Monday, January 16, 2012

Can happiness be aggregated?

My starting point for this post is take it as given that everyone agrees that for public policy purposes it is appropriate to view happiness in terms of individual flourishing. My reasons for this view have been presented in the draft of chapter 2 of the book that I have been writing.

I doubt whether it is possible to obtain an accurate measure of the extent to which each individual in the community is flourishing because some of the subjective information involved is probably not accessible to people conducting surveys. But let us assume that we have a measure that is good enough to compare the extent to which different people are flourishing in terms of a rating scale from 1 to 10, with a rating of 1 indicating that the individual is just surviving and a rating of 10 indicating that the individual is fully flourishing.

The measurement system that I am assuming would enable us to determine the percentage of people at different levels of flourishing within a particular community. If other communities adopted the same measurement system we could make observations about the percentage of people who are flourishing in different communities. It might be possible to say, for example, that 50 per cent of the population in community A are flourishing at a moderate level (with a rating of 7 or above) whereas the corresponding percentage in community B is only 40 per cent. There could be considerable interest in such observations, particularly if they enabled comparisons to be made between countries and over time.

Would such a measurement system enable us to say that the aggregate or average level of flourishing is higher in one country than another? I don't think so. For example if you are told that 50% of the population is flourishing in country A and 40% is flourishing in country B, that doesn’t necessarily mean that the average level of flourishing is higher in A than B. It is possible that 20% are struggling for survival in country A while only 5% are struggling for survival in country B. The average (mean) calculated from the percentages flourishing at each level might indicate that the level of flourishing is higher in B than in A. In this instance, is the mean a better measure of the 'average' than the median?

There is also a more fundamental problem. Let us assume that Mary is flourishing at level 9 and Jane is just surviving at level 1. Is their combined level of flourishing equivalent to that of two other people who are flourishing at level 5 ( i.e (9+1)/2) ? I don’t think so. It seems to me that, other things equal, it is preferable to have two people flourishing at level 5 than to have one person at level 1 and the other at level 9. But that judgement reflects my own values and is not related to the preferences of the people most directly concerned? We should ask Mary and Jane what they think. But their views might differ. Perhaps we could ask a random sample of the population what they think, or conduct experiments to find out what choices most people might make behind a veil of ignorance. (I have in mind the kind of experiment conducted by Hörisch Hannah, which I described in an earlier post.)

The point I am getting to is that even if you can conceive of ratings corresponding to different levels of flourishing, you may have good reasons to feel that combining the ratings of different individuals together should involve value judgements rather than just arithmetic. You may not be comfortable in thinking of the combined level of flourishing of Mary and Jane as though these individuals are just metric stations.

However, if we introduce value weights into the process of aggregating the flourishing of different individuals, are we not then making a judgement about the extent to which the distribution of flourishing is consistent with our views about the characteristics of a good society? It seems to me that any statement about aggregate happiness or gross national happiness involves judgements – explicit or implicit – about the characteristics of a good society.

So, why not ask directly whether society A is better than B, rather than asking whether aggregate happiness is greater in A than B? This would mean attempting to achieve consensus on the characteristics of a good society. I presented some thoughts about this in a post a couple of years ago.

Saturday, January 14, 2012

Has the United States become a secular theocracy too?

Secular theocracy is a result of the tendency in the modern world for faith in government to replace faith in God. In the past I have tended to associate secular theocracy with Australia, New Zealand, Britain and other countries in Europe, rather than the United States. When I first visited the US in the 1970s, I remember mentioning to someone that Americans seemed to take religion much more seriously than I had expected. He pulled a bill from his wallet and pointed to the words, ‘In God we trust’, suggesting that those words were a key to understanding America.

Until very recently I thought that the differing influence of secular theocracy in different countries could be explained entirely by the differing influence of collectivist ideas – a desire for security being satisfied by the welfare state rather than by religion. From where I sit, in Australia, it seemed that secular theocracy could be attributed to the varying influence of ideas of people like Karl Marx and J S Mill, leading to establishment of more extensive welfare states in some countries than in others. While I am an admirer of many of Mill’s writings, it seems to me that his introduction of the term ‘social justice’ played a significant role in the development of secular theocracy in some countries. The faith that many people have in social justice seems to me to be much like religious faith.  When people say that social justice demands this or that, it seems to me that they are actually using nebulous secular language to make claims about our religious duties toward other humans.

So, how did I react when it was suggested to me recently that secular theocracy stems from the separation of church and state? My initial reaction was not favourable. From my limited knowledge of history, the separation of church and state seems to be inextricably linked to the history of recognition of religious freedom and individual liberty. According to this view, the separation of church and state stems from recognition that in order to promote and preserve individual liberty it is necessary for religious organizations to be kept away from exercise of the coercive powers of the state.

An article recently published by David Theroux, president of the Independent Institute in the US, presents a somewhat different view of secular theocracy. David suggests that modern America has become a secular theocracy, with a civic religion (nationalism) replacing God. The view he presents is linked to that of C S Lewis, who argued that there is no sacred/secular divide and that a theopolitical world view of hope, joy, liberty and justice enabled Christians to discover objective natural-law principles of ethics, science and theology, producing immense human flourishing.

In support of his view that nationalism has replaced God, David Theroux points to a statement by Supreme Court Justice William Brennan in a land mark case in 1963 relating to bible reading in schools. Brennan argued that the function of public schools is the training of American citizens in an atmosphere in which children may assimilate a heritage that is ‘civic and patriotic’. He went on to suggest that ‘patriotic and united allegiance to the United States is the cure for the divisiveness of religion in public’.

David Theroux argues that in the United States secular theology ‘exalts a sovereign and powerful state that pervades all of life and compels obedience not just to its mandates but to secular nationalism of the Zeitgeist itself, for which the populace is forced to conform to and to fund’. The flag has become the most sacred object in US society. He suggests: ‘The religious-secular split enables public loyalty by Christians to the nation state’s secular violence, including invasive wars, torture, and “collateral damage”, while avoiding direct confrontation with Christian beliefs about the supremacy of God and natural law teachings’.

I have no hesitation in recommending David Theroux’s article. The existence of a pervasive secular theology of nationalism seems to me to be another important key to understanding modern America. 

Thursday, January 12, 2012

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. 

Wednesday, January 4, 2012

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.

Book Cover:  Thinking, Fast and SlowI 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.