us to run our own lives for ourselves?

Where is Ross Gittins coming from?

A few days ago, Evan, a person who comments on Jim Belshaw’s blog, wrote: ‘I think Ross Gittins is a good model for how to write on economics’. That was in response to a discussion Jim and I were having about Robert Frank’s ‘The Darwin Economy’ and the difficulty that we were experiencing in communicating on the issue of whether the ideology of the market is having too much influence in modern society. At least, that is my take on what the discussion was about. Jim and I agreed with Evan that Ross does write well.

It occurred to me soon afterwards that I have been ignoring Ross Gittins’ views on happiness for too long. Ross is the economics editor of the Sydney Morning Herald (SMH) and the leading economic journalist in Australia writing about happiness. When people have asked me what I think of Ross’s views on happiness I have refrained from saying much on the grounds that I rarely buy the SMH and haven’t read many of Ross’s columns in recent years.  I can’t use the excuse any longer, however, because I have discovered that Ross has a web site on which he posts his columns. (I have recenly included a link to the site on this blog to encourage myself to read his columns more regularly.)

When I looked at Ross’s site it was clear that, as well as the happiness theme, he is sometimes still playing an old tune that I like about the benefits of free trade. For example, one of the articles I read warns of the dangers to the rest of the economy from attempts to shield manufacturing industries from the consequences of the boom in the resources sector. This is consistent with the contribution Ross has made throughout his journalistic career in bringing good sense to public discussion of many economic issues.  I have a particularly high regard for the contribution that Ross made in earlier years in helping to improve public understanding of the costs of high trade barriers that were supporting inefficient resources use and unproductive work practices in this country. He deserves a medal!

But, what about Ross’s views on happiness? It wasn’t hard to find his review of ‘The Darwin Economy’. While well written and informative, the review is totally uncritical. In concluding his review, Ross gives the author, Robert Frank, the last word: ‘Frank concludes that the real reason we regulate markets is to protect ourselves from the consequences of excessive competition’. I was left with the impression that Ross concurs with that view.

How does Ross reconcile the view that regulation is desirable to protect against competition with his knowledge of how regulation has worked in the past in Australia to protect privileged interests at the expense of the rest of the community? How does Ross reconcile his opposition to economic growth, with his apparent ongoing support for productivity growth? I decided to buy Ross’s book, ‘The Happy Economist’ to see whether I could understand where he is coming from. (Since Ross is a strong supporter of international competition I’m sure he will not mind if I let readers of this blog know that I purchased the Kindle edition from Amazon for $9.99, rather than paying Allen and Unwin $26.99.)

I enjoyed reading Part I of the book, which is a discussion about such things as the nature of happiness, the evolutionary purpose of happiness, who is happy, whether wealth makes people happy, whether work makes them happy. This part of the book ends with a discussion of 10 hints about how to be happy. Perhaps it is strange for an economic journalist to be offering such advice, but from my (fairly extensive) reading in this field I get the impression that the advice Ross offers is based on the best research available.

Part II is comprised largely of an attack on mainstream economics and a sermon on ecological economics, mixed up with a strong dose of paternalism and proposals for increased government regulation. Despite all that, Ross manages somehow to convey the impression that he is more concerned about adulation of ‘the market’ than the actual existence of markets and competition.

Ross seems to be particularly concerned about the tendency of humans to over-indulge. He notes that many of us are tempted ‘to eat too much, get too little exercise, smoke, drink too much, shop too much, save too little, put too much on our credit cards, and work too much at the expense of our family and other relationships’.  He suggests that ‘individuals know they have trouble controlling themselves and would appreciate government taking temptation out of their way’.

This reminds me of a comment by the late Roger Kerr, executive director of the New Zealand Business Roundtable, in a speech aboutthe concept of progress that he made in 2009. Roger suggested that one consequence of the ‘fashionable academic preoccupation with happiness’ might be for more people to adopt the view: “I’m bald, fat and grumpy. What’s the government going to do about it?” I don’t think that is a necessary consequence of happiness research, but it seems to me that Ross is encouraging that kind of attitude in his paternalistic proposals. Among other things, Ross apparently wants governments to re-regulate shopping hours, limit advertising and take action to discourage spending on positional goods.

Ross’s presentation of his views on productivity, economic efficiency, market preferences and regulation involve as many twists and turns as the road from Thimphu to Punakha. At the risk of making this post excessively long, an appropriate place to begin might be with Ross’s claim that the regard mainstream economists have for ‘revealed preference’ – the idea that the choices people make reveals their preferences - has somehow led them to become ‘the great facilitators and advocators of economic growth – the high priests in the temple of Mammon’ (p 164). Economists who respect revealed preference actually have a long tradition of opposition to proposals by economic planners to lift savings and investment rates or give people incentives to work longer and harder in order to raise economic growth rates. My attitude has always been that if individuals prefer to spend rather than save or to enjoy leisure rather that to work long hours, their choices should be respected. A substantial component of my work involved providing advice about how governments could facilitate economic growth, but facilitating is about removing obstacles rather than pushing people around.

Ross makes it clear that he doesn’t see economic growth as being able to continue indefinitely – and in this regard he sees himself as one of history’s hastening agents (if I may borrow a phrase much used by a former work colleague). His discussion about ecological limits to growth and the desirability of the stationary state had me wondering how he was proposing to stop technological progress – a major source of economic growth. Ross eventually acknowledges that improvements in the efficiency with which resources are used are desirable. He suggests: ‘its growth in the throughput of natural resources we should forswear, not the rise in gross domestic product that comes from the continued pursuit of productivity improvement’ (p 221).

However, a few pages on Ross tried to convince me that I shouldn’t fear the end of economic growth. He states:

‘Many of the things that reduce our happiness stem from the search for greater efficiency so as to contribute to economic growth. Easing the efficiency imperative would be hugely liberating’ (p 229).

So, we will have productivity growth without the ‘efficiency imperative’ of market disciplines?

Ross agonizes further about efficiency a few pages later:

‘My fear is that, were the goal of increased efficiency to be abandoned, the motive of rolling back areas of privilege would be lost. It would then be a matter of first in, best dressed. Workers in unprotected industries would be obliged to continue propping up protected industries in perpetuity, with a great likelihood that, should further difficult times emerge, the privileged industries would be first in line for additional assistance in the name of preserving the status quo’ (p 233).

Well put! I am glad that Ross is troubled by that thought.

The closing sentence of Ross’s book reads: ‘In the end we are what we feel’. I think that might contain the key to the problem Ross has in reconciling his belief that because individual humans are inherently fallible they can’t be trusted to pursue happiness as they wish, with his admiration for the efficiency of markets and his understanding that governments are neither angelic nor infallible .

Our feelings are important. We obviously make ourselves unhappy when we make bad choices. But they are our choices. The nature of humans is such that we cannot flourish unless we have responsibility for our own lives.  

When can you trust your intuitions?

In my last post I discussed the part of Daniel Kahneman’s ‘Thinking Fast and Thinking Slow’ that I like least. In this post I will to discuss the part that I most enjoyed reading.

At the beginning of his book Kahneman sets up the idea that the human mind can be thought of as being comprised of two systems. System 1 operates quickly, with little effort and no sense of voluntary control. System 2 allocates attention to the effortful mental activities that demand it.

When I read that I immediately began to search for links to Timothy Gallwey’s concept of Self 1 and Self 2. Gallwey is a sports and business coach and author of popular ‘inner game’ books. I have read nearly all of Gallwey’s books and have written about them previously on this blog.

Gallwey observed that when he was playing tennis he seemed to have two identities. Self 2 was playing tennis and Self 1 was constantly interfering by telling him how to play and trying to get him to conform to his instructions.

It struck me that Gallwey’s Self 1 might correspond roughly to Kahneman’s System 2 and that Gallwey’s Self 2 might correspond with Kahneman’s System 1. Anyhow I didn’t find the link until I read Chapter 22 of ‘Thinking Fast and Thinking Slow’ in which Kahneman discusses his collaboration with Gary Klein, who turns out to be an admirer of Tim Gallwey's books.

Klein and Kahneman collaborated in a study directed toward answering the question of when you can trust an experienced professional who claims to have an intuition. Kahneman’s scepticism about intuitions was shaped by observing failures of intuitive judgements by experienced professionals.  He observed that experienced professional e.g. clinicians, stock pickers and political scientists often had too much confidence in their intuitions. He suggests that this occurs because System 1 tends to produce quick answers to complex questions, creating coherence where there is none.

Klein’s optimism about intuitive judgements by experienced professional was shaped by studies of leaders of fire fighting teams who seem to be able to make good decisions in emergencies without comparing options or knowing how they are able to sense the best course of action to take.

Klein and Kahneman agreed that successful intuitive judgement involves pattern recognition. Two basic conditions are necessary for acquiring a skill in intuitive judgement: an environment with sufficient statistical regularity for patterns to exist; and an opportunity to learn these regularities through prolonged practice.

Examples of statistically regular environments include sports, games such as chess, bridge and poker, and professions such as medical practice, nursing and fire fighting. By contrast, the failure of stock pickers and political scientists who make long term forecasts reflects the unpredictability of the events they are trying to forecast.

This all makes sense to me. When I am playing golf I should learn to trust Self 2 (System 1) and when I am trying to understand economic issues I should employ System 2 (Self 1).

However, that is an over-simplification. It probably isn’t wise to rely entirely on intuition when selecting which club to use when playing golf and the intuitions of economists have probably been the source of many a useful hypothesis about relationships between economic variables.

I particularly liked the way Kahneman ends his discussion of the relationship between System 1 and System 2 in the final chapter of his book. He suggests that System 2 is who we think we are – it articulates judgements and makes choices. (That is presumably why Tim Gallwey labelled it as Self 1.) Kahneman goes on to make the point that while System 1 is the origin of most of what we do wrong, it is also the origin of most of what we do right. The judgements and choices made by System 2 often involve endorsement or rationalization of ideas and feelings generated by System 1. 

Does libertarianism rest on rational actor assumptions?

‘The assumption that agents are rational provides the intellectual foundation for the libertarian approach to public policy: do not interfere with the individual’s right to choose, unless the choices harm others’ – Daniel Kahneman, ‘Thinking Fast and Slow’, Penguin, 2011.

I feel as though I am being somewhat churlish in protesting about Kahneman’s comments on libertarianism, which amount to only a few pages near the end of a 400 page book. In my view Kahneman’s book deserves high praise and it has indeed been widely praised (for example, even in a post on his blog by  David Friedman, who describes himself as an anarchist-anachronist-economist). Having thought slowly about the matter, however, it seems to me that it is important to try to prevent paternalists from getting a free kick from the reasoning that Kahneman develops in this book.

Much of Kahneman’s book is a discussion of research findings relating to biases in intuitive thinking. The view presented is that intuitive thinking (fast thinking) tends to be much more influential than we realize – it is responsible for many of the choices and judgements that we make. The confidence we have in our intuitions is usually justified, but they can lead us badly astray on issues that require deliberation (slow thinking).  For example, most people have particular difficulty in making judgements that require an understanding of probabilities. Kahneman is not optimistic that people can easily learn to recognize when they are in a cognitive minefield in which they need to slow down and question their intuitions. When people feel the stress of having to make a big decision, more doubt is likely to be the last thing they want.

My intuitions tell me that Kahneman may be too pessimistic about our ability to recognize when we are about to enter a cognitive minefield. It seems to me that many people have developed emotional systems that provide ample warnings when they are about to enter cognitive minefields. Since I am feeling such warning signals right now, however, my intuitions about this could well be wrong. I should confine my remarks to matters about which I can write with some confidence.

When I set out to write this post the plan in the back of my mind was to refer to some earlier posts in which I distance myself from the rational actor model employed by people like Gary Becker (whose theory of rational addiction is cited by Kahneman) and then to proceed to demonstrate that the classical foundations of libertarianism do not require the assumptions of that model. However, my early warning system suggested to me that it might be a good idea to check whether Becker actually bases his defence of libertarianism on the rational actor model.  It turns out that in the defence of libertarianism that I found, Becker actually distances himself from rational actor assumptions. (This is a post he wrote on the Becker-Posner blog in 2007 on the peculiar concept of libertarian paternalism - supported by Kahneman, but advocated originally by Cass Sunstein and Richard Thaler.)

Becker presents the view that I had planned to present more eloquently than I could, so I will quote him:

‘Classical arguments for libertarianism do not assume that adults never make mistakes, always know their interests, or even are able always to act on their interests when they know them. Rather, it assumes that adults very typically know their own interests better than government officials, professors, or anyone else ... . In addition, the classical libertarian case partly rests on a presumption that being able to make mistakes through having the right to make one's own choices leads in the long run to more self-reliant, competent, and independent individuals. It has been observed, for example, that prisoners often lose the ability to make choices for themselves after spending many years in prison where life is rigidly regulated. In effect, the libertarian claim is that the "process" of making choices leads to individuals who are more capable of making good choices’. 

Arnold Kling’s views on the implications of the cognitive biases documented by Kahneman are also worth quoting:

‘If social phenomena are too complex for any of us to understand, and if individuals consistently overestimate their knowledge of these phenomena, then prudence would dictate trying to find institutional arrangements that minimize the potential risks and costs that any individual can impose on society through his own ignorance. To me, this is an argument for limited government.

Instead of using government to consciously impose an institutional structure based on the maps of cognitively impaired individuals, I would prefer to see institutions evolve through a trial-and-error process. People can be “nudged” by all manner of social and religious customs. I would hope that the better norms and customs would tend to survive in a competitive environment. This was Hayek's view of the evolution of language, morals, common law, and other forms of what he called spontaneous order. In contrast, counting on government officials to provide the right nudges strikes me as a recipe for institutional fragility.

If Kahneman is correct that we have “an almost unlimited ability to ignore our own ignorance,” then all of us are prone to mistakes. We need institutions that attempt to protect us from ourselves, but we also need institutions that protect us from one another. Limited government is one such institution’  (‘The PoliticalImplications of Ignoring Our Own Ignorance’, The American, December 2011).

In responding to comments on his post, David Friedman has made a similar point that on balance Kahneman's work may actually favour the libertarian position that market decision processes are superior to political decision processes:

‘The arguments suggest that people are more nearly rational when they use the slow mind than the fast and, since the slow mind's attention is a scarce resource, they are more likely to use it the more important getting a decision right is. My market decisions are almost always more important to me than my political decisions, since the former directly affect outcomes for me, the latter do not. That suggests that people will be less rational in their political decisions than their market decisions.’

It is also worth noting that we do not have to choose between relying on our own individual thinking processes and relying on governments to guide us. In those areas of decision-making where we  may not be able to rely on our intuitions and deliberations we have family, friends, representatives of voluntary organizations of various kinds and paid professionals who may be willing to act as our advisers or our agents (as well as the social norms and customs mentioned by Kling). If I need an agent to make decisions for me, it seems to me to be preferable to appoint one to act as my servant than to appoint one to act as my master.

Finally, we should also recognize that when governments make paternalistic laws to criminalize stupidity they don't necessarily stop people from behaving stupidly. They may just add to the problems of the people they are trying to help.

Can behavioural economics help markets to work better?

In his book, ‘The Upside of Irrationality’, Dan Ariely claims to have identified a market failure in the online introductions market. He refers to a survey indicating that people participating in that market spent on average 5.2 hours per week searching profiles and 6.7 hours per week emailing potential partners for a payoff of 1.8 hours actually meeting them.

He comments:

‘Talk about market failures. A ratio of 6:1 speaks for itself. Imagine driving six hours in order to spend one hour at the beach with a friend (or even worse, with someone you don’t know and are not sure you will like)’.

When I read that my first thought was that it would not be particularly uncommon in Australia for young people to drive three hours to spend an hour with a friend and then drive for another three hours back to where they came from.

I think the term market failure is thrown around too loosely. The situation described clearly involves high transactions costs, but that doesn’t mean the market has failed. The existence of high transactions costs in a market should not be viewed as a symptom of market failure unless we can point to some reason why the market cannot function efficiently.

In this instance the market seems to be working well because evidence relating to the existence of high transactions costs has induced some enterprising people to consider what innovations might be introduced to reduce those transactions costs. The fact that the innovators were a university professor and his associates suggests to me that university staff may be becoming more entrepreneurial.

I think Dan Ariely has done a good job of demonstrating the potential for behavioural economics to help entrepreneurs to design innovations that may reduce transactions costs. He considers survey and experimental evidence which suggests that the high transactions costs associated with online introductions stem from the attempt to reduce humans to a set of searchable attributes. The problem is that the searchable attributes convey little information about what it might be like to spend some time with particular individuals.

Ariely and his associates developed a virtual online dating site that enabled participants to engage anonymously in instant message conversation about various images e.g. movie clips and abstract art. They found that participants were about twice as likely to be interested in a real date after meeting in person following the virtual date than following a conventional online introduction. It seems that when we experience something with another person we gain much more information about compatibility than when we just look at searchable attributes. He has discussed his research here.

It is too soon to know whether Dan Ariely and his associates have prompted a market innovation that will help large numbers of people to live happier lives. However, I think Ariely has demonstrated that behavioural economics may be able to help markets work better. As he points out, there is potential for firms to do a better job of satisfying consumer demand by conveying to consumers what it might actually be like to have the experience of using their products. I think that means, among other things, that if retail stores didn’t exist already they would probably need to be invented to give consumers the opportunity to experience goods before they buy them.

Coming back to market failure, does the fact that some consumers buy goods cheaply online after inspecting them in a retail outlet constitute a market failure? I don’t think so, even though such behaviour is evidence of positive spillovers associated with retailing. Manufacturers will work out before long that retailers provide them with a useful service by enabling consumers to experience their products in real life - and think up some way to encourage ongoing provision of that service.

Why do some people become grumpy senior citizens?

When I was in my 20s I could not imagine what it might be like to be old. I would not have believed it possible that one day the government would issue me with a ‘Seniors Card’ declaring that I am ‘a valued member of our community’ and asking for ‘every courtesy’ to be extended to me.

Actually, I still find it hard to believe that I have been given this card. Wasn’t I a valued member of the community when I was younger? Aren’t young people and old people equally entitled to courtesy?

Perhaps the purpose of the card is to warn young people that old people can be grumpy. A few days ago an elderly person - a person considerably older than me who has to cope with considerable pain and limited mobility - told me that a young man in a health services profession recently made a remark to her along the lines: ‘So, we are feeling a bit grumpy today, are we?’ She apparently tore strips off him (metaphorically) to teach him a lesson in courtesy. He now knows how she behaves when she is feeling particularly grumpy!

A few days ago another person mentioned to me that she had observed that the minor irritating behaviours that some of her friends had displayed when they were young have tended to worsen as they grow older. I think I have observed something similar, but I wonder whether the behaviour actually worsens or whether my threshold for irritation might have fallen as I have aged. There may be tendencies for both of these things to occur in some people. Some other people seem to improve with age.

In his book, ‘The Upside of Irrationality’, Dan Ariely provides a discussion of the long-term effects of short-term emotions, which may be helpful to an understanding of how some people develop habits of grumpiness. He provides experimental evidence that the way we respond to particular events when we are angry (even for unrelated reasons) can have an ongoing influence on our future decisions in similar circumstances and even become part of our identity.

The experiment involved influencing the mood of participants by showing them different videos chosen to make them feel either angry or happy, observing how they then respond to unfair treatment (unfair offers in the ultimatum game) and then observing how fairly they treat other people when roles are reversed. As might be expected, the angry participants were more likely to reject unfair offers. However, the offers that those participants subsequently made to other people tended to be fairer than the offers made by the happy participants who had accepted the unfair offers.

Ariely’s interpretation of the results seems to me to make sense. He suggests that the angry people tended to attribute their decision to reject the offer to its unfairness rather than to their emotional state and then to act as though they think other people are just like themselves. Similarly, the happy people who accepted the unfair offer would have tended to think that other people would be similarly willing to accept unfair offers. In both cases the decision made has an ongoing influence over future decisions, after the initial emotional state has passed.

The results are consistent with the idea that individuals have a tendency to interpret their own past decisions to indicate the kind of person they are and how the world works. A grumpy person who reacts negatively when some other person is perceived to be disregarding his or her commands is not necessarily acting out of character when showing generosity towards that person at other times. A decision made at the heat of the moment at some time in the distant past could have initiated a pattern of behaviour and sense of identity that prompts the person to act in this way. (The grumpiness shown at a particular time could, of course, be aggravated by pain or frustration.)

It is sometimes argued that society benefits from the actions of people who are prepared to sacrifice their own well-being in order to punish people who act unfairly. However, people who engage in such vindictive behaviour do not necessarily spend much time feeling grumpy. Chronic grumpiness is obviously undesirable for the individuals directly affected as well as for the victims of their grumpiness.

Dan Ariely’s research findings suggest an additional remedy for those of us who are concerned that we might become grumpier as we grow older. We should avoid making decisions while we feel grumpy!