Does brain plasticity have implications for the idea of progress?

I have not long finished reading Norman Doidge’s book, ‘The Brain that Changes Itself’ (2007). Doidge is a research psychiatrist and has written a highly readable and informative book based on interviews of scientific pioneers and people who have benefited personally from the new science of neuroplasticity.


The main message that I get from the book is that the computer analogy of brain function – the contribution of nature corresponds to hardware and the contribution of nurture corresponds to software – is somewhat misleading. The machine metaphor of the brain as an organ with specialised parts cannot fully account for the capacity of the brain to perfect its circuits to make itself better suited to the task at hand. More information about the book is available here.

Norman Doidge has relegated his discussion of plasticity and the idea of progress to an appendix. This may be because he does not want his comments on this controversial subject to detract from the main themes of his book. Nevertheless, Doidge’s conclusions about the implications of neuroplasticity for progress are cautious. He writes: ‘while it is true that the history of Western political thought turns in large part upon the attitudes that various ages and thinkers have held toward the question of human plasticity broadly understood, the elucidation of human neuroplasticity in our time, if carefully thought through, shows that plasticity is far too subtle a phenomenon to unambiguously support a more constrained or unconstrained view of human nature, because in fact it contributes to both human rigidity and flexibility, depending upon how it is cultivated’ (p 318).

Doidge suggests that while neuroplasticity teaches that the brain is more malleable than some have thought, ‘calling it perfectible raises expectations to a dangerous level’. The history of Western political thought referred to by Doidge includes the contribution of Condorcet, the French philosopher and mathematician, who was a major participant in the French revolution. Condorcet argued that human history was the story of progress and that human nature was continually improvable in intellectual and moral terms. The idea that the imperfections of human nature are a consequence of social arrangements leads to the belief that revolutionary changes in social arrangements will lead to a transformation in human nature. When this doesn’t happen revolutionaries tend to resort to additional coercion to change human behaviour to fit in with the new social arrangements that they have created.

Steven Pinker has questioned whether the idea of a malleable human nature deserves ‘its reputation for optimism and uplift’. He suggests that if it did, B F Skinner would have been lauded as a great humanitarian when he argued that society should apply conditioning to humans in the pursuit of utopian ideals. Skinner’s critics pointed out that no-one doubts that behaviour can be controlled; putting a gun to someone’s head or threatening him with torture are time-honoured techniques. Pinker comments: “The issue is not whether we can change human behavior, but at what cost” (‘The Blank Slate’: 169).

It seems to me that the idea of a malleable human nature may have become associated with socialistic utopianism merely because of an accident of history. The views of John Locke, who originated the concept of the human mind as a ‘blank slate’ written on by experience, certainly cannot be described in those terms. Locke viewed liberty as freedom from the violation of natural rights (including rights to possessions as well as to life and health) and indispensable to the proper pursuit of happiness.

Norman Doidge suggests that Rousseau, one of the originators of the view that humans are perfectible, used the term perfectibility in an ironic sense. According to Doidge, Rousseau understood that if the human mental and emotional life are malleable there can be many different kinds of development and we cannot be certain what a normal or perfect mental development would look like. To my mind this view highlights the arrogance of Rousseau’s revolutionary followers in attempting to impose their peculiar views of utopia on other people.

What kind of society is most likely to promote the development of human brains in ways that will relax the constraints of human nature that limit our virtue and our wisdom? Is it a welfare state that aims to minimize the economic challenges that we have to face? Is it a rent-seeking society in which the extent to which individuals and groups prosper depend on their skills in playing a political game of obtaining preferment at the expense of others? Or is it a free society in which people prosper by engaging in mutually beneficial exchanges?

At one point in his book, Norman Doidge writes: ‘To keep the mind alive requires learning something truly new with intense focus’ (p 88). When I read that I was reminded of what Israel Kirzner has written about the benefits of freedom to society. Kirzner points out that losses from denial of freedom extend beyond those associated with preventing people from attaining known goals. He writes: ‘A free society is fertile and creative in the sense that its freedom generates alertness to possibilities that may be of use to society’ (“Perception, Opportunity and Profit”, 1979: 239). Perhaps we should be open to the possibility that the exercise of entrepreneurial alertness improves human nature.

Is the rule of law under challenge in Australia?

I expect that some readers will think that this is an absurd question. Australia has a well-deserved reputation for the quality of its legal institutions. Our ranking on the World Bank’s rule of law index is higher than that of the U.S. and U.K. So why ask the question?



First, I don’t think we can derive much comfort about rule of law from the World Bank’s rule of law index. It measures perceptions of the extent to which people have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police and the courts, as well as the likelihood of crime and violence. As I have noted in an earlier post it is a broad measure of the quality of legal institutions rather than a measure relating specifically to rule of law.


Second, there is evidence that Australia has problems with rule of law. An example has recently come to notice close to home. In order to avoid violence in public parks, as occurred in Huskisson on Australia day last year, the Shoalhaven council has introduced bans on alcohol in certain specified parks on certain specified public holidays. I don’t have a view on whether these bans are the best way to prevent anti-social behaviour. The problem regarding rule of law arises because the police have been reported as saying that people wanting to drink responsibly as part of family gatherings can ignore the bans without risk of prosecution. It is comforting to know that the police do not like interfering with family gatherings, but it is difficult to feel comfortable with a situation where laws are to be enforced selectively. What has happened to the idea that the law should be enforced without fear or favour?


Robin Speed has referred to the similar example of an agreement by two doctors who operated independent practices in a country town and who agreed that one would work on Saturday and the other on Sunday. A Senate committee recognised that this was caught by the definition of a criminal cartel, but swept aside that concern on the grounds that the ACCC and DPP would not be expected to prosecute in such a case. As Speed says, “that is the antithesis of the rule of law”.


In his article in “The Australian” yesterday, ‘The rise and rise of the regulators’, Robin Speed argues that there has been a fundamental shift in the relationship between the individual and the law: “Increasingly, the relationship is not of the individual knowing and complying with what the law states, but of knowing and complying with what the regulators state the law states, and then knowing the extent to which the regulators will apply the law as stated by them”.


Even when parliament passes laws with the intention of restraining regulators, this does not necessarily prevent them from seeking to avoid those laws. For example, I have been reliably informed that in the 1970s the government’s most senior legal advisor provided a legal opinion that legislation that had recently been passed with the support of both of the major parties in parliament did not restrain regulators in the way that those framing and supporting the legislation had intended. The circumstances of this example are quite distinct from those where a court finds that the wording of legislation does not have the meaning that parliament intended. In the circumstances to which I am referring the opinion of the government’s legal advisor had the effect of denying the intention of parliament to restrict the regulatory activities of a particular arm of government. It elevated the intentions of regulators above those of the parliament.



How can the regulators be constrained? The obvious answer is legislation that gives regulators less discretion. In my view one area of high priority should be reform of the tax system to introduce greater certainty and reduce role of the tax office in deciding what tax law means. It will be interesting to see whether the Henry tax review has anything useful to say on this question.

Postscript:
Greg Cutbush, a farmer near Yass, has told me that he thinks the rule of law problem Mr Speed identifies is very common. For example, he’s noticed the ACCC applies one rule to farm products and another to household appliances. Any farmer who is found to have conspired with his neighbours to insist that the local grain merchant pay them the same price for their canola will be prosecuted under the Trade Practices Act because collective bargaining is prohibited. And yet when his brother and three of his neighbours get together and all buy new lawnmowers from an agent they have bullied in Bathurst one Saturday morning, nobody gives a stuff. It seems like the ACCC’s watchdog role is all window-dressing.

How painful is economic reform?

In my last post I presented evidence that people in countries with relatively high growth rates tend to perceive that their lives are improving. This is one of the reasons why I reject the view that economic growth makes people unhappy and that so called ‘unhappy growth’ can explain the reluctance of some governments to undertake economic reforms.



This raises questions about the effects of economic reforms on perceived changes in the quality of life. Do people in countries undergoing economic reforms tend to perceive that their lives were better prior to the reforms? My initial thought was that this would depend on the success of the reforms in raising economic growth rates.


I have now attempted to test this view empirically. In the analysis the perceived improvement in quality of life over the last five years is calculated as the difference between the rating of life today and life 5 years ago using data from the Gallup World Poll. Regression analysis has been used to explain variation in perceived improvement in life for 104 countries in terms of economic growth rate over the five years to 2007, improvement in governance over the same period (the average change in the 6 World Bank governance indicators), change in regulatory quality (the World Bank governance indicator most closely related to reforms that increase economic freedom) and a variable reflecting the extent to which assessments that people in different countries make of their lives tend to differ from the ratings that would be expected on the basis of income levels.


The regression explains about 40 per cent of the variation in perceived improvement in life among the 104 countries. The results show:
• Economic growth has a positive effect on perceived change in quality of life.
• Improvements in governance have a positive effect
• Improvement in regulatory quality have a negative effect on perceived change in quality of life.
(These results pass the standard statistical test relating to standard errors of estimates. Anyone who wants to see the results is welcome to contact me by email.)


It is important for the negative impact of change in regulatory quality to be seen in context. Economic reforms are generally undertaken in the hope that they will result in improvements in quality of life through higher economic growth. The chart below shows that countries which undertook regulatory reforms generally had relatively high economic growth rates. There was only one country undertaking regulatory reforms which had a negative economic growth rate.

The green diamonds in the chart denote the 10 countries in which people had the greatest perceived improvement in their quality of life. The red diamonds denote the countries with the greatest perceived decline in quality of life. The green diamonds are generally associated with higher economic growth rates than the red diamonds.


The evidence seems to support my intuitions – which are probably similar to the intuitions of most other economists interested in public policy - about the painfulness of economic reforms. Reforms often involve removal of regulatory barriers that protect the incomes of some groups at the expense of the broader community. The people who experience these income losses tend to resist reforms and to perceive that their lives were better before they were undertaken. When reforms are successful in promoting economic growth, however, these perceived losses tend to be outweighed by the benefits to those who gain from the reforms. Ad hoc attempts to promote reform of particular regulations are likely to be less successful than reform programs that are sufficiently broad and persistent to enable a high proportion of the population to perceive that their lives have improved.

Does 'unhappy growth' explain failure to adopt economic reforms?

Several researchers have noted that there is a tendency for average life satisfaction to be lower in the countries with high economic growth rates even though there is strong evidence that average life satisfaction is higher in countries with higher incomes. Carol Graham and Eduardo Lora have referred to this as the ‘paradox of unhappy growth’. In one recent paper Eduardo Lora (with Juan Camilo Chaparro) suggests that ‘unhappy growth’ may help to explain why some countries have been reluctant to adopt economic reforms that would lift economic growth rates (‘The conflictive relationship between satisfaction and income’, Nov. 2008).



This is an interesting view, but I doubt its validity. It seems to me that ‘unhappy growth’ could be a misnomer. Before explaining why I should try to summarise the authors’ explanations for ‘unhappy growth’. One explanation is in terms of an aspirational treadmill. Economic growth raises aspirations, so people experiencing high income growth may come to expect higher incomes and hence feel less satisfied with their current incomes than people experiencing low growth. The other explanation is that economic growth is often associated with structural changes that result in income losses to some groups as well as gains to others. As a result of loss aversion the average life satisfaction may decline while average income rises.



Both of these explanations seem plausible, but they leave us with a paradox. How can high incomes - which must have resulted from economic growth in the past - be associated with high average life satisfaction if economic growth reduces average life satisfaction?


There is a simple explanation that dissolves this paradox. The observation of lower average life satisfaction in the countries with higher growth rates might just reflect the shorter time that the people in the countries with higher growth have had to accumulate the capital necessary to enjoy the fruits of their current income levels. Consider two countries which currently have similar per capita incomes, one of which has experienced rapid growth over the last couple of decades and one which has experienced low growth. It would be reasonable to expect that per capita net wealth would be lower in the high-growth country than in the low-growth country because people in the former country have had less opportunity to accumulate wealth from their current incomes. People with lower per capita net wealth could be expected to have poorer standards of housing and to feel less financially secure, so it is only to be expected that they would feel less satisfied with their lives. (This is similar to the explanation offered by Angus Deaton, namely that life satisfaction responds to the long-term average income, as in a permanent income model of life satisfaction. See: ‘Income, health and well-being around the world’).




There is some evidence that average life satisfaction is strongly influenced by net wealth. A study by Bruce Headey and Mark Wooden has shown, using Australian data, that wealth is at least as important to subjective well-being as is income (IZA Discussion Paper 1032, Feb. 2004).


There is also some evidence of a similar phenomenon with respect to education levels. Regression analysis suggests that there is a tendency for average education levels to be lower in countries with high growth rates, after controlling for income levels. This can be explained in terms of the time taken for accumulation of human capital. It would make no sense to attempt to explain it in terms of economic growth resulting in less education.


Finally, there is evidence in the following chart that people tend to perceive that their quality of life has improved in countries that have experienced relatively high growth rates. The perceived improvement in quality of life over the last five years can be calculated as the difference between the rating of life today and life 5 years ago using data from the Gallup World Poll. The chart plots perceived improvement in quality of life against per capita GDP growth rate for the period 2002-07 (based on rgdpl data from Penn World Tables) for 103 countries. The pink dots in the chart lie on a line fitted by regression.

The evidence of perceived improvements in quality of life in countries experiencing high economic growth rates is not consistent with the idea that economic growth makes people unhappy. I don’t accept that the failure of governments to adopt economic reforms can be explained by ‘unhappy growth’.