Does the McClure report provide a basis for sensible welfare reform?

My first impression of the report of the Reference Group on Welfare Reform was not favourable. I couldn’t make sense of it.

The four pillars metaphor got in the way of the story the report was attempting to tell. When I went looking for the structure that the pillars were meant to support I got lost. So I then went looking for four major problems that reforms were intended to address and could only find two.

At that point I realized that the pillars were just a device to tell readers that the material in this report has been organised under four subject headings.  The reason why the material was organized in this way still escapes me, but that probably doesn’t matter. The report was probably not intended to be read by people like me.

One of the major problems that the members of the reference group (Patrick McClure, Sally Sinclair and Wesley Aird) have sought to deal with is the complexity of the existing system of welfare payments. The report is concerned that complexity creates problems for individuals in understanding the system and accessing support, and makes it more difficult to administer the system efficiently. There is also an underlying problem of inequity, with people in similar circumstances being treated differently. The reference group has proposed a simplified payment architecture, with five primary types of payment. It looks like a sensible reform, but I am not well placed to comment.

The other major problem that the reference group has sought to address is long-term dependence on income support by people who have potential to become self-reliant. The report proposes that the problem be tackled with an investment approach along the lines of that adopted in New Zealand. The key features of the proposed approach seem to be:

• Conducting actuarial calculations annually to estimate the lifetime liability (i.e. contingent liability to government) of the overall income support system and support for specific groups.
• Identifying those groups at greatest risk of long term income support dependence and those groups with the strongest chance of breaking this reliance with tailored support.
• Making a broad range of services available to assist at-risk clients to break their reliance on income support. The Federal Government is envisaged to be the driving force behind service delivery.
• Ensuring that interventions are evidence-based, and “testing and learning” to ensure continuous improvement of support services.

The proposed investment approach seems promising, but it is not obvious that the report has taken into account criticisms of the New Zealand scheme, such as those raised by Simon Chapple in an article published in 2013. Chapple pointed out that the investment approach adopted in New Zealand can produce policy outcomes that are inconsistent with a standard cost benefit framework. For example, the investment approach counts movement of people off welfare for any reason – including movement into the black or grey economy, emigrating and going to prison - as a benefit.  It provides the administering agency with an incentive to focus on reducing government spending rather than achieving more desirable outcomes such as helping welfare beneficiaries gain employment.

In my view Chapple’s objections to the New Zealand scheme should probably not weigh heavily against the adoption of a similar scheme in Australia, but the issue deserves more careful consideration than I can give it here. It would have been desirable for the reference group to have discussed the issues involved in its report. It will be interesting to see how Patrick McClure or other members of the group now deal with the similar criticisms that have been raised against their proposals by Michael Fletcher. They can hardly argue that their report speaks for itself.

If this report had been prepared by the Productivity Commission I am sure it would have provided a more thorough investigation of the fundamental issues that should be considered before the government adopts an investment approach to welfare along New Zealand lines.

When you buy coffee and chocolate do you want to know the story about the people who produced the beans?

I bought my first batch of Arabicas Blue Mountain Gold coffee online from Papua New Guinea last year, after sampling the product when I was working in Port Moresby. I was impressed by the flavour, but was also attracted by the story of how this fine variety of coffee - first planted in PNG in the 1930's from seeds imported from Jamaica - is grown mainly by farmers with small plots of coffee trees, using traditional farming methods.

It is not clear to what extent the farmers actually benefit at present from marketing telling that story, but there must be potential for them to obtain greater rewards in future if the combination of a good story and a product of consistently high quality leads to growth of demand for their output.

Before spending a couple of weeks in PNG recently I told people who asked why I was planning to have a holiday in such a dangerous place (please see my last post for an attempt to put those risks in perspective) that one of my reasons for visiting was to see where my coffee came from. As things happened, I didn’t actually get to see where my coffee came from, but I did see a coffee plantation near Goroka. The fruit shown in the photo will turn red over the next few weeks before being ready for harvest.

I also had the opportunity to visit a processing facility in Goroka and to learn a little about the industry from the manager of the firm. He has asked me not to give him any publicity because his firm does not sell directly to the public and gains no benefit from any time he spends showing tourists around. I was fortunate to arrive on his doorstep just as he was about to show his operation to a group of bank officials and to be allowed to tag along.

 It was interesting to see the effort required for quality control, particularly in order to give purchasers of organic coffee (usually grown on small holdings) a high quality product. For example, quality is better when care is taken to only pick ripe fruit and to ensure that beans are properly dried in the sun. If the beans are not dry when they come to the mill they have to be dried using equipment such as that shown below.

The factory tour ended with a coffee tasting which demonstrated large differences between various grades and blends of coffee.

 During my PNG holiday I also visited Madang and had the opportunity to see cocoa being grown. The Madang Resort hotel organised for me a trip to Hobe, a small village not far from Madang. I spent an hour or so with Joel Lalek on his cocoa farm. 

Joel described himself as a subsistence farmer, but his cocoa activity looked fairly commercial to me. His crop is fermented and dried by his brother using the equipment shown below.

Joel buys seedlings from the Cocoa Coconut Research Institute (CCRI).  The photo below shows seedlings at the Stewart Research Station, CCRI.

The research manager of the Stewart Research Station explained to me the origins of PNG cocoa and the aims of the current breeding program. PNG cocoa is based on the Trinitario variety, often used in high-quality dark chocolate. Unfortunately, the variety is susceptible to cocoa pod borer, which has devastated harvests in PNG during the last decade. One of the aims of the breeding program is to provide greater resistance to this pest. Meanwhile, farmers in some areas have had considerable success in controlling pest outbreaks through pruning and sanitation practices e.g. burying diseased pods. 

A question I was turning over in my mind during my PNG visit is why I haven’t found the same opportunities to obtain single source chocolate based on PNG cocoa as I have to purchase PNG coffee. It would be good to be able to find a regular supplier of high quality dark chocolate with a PNG village story attached to it.

It seems likely that better opportunities to buy single source PNG chocolate might arise in future. People who live in the US can already buy chocolate made from PNG beans from Tejas Chocolate. Perhaps the partnership between Cadbury Australia and Monpi Cocoa Exports will eventually provide similar opportunities to Australians.

It would be nice to be able to end this article with some optimistic observations about the opportunities for better returns for coffee and cocoa farmers in PNG arising from the increasing demand of consumers in high income countries to be told the story behind the food and beverages they buy. I have not found any research which would provide a solid basis for such optimism, but I have not spent much time searching the relevant literature. All I can offer at this stage is a glimmer of hope.

It is indisputable that many consumers like to know the story behind some of the products they buy. Wine comes to mind as a prime example. Yet, in recent years we have seen a trend toward commodification of wine sales in supermarkets, with the use of hidden labels and own-brands. That trend is presumably meeting a demand for a product of reasonable quality at a relatively low price. The trend toward commodification may continue for some time, but when people are buying high quality wine they will still look for a label which tells the story of when, where and how it was produced. I guess the pattern of demand is fairly similar for coffee and chocolate.

The characteristics of farming in PNG typically meet a range of the interests and concerns that people are likely to have when they want to know the story behind the products they buy. The fact that the varieties of coffee and chocolate grown in PNG are at the high quality end of the market certainly provides a basis for positive stories. The fact that chemicals are rarely used by village farmers helps to meet some consumer concerns about health and environmental impacts. Telling a story about village farming can also be consistent with marketing arrangements which help meet the concerns that many consumers have about remuneration for farmers.

Most importantly, the stories that PNG farmers can tell are intrinsically interesting because their lives are so different from those lived by most people in high-income countries.

So, dear reader, when you buy coffee and chocolate do you want to know the story about the people who produced the beans?

Why not ask poor people their priorities for an agenda to succeed the Millennium Development Goals?

A few years ago a senior official of the Australian government aid agency asked me my view of the Millennium Development Goals (MDGs).  My response was that I had not thought much about them. I am not proud of that. As a person who claims to have a strong interest in human flourishing I should have shown more interest in the MDGs, even if only to be able to articulate why I didn’t think their existence made a significant contribution to reducing world poverty.

If I did not have a strong interest in issues relating to human flourishing, there is a good chance that I would not even have been aware of the existence of the MDGs. World Values Survey data (for 2005-2009) shows that only 12 percent of Australians had actually heard of the MDGs. The relevant percentages varied widely among the 43 countries included in the surveys - from 64 percent in Ethiopia to 5 percent in the United States.

If asked about the MDGs now I would say that providing poor people with better opportunities should be the most important goal. That is mainly about opportunities to earn income. Poverty has some multidimensional aspects that are not adequately reflected in conventional measures of income. For example, it is important to recognize that people with disabilities can have greater needs than others with similar incomes and that income measures do not normally take account of such things as availability of safe drinking water. But when people have opportunities to earn income they are in a better position to help family members and to contribute to provision of public goods.

 Nevertheless, I would still struggle to list all the MDGs. The problem is that there are 8 to remember – including four goals relating to health issues. One of the goals that sticks in my mind is “Develop a Global Partnership for Development”, which seems to be mainly about flying bureaucrats to international conferences.

The most important thing to know about the MDGs is that good progress has been made to achieving many of them. The proportion of people living in extreme poverty has halved since 1990. Unfortunately, that still leaves about 700 million people in the world who are living on less than US $1.25 a day.

Much of that progress toward achieving the MDGs has to do with increases in economic freedom in China and India, and would have occurred if the MDGs did not exist.  Nevertheless, the monitoring and reporting process associated with the MDGs has served a useful function.

Meanwhile, a sub-committee of the Global Partnership for Frequent Flying – sometimes referred to as the UN General Assembly's Open Working Group on Sustainable Development Goals - has held meetings where it:

“ reaffirmed the commitment to fully implement all the principles of the Rio Declaration on Environment and Development, including, inter alia, the principle of common but differentiated responsibilities, as set out in principle 7 thereof”.   

 “It also reaffirmed the commitment to fully implement the Rio Declaration, Agenda 21, the Programme for the Further Implementation of Agenda 21, the Plan of Implementation of the World Summit on Sustainable Development (Johannesburg Plan of Implementation) and the Johannesburg Declaration on Sustainable Development, the Programme of Action for the Sustainable Development of Small Island Developing States (Barbados Programme of Action) and the Mauritius Strategy for the Further Implementation of the Programme of Action for the Sustainable Development of Small Island Developing States. It also reaffirmed the commitment to the full implementation of the Programme of Action for the Least Developed Countries for the Decade 2011–2020 (Istanbul Programme of Action), the Almaty Programme of Action: Addressing the Special Needs of Landlocked Developing Countries within a New Global Framework for Transit Transport Cooperation for Landlocked and Transit Developing Countries, the political declaration on Africa’s development needs and the New Partnership for Africa’s Development. It reaffirmed the commitments in the outcomes of all the major United Nations conferences and summits in the economic, social and environmental fields, including the United Nations Millennium Declaration, the 2005 World Summit Outcome, the Monterrey Consensus of the International Conference on Financing for Development, the Doha Declaration on Financing for Development, the outcome document of the High-level Plenary Meeting of the General Assembly on the Millennium Development Goals, the Programme of Action of the International Conference on Population and Development, the key actions for the further implementation of the Programme of Action of the International Conference on Population and Development and the Beijing Declaration and Platform for Action, and the outcome documents of their review conferences. The Outcome document of the September 2013 special event to follow up efforts made towards achieving the Millennium Development Goals reaffirmed, inter alia, the determination to craft a strong post-2015 development agenda. The commitment to migration and development was reaffirmed in the Declaration of the High-Level Dialogue on International Migration and Development”.

I hope no-one tried to read all that. The reasons I included that passage should be obvious, so I will resist the temptation to try to explain.

Actually, as well as reaffirming their commitment to fully implement the outcome of their previous frequent flying activities, the Open Working Group on Sustainable Development Goals managed to suggest 17 sustainable development goals to succeed the Millennial Development Goals.

I don’t object to any of the goals specified. If anything I would like to add to the list. For example, I would like to see a specific reference to ending slavery and intergenerational debt bondage. As more people emerge from poverty there is also a case for greater recognition of the importance of reducing vulnerabilities and building resilience (but without the welfare state ideology being advocated by UNDP - see my last post for comment).

However, if 8 goals is too many for me to remember, there is not much hope that I will be able to remember 17. Following the recommendations of Bjorn Lomborg’s Copenhagen Consensus group, Matt Ridley has suggested 5 goals:

1. reduce malnutrition;

2. tackle malaria and tuberculosis; 

3. boost preprimary education;

4. provide universal access to sexual and reproductive health;  and

5. expand free trade.

Those seem to me to be worthy goals, but my views are no more relevant than those of the bureaucrats, diplomats and development experts who attend UN conferences. 

In using any top-down approach to determine the development agenda, bureaucrats and development experts are telling the world’s poor what their priorities should be in order to live happier lives. That is highly impertinent in my view.

As I see it, the best way to determine the development agenda would be by using surveys to ask the world’s poor about their priorities. Those priorities might not meet the approval of all members of the global partnership of frequent flyers, because they may differ for people living in different circumstances in different parts of the world. If that is what emerges, then so be it.

The over-arching goal should be to ensure more widespread opportunities for individuals to live happy lives, rather than to produce a uniform development agenda that conforms to the ideals of bureaucrats and development experts.

Could the adoption of welfare states reduce vulnerabilities and build resilience in developing countries?

I was delighted when I first noticed that Human Development Report 2014 has looked at the question of how poor people in developing countries can be made less vulnerable and more resilient in the face of natural disasters, commodity price instability and other threats to their well-being. In turning its attention to vulnerability and resilience the United Nations Development Programme (UNDP) has recognized the progress that has occurred in reducing world poverty in recent decades.

However, I am appalled that the UNDP has adopted an approach that is likely to lead to lead to greater welfare dependency and increased government debt in developing countries, and inevitably make the poor people in those countries more vulnerable to extreme poverty when fiscal restraint has to be re-imposed. There is something very peculiar about the idea that people can become more resilient by being made dependent upon unsustainable government largesse. The UNDP seems to have an obsessive desire to encourage developing countries to adopt the most expensive kind of welfare system imaginable.

At this point you probably think that I must be exaggerating. If so, you are wrong! The report does not argue for provision of a targeted safety net to assist those most in need of help at time they most need that assistance. In fact, it rejects that approach explicitly in favour of universal provision of basic social services such as education and health care. The authors argue:

“Universal coverage of basic social services is not only imperative – it is also possible at an early stage of development. And recent evidence shows that it can be achieved in less than a decade” (p 85).

The authors recite the view that when social benefits are targeted, “the middle class and elites are less willing to fund them through taxes”.  They obviously see little merit in public policy transparency. They also over-estimate their ability to pull the wool over the eyes of middle and upper-income voters. Such voters have not been backward in shifting the burden of funding universal welfare back to low income earners via taxes on wages or goods and services (as in Scandinavian countries) or in shifting it forward to future generations through increases in public debt (as in many other high-income countries).

When the authors discuss policies to promote full employment they show some recognition that a somewhat different approach might be appropriate in developing countries. They recognize a need for policies to address the vulnerabilities of people engaged in traditional agricultural activities and informal sectors. For example, they mention the role of micro-credit schemes, improved small-scale technologies and support for farmer cooperatives.

I was hoping to see some innovative thinking about food security in the report, but I didn’t find any. The issue is mentioned in the discussion of agricultural trade liberalization, where it is in the “too hard” basket. There is recognition that “spikes in the prices of food and other commodities are adding to hunger and starvation for the poor and vulnerable”, without consideration of how this could be avoided. There is recognition that farmers in developing countries often have to compete with subsidized agricultural products from developed countries, again without providing any suggestions about how this could be avoided. And there is this peculiar recommendation: “Agricultural liberalization needs to be selective in targeting goods mainly exported by developing countries to avoid increasing prices of food staples of developing countries”. So much for free trade, or even fair trade!

Actually, apart from that example of absurdity, I found the section on trade in Chapter 5 of the report to be one of the more sensible parts of the report.

While I am in a positive frame of mind I should also mention that the report has some informative diagrams showing progress in reducing world poverty. For example, Figure 2.6 (page 41) shows that for most countries the poorest 40 percent of the population have enjoyed more rapid consumption than the population as a whole over the period 2005-10. However, when the authors wrote about that Figure, what they emphasized was that consumption for those at the poorest end of the distribution has been slower than for the population as a whole in some countries where inequality has been high or rising. The three countries they cite as examples are Malaysia, China and Uganda. That seems to me to be grossly unfair to China and Uganda; in those countries, growth in consumption at the poorest end of the distribution has been much the same as for the population as a whole.

It was almost inevitable that the UNDP would produce a disappointing report about how to reduce vulnerabilities and build resilience in developing countries. People who work for international agencies are always subject to the temptation to see themselves as architects of human development. It would be overly optimistic to expect anyone writing a report for the UNDP to show an understanding the bottom-up processes through which economic development has tended to lead to growth of emancipative values and progressively greater efforts to protect vulnerable people from misfortunes.

The authors of the report seem to have hopes that the approach they advocate will influence international debate about the post 2015 development agenda, which is to follow the Millennium Development Goals. In my view their report should be ignored. The approach the authors advocate is a recipe for a return to more widespread poverty and misery throughout the world.

Should we choose eudaimonia over hedonia?

Last week my attention was drawn to the findings of some recent research, led by Barbara Fredrickson, which suggests that eudaimonia – which can be described in broad terms as a sense of wellbeing associated with a noble purpose or engagement in meaningful activities - provides positive health benefits in protecting against a variety of human ills, including arthritis, heart disease and viral infection. By contrast, the study suggests that hedonia – a sense of happiness associated with pleasure, satisfaction and self-gratification – has the opposite effects.

The findings are noteworthy because previous research has suggested that both eudaimonia and hedonia are associated with improved physical and mental health outcomes. I feel more inspired than surprised by the findings. Like many other people I was brought up to believe that a noble purpose can be protective, but in adult life I viewed that as more a matter of faith than anything else. It is interesting to learn there may be a scientific basis for such beliefs.

The research combined psychology tests to determine the nature of happiness experienced by 80 healthy adults with a health check and test of blood samples to assess gene expression associated with chronic stress and antiviral responses. Barbara Fredrickson is a psychology professor at the University of North Carolina. On this project she collaborated with a team led by Steven Cole, professor of medicine and psychiatry, at the University of California. (The research findings have been published in PNAS.)

Like previous studies, this study indicated that there is a relatively high correlation observed between eudaimonic and hedonic indicators of happiness (r= 0.79). People who score highly in terms of eudaimonic happiness tend also to score highly in terms of hedonic happiness, and vice versa, but there was nevertheless sufficient difference to enable the impacts of eudaimonia and hedonia to be disentangled.

The authors’ conclusion is a bit complicated, but it seems to be implying that if the ‘good life’ means a long and healthy life, then eudaimonic wellbeing is superior to hedonic wellbeing.

 However, there are some important qualifications noted in the discussion:

‘In interpreting these results, it is important to note that hedonic and eudaimonic well-being are not mutually exclusive approaches to happiness, nor do they represent a simple typology or a tradeoff. Both types of well-being share some common sources (e.g., perceived social connections) and can reciprocally influence one another [i.e., positive affect predisposes people to find positive meaning, and finding positive meaning increases positive affect]. As such, the current finding that a purified index of eudaimonic well-being (purged of shared variance with hedonia) predicts a more favourable pattern of gene expression than does a purified index of hedonic well-being (purged of shared variance with eudaimonia) says more about which form of well-being one would not want to do without, rather than which form one would be better to avoid. For people in whom one form of well-being outweighs the other, striving predominately toward meaning may have more favourable effects on health than striving predominately toward positive affect per se’. (References to cited works have been omitted from the quote.)

I struggle to understand what some of that paragraph means – the findings of the study seem to me to suggest that some kind of trade-off between eudaimonia and hedonia must be involved, despite the existence of complementarity. The issues involved appear a little clearer, however, when I bring my training in economics to bear and think in terms of a possibilities curve that surrounds all the combinations of eudaimonia and hedonia that it might be possible for an individual to achieve.

I have drawn the possibilities curve to depict a trade-off between hedonia and eudaimonia at most of the attainable points (i.e. between A and B) but allowing some regions where single-minded pursuit of either hedonia or eudaimonia might result in inferior outcomes. I draw the curve as concave to the origin over most of its length because I imagine that the eudaimonic benefits we can obtain by sacrificing a unit of hedonic benefits would tend to diminish as we sacrifice more and more hedonic benefits. My reasoning is that there are likely to be diminishing returns to devoting time both to activities that produce high hedonic benefits and activities that produce high eudaimonic benefits. I expect that single minded pursuit of hedonia might be counterproductive for the same reason that J S Mill argued that happiness cannot be obtained by seeking it (as discussed here previously). And I expect that single minded pursuit of eudaimonia might be counterproductive for the same reason that Aristotle argued that we need amusement – ‘for amusement is a sort of relaxation, and we need relaxation because we cannot work continuously’. (That comes from the passage in Nicomachean Ethics Book X, where Aristotle suggests that it would, indeed, be strange if amusement was your purpose in life and you were to take trouble and suffer hardship all your life just in order to amuse yourself.)

The sentence in the paragraph quoted above about the findings saying more about ‘which form of well-being one would not want to do without, rather than which form one would be better to avoid’, seems to envisage a person who is at a point inside the possibilities curve, such as the point at the question mark. A person in that position might be considering whether to seek to become happier by moving in the direction of point H or point E.

I should emphasize that the possibilities curve I have drawn is based mainly on my speculations and may not be related to what Barbara Fredrickson and her colleagues have in mind.

However, I think my diagram may have some value in considering the information and practical wisdom we need to make sensible decisions about how we live our lives:

• ·         First, we need to know ourselves well enough to know where we stand at present relative to the possibilities that are available to us.
• ·         Second, additional information (such as the findings about potential health consequences in the study discussed above) has potential to help us to choose wisely among the possibilities that are available.

My final point is the same as the point I made a few years ago in discussing whether J S Mill was correct in his rejection of Jeremy Bentham’s claim that pushpin is a good as poetry. There doesn’t seem to me to be much point in arguing whether eudaimonia is or is not superior to hedonia. The important issue is about obtaining balance in one’s life.

Has preventative health care become code for paternalism?

‘The Taskforce says that prevention is everyone’s business – and we call on the state, territory and local governments, on non-government and peak organisations, health professionals and practitioners, communities, families and on individuals to contribute towards making Australia the healthiest country by 2020.’ (Extract from ‘Taking Preventative Action’, the federal government’s response to the Report of the National Preventative Health Taskforce).

I find the sentiments in the quoted passage objectionable for two reasons. First, preventative health care is not ‘everyone’s business’. Individual adults have primary responsibility for their own preventative health care because no-one is better able to exercise that responsibility than they are. Individuals who are persuaded that preventative health care is a collective responsibility could be expected to look increasingly to the various levels of government, non-government organisations, health professionals and practitioners, communities and families – everyone except themselves - to accept responsibility for what they eat, drink and inhale.

Second, the goal of making Australia the healthiest country by 2020 is being put forward as though it is self-evidently desirable collective good that should be pursued by any and every means available to everyone. The goal is not self-evidently desirable. Individual health is not a collective good. And the end does not justify the means that are being proposed to pursue it.

If you delve behind the spin about making Australia the healthiest country my 2020, the underlying goal seems to be to raise average life expectancy in Australia to the highest level in the world by reducing the incidence of chronic disease. What does this entail? It would be hard to object to the goal of enabling individual Australians to reduce their risk of chronic disease. The problem is that the government’s strategy is more about achieving national goals than providing better opportunities for individuals - more about behaviour modification than about ‘enabling’ individuals to reduce their health risks.

The government claims that analysis of ‘the drivers of preventable chronic disease demonstrates that a small number of modifiable risk factors are responsible for the greatest share of the burden’. The behavioural risk factors led by obesity, tobacco and alcohol apparently account for nearly one-third of Australia’s total burden of disease and injury. The chronic conditions for which some of these factors are implicated include heart disease, stroke, kidney disease, arthritis, osteoporosis, lung cancer, colorectal cancer, depression and oral health problems.

Since these risk factors stem from individual lifestyles it is obviously desirable for individuals to be aware of them. There may be a role for governments in provision of this information. Perhaps governments should also be involved in helping people in various ways to live more healthy lifestyles. It is questionable how far governments should go down this path, but it is difficult to object to modest efforts by governments to improve opportunities for people to live healthier lifestyles.

However, rather than helping people to help themselves the federal government has chosen the path of Skinnerian behaviour modification. It has chosen to drive changes in behaviour through what it describes as the ‘world’s strongest tobacco crackdown’. (This is one instance when I hope the government doesn’t actually mean what it says – some people in Bhutan have apparently been jailed recently for possession of more than small amounts of tobacco products.) The government’s strategy also involves ‘changing the culture of binge drinking’ and ‘tackling obesity’, but in this post I will focus on smoking.

Some of the tactics being used in the tobacco crackdown involve information and persuasion but there is also an element of punishment involved. The tobacco excise has been increased to over $10 for a packet of 30 cigarettes and legislation is proposed to require cigarettes to be sold in plain packaging. It seems to me that this amounts to persecution of smokers and their families. It will reduce the amount of household budgets available to be spent on other products and encourage some to avoid excise by obtaining tobacco from illegal sources.

As a former smoker, I am probably more strongly against smoking than most people who have never smoked. I encourage other people to quit smoking and discourage young people from taking up the habit. But having given up smoking several times, I know how hard this can be. Governments have no basis on which to judge that people are not in their right mind if they consider that the pleasures they might obtain from additional years of life are not worth the pain of giving up smoking.

In my view this question of whether smokers are capable of judging what is in their own best interests is at the crux of the matter. The politicians and bureaucrats who seek to modify the behaviour of smokers may see themselves as enhancing the capability of these people to have lives that they ‘have reason to value’, in accordance with well-being criteria proposed by Amartya Sen. If so, their attitudes highlight a major problem with Sen’s approach. Governments have no business deciding what kinds of lives individuals have reason to value.

Should we view human flourishing in terms of psychology, capablility or opportunity?

This question may seem like just another intellectual puzzle, but it is actually has important implications for the way we view public policy issues. My bottom line is that the way we answer this question if we are thinking about the flourishing of a close relative or friend might be quite inappropriate if we are thinking about the development of public policy.

I think the best place to begin my explanation is with a brief discussion of the three different perspectives. I don’t wish to imply that these are the only ways of looking at human flourishing – they just seem highly influential.

Martin Seligman is a leading exponent of the psychological perspective. In his recent 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: 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 criticism 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 healthy rather than ill even if their health made no contribution to their psychological well-being.

The capability approach has been 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 notes that individuals may differ a good deal from each other in the weights they attach to different functionings. He seems unwilling, however, to leave the weighting exercise to the individuals concerned. He suggests that ‘the weighting exercise has to be done in terms of explicit valuations, drawing on the prevailing values in a given society’. He also refers to our capability ‘to achieve functionings that we have reason to value’.

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’. The freedom of some other person to seek out and take advantage of opportunities for mutual benefit encompasses his or her freedom to seek out and take advantage of opportunities to benefit you and me. Sugden implies that if everyone has opportunity in this sense, then you and I should see ourselves to be part of an economic system that is full of people who can expect to be rewarded for finding ways to benefit us (‘Opportunity as mutual advantage’, Economics and Philosophy (26)).

If we are considering the well-being of relatives and friends we might consider that opportunity, capability and psychology are all relevant to our assessment. For example, we might be able to think of people who have high levels of psychological well-being even though they have relatively low capability in some respects because we consider that they have not made good use of the opportunities available to them. We might be able to think of others who are unhappy even though they have high levels of capability and have had superior opportunities in life.

However, from a public policy perspective, what business does the government have in trying to improve the capability or psychological well-being of a person if this interferes with his or her status as a responsible agent? We might think that the capability and psychological well-being of such people would be improved if they drank less alcohol or gambled less, for example, but as far as I can see we have no right to prevent them from spending their income as they choose.

The situation becomes rather different if the government is offering some kind of benefit that is intended to improve the capability or well-being of some group. In that situation, it seems to me that the donors (taxpayers) have every right to attach conditions to the proposed benefit and the intended beneficiaries have every right to refuse to accept it if they don’t like the conditions attached.


Some might suggest that the alternatives to accepting a benefit with strong conditions attached could sometimes be so unpalatable that the conditions amount to coercion. I don’t accept that economic incentives ever force people to do anything. Nevertheless, if a person chooses to die rather than accept the conditions attached to a benefit, the question arises of whether this should be viewed as the choice of a responsible agent. Paternalistic intervention may be warranted to protect people who are not of sound mind as well as children.

However, there are also difficult issues involved in considering government proposals to improve the psychological health of children. The recent Australian Government Budget proposes a health and well-being check for 3 year old children on the grounds that ‘around 15.4 per cent of all children and adolescents (those aged up to seventeen years) have a mental disorder’. Internationally renowned experts are apparently telling the government that ‘there is a growing body of evidence showing that you can identify kids with (or at risk of) conduct disorders or poor development very early – from three years old’. The government claims: ‘Intervening early means building strong and resilient children, and avoiding behavioural or mental health issues that can persist for the rest of a person’s life’.

Should I be concerned about this proposal? Perhaps it just offers parents better opportunities to ensure that children get services necessary for their psychological wellbeing. On the other hand, it could be the thin end of a large wedge leading to greater use of pharmaceutical products to control behaviour of children and greater government intervention in family life. I wish I could be more confident that the proposed intervention will actually build strong and resilient children.

Postscript:
On reflection, the paragraph beginning 'Some might suggest that the alternatives to accepting a benefit ... ' doesn't adequately capture the ideas I would like to express. In my view, although welfare systems should be directed to a large extent toward helping people to help themselves, communities should have an over-riding commitment to meeting basic needs of people who have no other means of support.