Is there virtue in serving a purpose we do not know for reasons we do not question?

When I recently re-read John Galt’s speech (in “Atlas Shrugged by Ayn Rand) I was reminded of Rand’s view that the mystics of spirit, who believe that the good is God i.e. beyond man’s power to conceive, and the mystics of muscle, who believe that the good is Society, a super-being embodied in no-one in particular and everyone in general except yourself, have similar moral codes. Galt says: “No matter how loudly they posture in their roles of irreconcilable antagonists, their moral codes are alike, and so are their aims: in matter – the enslavement of man’s body, in spirit –the destruction of his mind”.

In the next paragraph Galt explains: “Man’s standard of value, say the mystics of spirit, is the pleasure of God, whose standards are beyond man’s power of comprehension and must be accepted on faith. Man’s standard of value, say the mystics of muscle, is the pleasure of Society, whose standards are beyond man’s right of judgement and must be obeyed as a primary absolute. The purpose of man’s life, say both, is to become an abject zombie who serves a purpose he does not know for reasons he is not to question” (p. 1027).

A few pages earlier Galt said: “Thinking is man’s only basic virtue, from which all the others proceed. And his basic vice, the source of all his evils, is ... the act of blanking out, the wilful suspension of one’s consciousness, the refusal to think ... . It is the act of unfocusing your mind and inducing an inner fog to escape the responsibility of judgement ...” (p 1017).

When I read this stuff 20 years ago it was like being at the sidelines at a football match cheering for my side to win. I thought that people who unquestioningly adhered to customs or the teachings of religious or secular authorities were behaving like zombies. It seemed obvious to me that individuals should be using their minds to decide for themselves how they should live.

So, what has changed? Not much, except that, having read a lot more of the writings of Friedrich Hayek since then, I now also see merit in the view that “submission to rules and conventions we largely do not understand ... is indispensible for the working of a free society”. Hayek argued that in our efforts to improve our institutions “we must take for granted much that we do not understand”: “We must always work inside a framework of both values and institutions which is not of our own making. In particular, we can never synthetically construct a new body of moral rules or make our obedience of the known rules dependent on our comprehension of the implications of this obedience in a given instance” (“Constitution of Liberty”, p. 63).

Is it possible to reconcile the view that it is good for people to decide for themselves how they should live their lives with the view that there is merit in observing rules that serve purposes beyond our understanding? I think Hayek was right to emphasise that it is unwise to reject customary rules just because we do not understand their purpose. Many customs deserve respect because they evolved through an evolutionary process in which groups that adhered to superior rules were most successful. Hayek recognized that for this cultural evolution to occur some people had to break with custom in order to introduce new practices advantageous to themselves, which then proved beneficial to the groups in which those practices prevailed. He noted that one of the benefits of freedom was to enable this cultural evolution to occur: “The existence of individuals and groups simultaneously observing partially different rules provides the opportunity for the selection of the most effective ones” (“Constitution of Liberty”, p. 63).

However, I think Rand was right to emphasise that the purpose served by rules protecting lives, liberty and property are capable of being understood. As John Galt explains: “there are no conflicts of interest among rational men” ... “I deal with men as my nature and theirs demands: by means of reason. I seek or desire nothing from them except such relations as they care to enter of their own voluntary choice” (p 1022).

Did Ayn Rand regard selfishness as a virtue?

People who are familiar with Ayn Rand’s writings may consider the answer to this question to be obvious. Rand made no secret of the fact that she regarded selfishness as a virtue. So, why ask the question?

Having recently read “Atlas Shrugged” properly for the first time (rather than skimming through it) the heroes, including John Galt, Hank Rearden and Dagny Taggart, did not seem to me to be selfish. By the end of the book they had chosen not to live their lives for the sake of others and not to ask others to live for their sake. But this did not make them selfish in the sense of being deficient in consideration for others. Hank Rearden left his mother without means of support when he went off to start a new life, but it would be difficult for anyone who was aware of the way she repaid the kindness he showed her to argue that he had acted selfishly towards her.

Rand’s view that selfishness is a virtue follows from a narrow definition of selfishness as “concern with one’s own interests” and of individual happiness as the moral purpose of life. In the words of John Galt: “Happiness is the state of consciousness which proceeds from the achievement of one’s values” (p 1014).

Galt explains: “Happiness is not to be achieved at the command of emotional whims. Happiness is not the satisfaction of whatever irrational wishes you might blindly attempt to indulge. Happiness is a state of non-contradictory joy – a joy without penalty or guilt, a joy that does not clash with any of your values and does not work for your own destruction, not the joy of escaping from your mind, but of using your minds fullest power, not the joy of faking reality, but of achieving values that are real, not the joy of a drunkard, but of a producer” (p 1022).

Rand’s narrow definition of selfishness enabled John Galt to say: “This much is true: the most selfish of all things is the independent mind that recognizes no authority higher than its own and no value higher than its judgement of truth” (p 1030).

Why did Ayn Rand adopt a narrow definition of selfishness? She could have avoided a lot of confusion by using another term, e.g. “ethical egoism”, to describe the virtuous concern for one’s own interests and accepting the popular usage of selfishness to describe unethical behaviour that involves pursuing one’s own interests at the expense of others. I suspect that Rand adopted a narrow definition of selfishness in order to argue that selfishness is a virtue. And she wanted to argue that selfishness is a virtue in order to draw attention to her opposition to the view that self sacrifice is a virtue.

The view that self sacrifice is a virtue was clearly one of Rand’s main targets. In John Galt’s words: “If you wish to save the last of your dignity, do not call your best actions a ‘sacrifice’: that term brands you as immoral. If a mother buys food for her hungry child rather than a hat for herself, it is not a sacrifice: she values the child higher than the hat; but it is a sacrifice to the kind of mother whose higher value is the hat, who would prefer her child to starve and feeds him only from a sense of duty” (p 1029).

Postscript: 
Readers might also be interested in a later post on this topic based on a Cato seminar.

Don't restrictions on freedom affect the quality of life?

It is hard to believe that the Commission on the Measurement of Economic Performance and Social Progress would consider that freedom and personal responsibility have little relevance to the quality of life. However, I haven’t been able to find any discussion of freedom or personal responsibility in their recently published report. The Commission, whose members include Amartya Sen and Joseph Stiglitz along with a list of other prominent academics, was established by the President of France, Nicolas Sarkozy.

The Commission’s report seems to have plenty to say about the limitations of GDP, and various issues concerning measurement of quality of life and sustainability, but the closest it comes to recognition that freedom might have some relevance to the quality of life seems to be in a sentence discussing freedom to exercise political voice. While it is good for people to be permitted to complain about restrictions on their liberty, it seems to me that it would be better if they had less restrictions on liberty to complain about. The authors give the impression that they consider that only the latter two words in the call for “liberty, egality and fraternity” are relevant to the measurement of social progress.

I would have been pleasantly surprised if the Commission’s report had endorsed the theme running through this blog that human flourishing must be a self-directed activity and that liberty is necessary for self-direction. (Some posts discussing these concepts are here, here and here.)

However that would have been too much to hope for. Although the relevance of rights is widely recognized in discussions about political institutions, the importance of the right to self-direction is often overlooked when it comes to discussions of the merits and demerits of alternative policies. Rights are routinely overridden when democratically elected governments consider that more important matters are at stake such as “social justice” or even the well-being of the people whose rights they infringe.

I had hoped, nevertheless, that the report would give some recognition to research findings that people value freedom. For example, it could have mentioned John Helliwell’s finding that people tend to have higher life satisfaction in countries in which a high proportion of the population are satisfied with their freedom to choose what to do with their lives (see NBER Working Paper 14720). The Gallup World Poll shows that satisfaction with freedom in France (82%) is somewhat higher than the U.K., but lower than in the U.S. (88%), Australia (91%) and Denmark (96%).

The fact that the vast majority of people in democracies tend to be satisfied with their freedom is related to economic freedom and civil liberties (as shown here). In addition, people would not be expected to feel that their freedom is being unduly restricted unless they are not permitted to do things that they actually want to do. But their sense of personal competence and self-respect must be weakened when responsibility for important aspects of their lives – such as family health care, education and saving for retirement - are taken out of their hands by paternalistic governments.

There is some survey information available to compare the extent that people in different countries feel that they have personal responsibility for what happens in their lives. Data from the World Values Survey shows that French people tend to feel that they have less control over their lives than people in the U.K., U.S. or Australia. The French also scored lower than people in the U.K, U.S. and Australia on the Gallup World Poll question asking whether respondents were proud of something they did yesterday. The Commission seems to overlook such matters.

I am sympathetic to the Commission’s view that more research should be done to assess the links between various dimensions of the quality of life. It is disappointing, however, that the Commission does not recognize freedom as an important dimension of the quality of life.

Postscript, May 2012:
In retrospect, I should have read the report more closely. It contains at least one fairly strong statement of the value of freedom: 'what really matters are the capabilities of people, that is, the extent of their opportunity   set and of their freedom to choose among this set, the life they value'. I am particularly impressed that 'freedom to choose ... the life they value' is not qualified by weazelwords which cast doubt on the ability of people to choose lifestyles that they value.  (See para 29.)

How credible is Rudd's spin on the history of economic reform?

In his comments in “The Australian” (8 Sept. ’09) on Paul Kelly’s new book, “The March of Patriots”, Kevin Rudd attempts to make a distinction between the economic reforms of the Hawke-Keating Labor governments and those of the Howard conservative government. Rudd describes the Hawke-Keating reforms as “modernising our economy to make it more competitive in a rapidly globalizing world”. He describes the Howard reforms as “neo-liberalism” or “a form of free market fundamentalism that has little in common with the philosophy and policy of the reforming centre of Australian politics to which we belong”.

This attempt to associate the Howard government with free market fundamentalism is typical Rudd-speak. This time, however, Rudd seems to have spun himself into a corner by also claiming that the Howard government was lazy. Rudd states: “we would describe our opponents as indolent: perhaps not always opposing the great transformational reforms engineered by Labor during its 13 years in office but hardly adding to that reform agenda during their 12 years in office”. Can an indolent conservative government be guilty of excessive zeal in promoting market-oriented reforms?

Peter van Onselen noted this apparent contradiction (in an article in “The Australian” on 9 Sept. ’09). He also updated a table in a book by Andrew Charlton (senior economic advisor to the PM) to enable the economic reform records of the Hawke-Keating, Howard and Rudd governments to be compared. The table suggests that the Howard government made some substantial reforms and that the Rudd government has tended to roll back previous economic reforms. (Unfortunately the table does not seem to be available on line.)

The table prepared by van Onselen is informative, but it would be nice to be able to compare the economic reform efforts of the three governments quantitatively. This is attempted in the chart below using economic freedom indexes constructed by the Fraser Institute and Heritage Foundation.

The chart confirms that the Hawke-Keating governments had strong neo-liberal credentials, but the two indexes provide a somewhat contradictory picture of the Howard government. The Heritage Foundation index even suggests that the Rudd government has made positive contributions to economic freedom. It might be interesting if someone could investigate why this is so and why two indexes seem to tell different stories about the Howard government.

However, while the history is interesting, the future position of the Rudd government on economic reform will be far more important to the future well-being of Australians. The one hopeful sign in Kevin Rudd’s latest graceless contribution is his praise for the reforms of the Hawke-Keating era. When he was elected to government Rudd seemed to want to be indistinguishable from John Howard in all important respects. Then he wrote an essay in which he seemed to have adopted the attitudes and language of Hugo Chavez. Perhaps he has now recognized that it is not necessary to choose between John Howard and Hugo Chavez (to paraphrase some infamous Rudd-speak).

Would it be too optimistic to interpret Rudd’s latest spin as a signal that he has now adopted Paul Keating as his role model?

What do we know about the neurology of human flourishing?

“Human flourishing is fundamentally a self-directed activity. ... Flourishing does not consist in the mere possession and use of goods that might be necessary for a flourishing life. Rather, human flourishing consists in a person developing the skills, habits, judgements and virtues that will, in most cases, achieve the needed goods. The goods must, in a central way, be made one’s own”: Douglas Rasmussen and Douglas Den Uyl, “Norms of Liberty”, 2005: 86.

Is there a readable book about the neurology of human flourishing? The only book that I am aware of that comes close is “Iconoclast”, by Gregory Berns. This book discusses things that have probably happened at a neurological level when famous people have achieved extraordinary things. The brain functions and processes that Berns writes about, however, seem to me to be relevant to the character development and flourishing of all humans.

What are the factors most likely to prevent individuals from achieving according to their potential? Anyone writing a list from the top of their head would be likely to include such things as: getting one’s thinking stuck in a rut; being constrained by fear of the unknown or fear of ridicule; social environments that reward conformity rather than individuality; and lack of skills in social networking. Gregory Berns discusses these factors.

Points made by Berns include the following:

• In order to think creatively and imagine new possibilities it is necessary to break out of the cycle of experience-dependent categorization. We need novel experiences in order to see things differently.
• Constraints associated with conditioned fear responses can be inhibited through cognitive reappraisal (re-interpretation of information). For example, fear of uncertainty or ambiguity can be inhibited if the situation is viewed as an opportunity to gain additional knowledge by experimenting.
• People have a strong tendency to follow the herd in order to avoid activating their fear systems. But one dissenter is typically enough to break the herd effect.
• Important social networking skills include promoting familiarity with the goods you are selling (because familiarity defines what people like) and establishing a reputation for being trustworthy.
  
  

Do we need a neurologist to tell us such things? Probably not, but it is good to know that there is neurological evidence supporting at least some of the claims made by personal development practitioners.

There is a fair amount of discussion in the book relating to wisdom and knowledge, courage, humanity and justice, but I don’t think there is much discussion of temperance or transcendence. One could hardly have expected all the human virtues to be discussed in the book, however, because Greg Burns did not actually set out to write a book about the neurology of human flourishing.

What practical measures can be taken to improve policy outcomes in democracies?

There seems to be increasing scepticism these days about the worth of democracy. The following quote from a post by John Humphreys on the “Thoughts on Freedom” blog provides a good example of what I mean:


“Democracy has become a new faith. Simply saying the word supposedly makes an argument stronger, as though there is some inherent morality in two wolves and a sheep voting on what to have for dinner. Democracy has it’s uses — it allows you to change government without any killing and it puts downward pressure on corruption. But I doubt that it leads to better policy, and indeed I think it has a built-in bias towards ever more totalitarian policy controlled by special interest groups ...”


In my view Humphreys is wrong. There is an inherent morality in democracy when it is perceived appropriately as a system in which all members of the polity have equal potential to influence the construction and operation of the political order. The problem is that it is often seen to be legitimate for some groups to use democratic politics as a means to obtain benefits at the expense of others. Such attitudes should be denounced as immoral for the same reason that the attitude that the market economy exists to enable some people to benefit through opportunistic exploitation of others is widely denounced as immoral. As James Buchanan has emphasised, the viability of a market economy and a democratic political system both depend on norms of mutual respect and reciprocity.


The political system in most democratic countries does not have huge problems in dealing with blatant attempts by some people to benefit at the expense of others. Democratic politics can be effective in dealing with corruption (as John Humphreys acknowledges). It is worth noting, however, that corruption often goes undetected for long periods where dedicated institutional arrangements do not exist to detect it.


I think that democratic politics are also reasonably effective in dealing with unsubtle attempts at vote buying, for example where a governing party promises additional benefits to residents of marginal seats in a desperate attempt to hold onto or win office. Parties initiating such tactics risk being perceived by voters as acting unfairly - and hence unworthy of being elected to government.


It is much more difficult for voters to deal appropriately with complex issues such as those involved in trade protectionism. A recent policy brief prepared for the Lowy Institute by Bill Carmichael, Saul Eslake and Mark Thirlwell describes the nature of the problem as follows:


“Most of us have a limited understanding of what is at issue in decisions about protection. Our response to the prospect of opening domestic markets is influenced by the information available to us about the domestic consequences. In the absence of public information about the economy-wide gains at issue for the community as a whole, and in view of the more visible costs to prospective losers, the latter have naturally found support at home. As a result, governments have had difficulty mobilising a domestic commitment to open domestic markets to international competition” (“Message to the G20: defeating protectionism begins at home” p 7-8).


The solution advocated by the authors is “a domestic discipline on national decision-making that promotes wide domestic awareness of its economy-wide costs.” Rather than attempt to summarise the proposals here I recommend that people should read them in the context in which they are presented in the paper.


The thought that I would like to leave you with here is that there is scope for policy outcomes in democracies to be improved if more intellectual effort is put into constructive efforts of the kind presented in the Lowy paper.

Addendum by Bill Carmichael:

It should not surprise us that those responsible for articulating the theoretical basis for market economics and democracy--people like John Stuart Mill, David Hume and Adam Smith--placed a condition on the relevance of each in enhancing the quality of governance and community welfare. The condition was, and remains, the existence of a well informed community in the case of democracy and well informed consumers as the basis for market economics. The message from these theoretical founders is that the value (in each case) is not in the theory, but its practise. That is the rationale for the domestic transparency arrangements established in Australia in the early 1970's, structured to operate outside government and independent of private interest groups. Those arrangements were put in place for a specific purpose--to make our democratic system and market economics relevant in decision-making on protection issues, by providing the information governments, communities and consumers need to promote decisions that enhance community welfare. I believe such arrangements have a wider application than decision-making on protection In their absence, our expectations about what the community gains from market economics and democratic governance are likely to lack substance.

Is economic growth causing the Chinese to become discontented or more optimistic?

In my last post I suggested that the reasons why rapid economic growth has not resulted in increased average life satisfaction in China over the last couple of decades have more to do with rising aspirations than with increased income inequality. In this post I want to consider those issues further.

My first point is that in recent years the Chinese have been about as satisfied with life as people in most other countries with comparable income levels. This shows up clearly in charts in Angus Deaton’s article, ‘Income, health and well-being around the world’ (“Journal of Economic Perspectives”, 22 (2)).

Second, survey evidence is not consistent with growing discontent caused by rising inequality - or by anything else. According to recent Gallup data about 66 percent of Chinese are satisfied with their standard of living and 83 percent say that their standard of living is getting better. A paper by Nicole Naurath show that in 2008 over 80 percent of Chinese claimed that economic conditions were getting better in the city or area where they live and that it was also getting better as a place to live.

Third, there is evidence that life satisfaction in China is more strongly influenced by satisfaction with income growth (i.e. satisfaction with income now compared with income in the past) than with either absolute or relative incomes. The results of a study by Lina Song and Simon Appleton do not support the view that dissatisfaction with relative income is a major cause of social discontent in China (“Life Satisfaction in Urban China”, IZA DP: 3443, 2008).

Fourth, Andrew Deaton found in his cross-country study, cited above, that while level of per capita income has a positive effect on life satisfaction, economic growth has a negative effect. His results suggest that it would be normal for the negative effect of economic growth to outweigh the positive effects of increases in income levels in countries that are experiencing rapid economic growth (see Table 2 in his article). Deaton argues that his results are consistent with life satisfaction responding to the long-term average income, as in a permanent income model of life satisfaction.

Fifth, the ratings that the Chinese give to the quality of their lives five years ago and five years into the future suggest that large upward revisions are occurring in their aspirations. The Gallup data for 2008 indicates that the Chinese rated their lives five years ago less highly than just about every country in the world outside Africa. The rating they give to their lives five years ahead is higher than that in some western European countries. When they appraise their current quality of life in five years time they will realize that they still have somewhat further to go before attaining “the best possible life”. But they are not likely to become discontented while they continue to experience the economic growth they have come to expect.

I think the lesson to be learned from consideration of the relationship between average life satisfaction and rising per capita incomes in China is that the failure of life satisfaction to rise with income does not necessarily imply discontent with the consequences of economic growth. Those who suggest that economic growth has led to widespread discontent in China are mistaken. Economic growth has merely cursed the Chinese with great expectations.

The Chinese are becoming wealthier, so why aren't they happier?

This is the question raised in a recent article in the Journal of Happiness Studies: “The China puzzle: falling happiness in a rising economy”, by Hilke Brockman, Jan Delhey, Christian Weizel and Hao Yuan (V10, 4, 2009).

The focus of the study is the decade from 1990 to 2000. Even though real per capita GDP in China was 2.8 times higher in 2000 than in 1990, the percentage of Chinese describing themselves as very happy declined from 28 percent to 12 percent and the average life satisfaction rating fell from 7.3 to 6.5 (on the WVS 10 point scale).

The authors consider three possible explanations: anomie (powerlessness), political disaffection (declining trust in government) and relative deprivation (frustration because increased income inequality resulted in a higher proportion of the population with below average incomes). Anomie is measured by survey data on the lack of a feeling of free choice and control over the way you live your life. Political disaffection is measured by survey data on lack of trust in the government and parliament. Survey data on financial dissatisfaction (dissatisfaction with the financial situation of your household) is used as a proxy for relative deprivation.

To cut a long story short, the authors conclude that relative deprivation provides the best explanation because the decline in life satisfaction is strongly associated with a decline in financial satisfaction. (A fuller summary of the article is available on Psyblog )

The main problem I have with this conclusion is that data presented in the article suggests that average life satisfaction of high income earners declined along with the life satisfaction of those on lower incomes. There was no reason for the high income earners to feel relative deprivation.

When I look closely at the data it seems to me that the main puzzle is not why average life satisfaction in China was lower in 2000 than in 1990, but why such a high proportion of Chinese were recorded as satisfied with life in 1990. This figure, 68 percent, was higher than in such high income countries as Austria, France, Germany and Japan.

When you look at average life satisfaction of people in different age groups (Fig. 1) older people seem to have been much happier than young people in 1990 and the situation has been partially reversed since then. A comparison of Figure 1 and Figure 2 shows similar patterns for life satisfaction and financial satisfaction. This suggests to me that the apparent decline in average life satisfaction between 1990 and 2000 might possibly be attributable to perceptions by older people that their financial security had declined for some reason e.g. concerns that as a result of social changes young people might be less likely to support them in their old age.

Even if we disregard the 1990 data, however, it is apparent from the Figures that we are still left with the problem of explaining why average life satisfaction and financial satisfaction has not increased since the mid 1990s. The decline in consumption as a percentage of GDP from about 50 percent around 1980 to about 32 percent in recent years cannot provide a complete explanation, because this has not prevented real per capita consumption from increasing substantially.

My guess is that the failure of average life satisfaction to rise in China is associated with a change in the benchmarks that people use to assess their current well-being. In 1990 many people in China may have been using past living standards as the benchmark in assessing their current satisfaction with life. Since then, however, their aspirations have probably risen as they have come to view the living standards enjoyed in high income countries as attainable in the foreseeable future. If I am right most Chinese people would probably agree that “they have never had it so good”, to borrow an unsuccessful political slogan. But those old enough to remember what life was like 30 years ago would probably rather forget about that.

Note: A follow-up post on this topic is here.

Is it possible to make an appropriate emotive appeal by just telling a story?

A post by Peter Boettke on The Austrian Economists blog has got me thinking about emotive appeals in politics. I think the point that Boettke is making is that rhetorical experts are offering poor advice when they suggest that writers try to get their message across by telling stories that appeal to the emotions, in the manner of Dickens and Steinbeck, rather than using stories to illuminate systemic forces, as Ayn Rand did in “Atlas Shrugged”.

I think it might be worth noting that it is sometimes possible to make effective emotive appeals without telling stories and that some stories are capable of speaking for themselves in illuminating systemic forces.

My example of an effective emotional appeal that does not involve a story comes from “John Stuart Mill, Victorian Firebrand”, by Richard Reeves, which I have just finished reading. When Mill was a member of the House of Commons, arguing for women to be given the right to vote, he used an accounting framework to urge rejection of the view that the political interests of women were safe in the hands of their fathers, husbands. and brothers. Mill said:
“I should like to have a return laid before this House of the number of women who are annually beaten to death, kicked to death, or trampled to death by their male protectors: and, in an opposite column, the amount of the sentences passed, in those cases in which the dastardly criminals did not get off altogether. I should also like to have, in a third column, the amount of property, the unlawful taking of which was, at the same sessions or assizes, by the same judge, thought worthy of the same amount of punishment. We should then have an arithmetical estimate of the value set by a male legislature and male tribunals on the murder of a woman, often by torture continued through years, which, if there is any shame in us, would make us hang our heads” (Available at: Online Library of Liberty).

Richard Reeves comments that this passage “vividly captures the combination of sinewy logic and controlled anger employed by Mill’s best pieces of oratory” (p 423).

It can also be possible in some circumstances for a simple story to evoke an appropriate emotive response without any interpretation. For example, last night I read a story in a news magazine about a respected business man who is co-owner and general manager of a travel agency in the country in which he lives. A few months ago this man moved in with his parents while his own house was being renovated. Four days after he left the house his next door neighbours decided to take advantage of his absence by forcing open the front door and changing the locks. They are now occupying the house and refusing to leave. As soon as he found out what had happened the man contacted the police expecting that they would evict the squatters, but the police took them food and supplies. The man has taken the matter to court but the case has still not been resolved.

I have left out some details of this story such as the country where this is alleged to be happening, and the man’s name and ethnicity because I don’t think such details should be relevant to one’s emotive response. (If anyone is interested in following up the story it is in The Weekend Australian Magazine for August 22-23, 2009.)

How do you respond to this story? My initial reaction was anger at the way property rights were apparently being disregarded and dismay that the rule of law seemed to be breaking down in the country concerned.

I hope there is another side to this story that will make my initial reaction inappropriate. For present purposes, however, the only point I want to make is that the story speaks for itself. I don’t think many people would need to be told explicitly that the story illustrates that there may be something wrong with the justice system of a country in which such things can occur.

How could J.S. Mill have reconciled his views on liberty and indoctrination of morals?

In “John Stuart Mill, Victorian Firebrand” Richard Reeves suggests that the question of whether Mill’s essay, “Utilitarianism”, can be reconciled with his more famous essay, “On Liberty”, is one that “will keep scholars engaged for the foreseeable future” (p. 330). That is probably correct, but I don’t think Mill would have had a huge problem in reconciling his views in the two essays if he had felt inclined to do so.

What is it that needs to be reconciled? In “On Liberty”, Mill argues that human flourishing requires the exercise of individual choice: “The human faculties of perception, judgment, discriminative feeling, mental activity, and even moral preference, are exercised only in making a choice. He who does anything because it is the custom, makes no choice. He gains no practice either in discerning or in desiring what is best. The mental and moral, like the muscular powers, are improved only by being used” (Ch. 3).

In “Utilitarianism”, written about the same time, Mill argues that people should be indoctrinated with a version of utilitarian morality: “To do as you would be done by, and to love your neighbour as yourself, constitute the ideal perfection of utilitarian morality. As the means of making the nearest approach to this ideal, utility would enjoin, first, that laws and social arrangements should place the happiness, or (as speaking practically it may be called) the interest, of every individual, as nearly as possible in harmony with the interest of the whole; and secondly, that education and opinion, which have so vast a power over human character, should so use that power as to establish in the mind of every individual an indissoluble association between his own happiness and the good of the whole; especially between his own happiness and the practice of such modes of conduct, negative and positive, as regard for the universal happiness prescribes; so that not only he may be unable to conceive the possibility of happiness to himself, consistently with conduct opposed to the general good, but also that a direct impulse to promote the general good may be in every individual one of the habitual motives of action, and the sentiments connected therewith may fill a large and prominent place in every human being's sentient existence (Ch 2).

Different people have different views about the tension between Mill’s emphasis on the importance of individual choice and his proposals for indoctrination of an indissoluble association between individual happiness and the good of the whole. For example, Linda Raeder writes: “A deep immersion in Mill’s thought leaves one with the decided impression that his aspirations for human beings were not for the flowering of their unique individuality but for their conformity to his personal ideal of value and service” (“John Stuart Mill and the Religion of Humanity”, 2002). Richard Reeves adopts a more conventional view of Mill’s aspirations: “The animating idea at the heart of Mill’s life and work is individual liberty. His image of a good society was one in which every man (and, he would add, every woman) can shape the course of their own life. ... Mill wanted our lives to be free, but he also wanted them to be good ” (p. 6).

Mill’s view on the importance of diversity in education seem to me to provide an example of the way in which it would have been possible for him to reconcile his desire for us to be free with his desire for us to be good. He wrote: “All that has been said of the importance of individuality of character, and diversity in opinions and modes of conduct, involves, as of the same unspeakable importance, diversity of education. A general State education is a mere contrivance for moulding people to be exactly like one another: and as the mould in which it casts them is that which pleases the predominant power in the government, whether this be a monarch, a priesthood, an aristocracy, or the majority of the existing generation, in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by natural tendency to one over the body. An education established and controlled by the State, should only exist, if it exist at all, as one among many competing experiments, carried on for the purpose of example and stimulus, to keep the others up to a certain standard of excellence” “On Liberty”, Ch 5.

Mill also emphasised the value of experimentation at a more general level:
“It will not be denied by anybody, that originality is a valuable element in human affairs. There is always need of persons not only to discover new truths, and point out when what were once truths are true no longer, but also to commence new practices, and set the example of more enlightened conduct, and better taste and sense in human life” (“On Liberty”, Ch 3).

In his “Autobiography” Mill noted that he viewed “On Liberty” as “a kind of philosophic text-book of a single truth, which the changes progressively taking place in modern society tend to bring out into ever stronger relief: the importance, to man and society of a large variety in types of character, and of giving full freedom to human nature to expand itself in innumerable and conflicting directions” (Ch 7).

It seems to me that it would have been possible for Mill to reconcile his views on liberty and ethics by making the case that recognition of the right of individuals to experiment in living as seems best to themselves is of over-riding importance to society. Not only does this open the possibility of discovering new truths, it also opens the possibility that people can learn from the mistakes of others. As Friedrich Hayek wrote: “It is whenever man reaches beyond his present self, where the new emerges and assessment lies in the future, that liberty ultimately shows its value” (“Constitution of Liberty”, p. 394).

If Mill had argued more explicitly that the right of individuals to live as seems best to themselves is of over-riding importance it would have been clearer that he did not intend that his personal values should be imposed on people who do not desire them.

Postscript:
I should have noted that Hayek explicitly made the point that "the existence of individuals and groups simultaneously observing partially different rules provides the opportunity for the selection of the more effective ones" ("Constitution of Liberty", p.63).

How silly were J.S. Mill's views about income distribution?

J S Mill wrote: “The laws and conditions of the Production of wealth partake of the character of physical truths. There is nothing optional or arbitrary in them. ... It is not so with the Distribution of wealth. That is a matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like. They can place them at the disposal of whomsoever they please, and on whatever terms” (Principles of Political Economy, 1848, II,1.1).

In 1983, Friedrich Hayek commented that this view of J S Mill “is really an incredible stupidity, showing a complete unawareness of the crucial guide function of prices ...” Hayek explains: “We must face the truth that it is not the magnitude of a given aggregate product which allows us to decide what to do with it, but rather the other way around: that a process which tells us how to reward the several contributions to this product is also the indispensable source of information for the individuals, telling them where they can make the aggregate product as large as possible” (Conference paper published in Nishiyama and Leube, “The Essence of Hayek”, p 323). This must have been one of the most intemperate remarks that Hayek ever made about anyone.

One of the things I have learned from Richard Reeves book, “John Stuart Mill, Victorian Firebrand” is that Karl Marx was also unimpressed by Mill’s attempt to separate the laws of production and distribution. Marx viewed this as “a shallow syncretism” (Reeves, p 210). He thought Mill was attempting to reconcile irreconcilables.

How silly were Mill’s views about distribution? In order to answer this question I think we need to understand Mill’s views about property and inheritance.

I see a lot of merit in much of what Mill wrote about property. For example: “The institution of property, when limited to its essential elements, consists in the recognition, in each person, of a right to the exclusive disposal of what he or she have produced by their own exertions, or received either by gift or by fair agreement, without force or fraud, from those who produced it” (“Principles of Political Economy”, II, 2.2).

It is when Mill writes about “landed property” that I begin to see problems: “When the "sacredness of property" is talked of, it should always be remembered, that any such sacredness does not belong in the same degree to landed property. No man made the land. It is the original inheritance of the whole species. Its appropriation is wholly a question of general expediency” (“Principles of Political Economy”, II,2.26). Given that land can be exchanged for other goods I don’t see how it is possible to argue that rights to ownership should not be recognized as the same for land as for other goods.

The problem that Mill had with “landed property” seems to be associated with the potential for a relatively small number of families to have a disproportionate amount of wealth and to exercise disproportionate political power. He was against the inheritance of “enormous fortunes which no one needs for any personal purpose but ostentation or improper power”. Richard Reeves points out that Mill was particularly concerned to distinguish between “earned” and “unearned” income. Mill viewed inheritances as “unearned” and argued that it would be socially beneficial to impose a limit on the amount any person could inherit.

Mill’s views about redistributive taxation were also influenced by his aversion to inherited wealth: “To tax the larger incomes at a higher percentage than the smaller is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours. It is not the fortunes which are earned, but those which are unearned, that it is for the public good to place under limitation. ...I conceive that inheritances and legacies, exceeding a certain amount, are highly proper subjects for taxation: and that the revenue from them should be as great as it can be made without giving rise to evasions ... such as it would be impossible adequately to check” (“Principles of Political Economy”, V, 2.14).

It seems to me that Mill’s claim that distribution of wealth should be viewed as entirely separate from production was silly – and contradicted by his own views about the adverse consequences of progressive taxation. Mill’s idea for an upper limit on the amount that anyone could inherit also seems extremely silly. I can see some wisdom in his views about taxation of inheritances, but even here it seems to me that he was fooling himself if he thought that inheritance taxes would impose no disincentives to working and saving. Despite all this silliness, however, Mill still had many sensible things to say about property rights and taxation.

Does our Nicole worsen income inequality in the United States?

In his recent paper, “Thinking clearly about economic inequality”, Will Wilkinson – a research fellow at the Cato Institute in the U.S. (and prominent blogger)- mentions some reasons why Nicole Kidman is wealthy. He states: “Nicole Kidman is fabulously wealthy because millions of individuals have chosen to see a movie with Nicole Kidman in it instead of a non-Kidman movie, or instead of going bowling”. He uses Nicole as an example to illustrate how the pattern of incomes “emerges from billions upon billions of individual choices and transactions” (p 14).

I think Wilkinson is making a good point. People often talk about income distribution as though government is actually distributing national income among the citizens - like a mother deciding how large a slice of a cake to give to each of her children. If we want the cake metaphor to reflect the real world, however, we have to accommodate the fact that mother doesn’t actually bake the cake, the children do. And distribution is the result of mutually beneficial process in which individuals earn cake by contributing to its production.

Wilkinson’s mention of Nicole Kidman is also relevant to a somewhat different point that he is making, although he doesn’t make the link specifically. Nicole Kidman has dual citizenship between the U.S. and Australia. If she is viewed as a U.S. citizen for the purposes of considering the distribution of income that makes the distribution of income in the U.S. look more unequal. If she is viewed as an Australian citizen that makes Australia’s income distribution look more unequal. Who cares?

The point is, of course, that there is something peculiar about viewing income inequality as a cause for concern at a national level, when this can change just because people move across national borders. When people talk about the effects of migration on income distribution in countries like the United States and Australia they are more likely to be thinking of the migrants who make income distribution less equal by occupying the lowest rungs of the economic ladder than those who make it less equal by occupying the highest rungs on the ladder. But the questions raised about the relevance of income distribution to well-being are the same in both cases.

Wilkinson makes the point: “If you focus only on the shifting pattern of incomes among legal residents within the statistics-keeping jurisdiction ... you can easily lose track of the real story of human welfare ...” (p 14). He comments as follows on the effects of the migration of unskilled migration on economic inequality in the U.S.: ‘If were to assume a natural and mundane moral perspective, from which all people involved are taken into account and assumed to have equal worth ... what we would see is a profound reduction in both poverty and economic inequality. If the question is “What happened to the people in this scenario?” then the answer is “The poorest people became considerably wealthier, narrowing the economic gap between them and the rest”.’ (p 15).

It seems to me that this reasoning is relevant to Australia as well as to the U.S. If we are interested in the well-being of people we should be interested in the opportunities that are available to them. When you look at it carefully the concept of income inequality doesn’t have much relevance to well-being.

How can a conservative favour centralization of power?

One of my reasons for reading Tony Abbott’s recent book, “Battlelines”, was to remind myself why I am not a conservative. The more serious reason was to find our how a politician who proudly wears the conservative label would attempt to justify proposing an amendment to the Australian constitution that would remove current restrictions on the policy areas in which the federal government has power to make laws.

In writing this book Tony Abbott, a former minister in the Howard Government who is now on the opposition front bench in the federal parliament, seems to have taken on the role of defining where the battlelines should be drawn in the approach to the next election.

One of the things Abbott is clearly trying to do in this book is to identify enduring values that will continue to bind the Liberal Party together. In the process he does a reasonably good job of minimizing the differences between Hayekian liberals and Burkean conservatives. At one point he writes: “Following Adam Smith, Liberals tend to think that government is necessary to keep the peace but otherwise should let people make mutually beneficial arrangements with each other” (p 82). If I believed that was a statement of conservative philosophy, I would not mind being called a conservative. In other places in the book, however, Abbott displays the contempt for personal freedom that is associated with traditional conservative values. For example: “The basic problem is that most Western countries have privatised the next generation. Having children tends to be regarded as a personal choice rather than a social good” (p 97).

Having now reminded myself why I am not a conservative, let me turn to Abbott’s views on federalism. The essence of his argument is as follows:

• When nothing else seems to solve problems, voters always expect the central government to ‘do something’.
• After more than 50 years of increasing federal government involvement in matters that were formerly the exclusive responsibility of the states, the federation has become dysfunctional. “There are few problems in contemporary Australia that a dysfunctional federation doesn’t make worse”.
• Current attempts to end the “blame game” between different levels of government are not going to work. Someone has to have the legal power to take responsibility.
• The only credible way to fix the problem is to give the central government the legal power to call the shots i.e. to over-ride the states.
• The argument that the states form a bulwark against the potential tyranny of the national government is “far-fetched”. Australia has states because this was the price of becoming a nation, not because the fathers of federation thought that an intermediate level of government was necessary to avoid tyranny.

I agree, more or less, with the first three points, but disagree with the last two. What reason do we have for thinking that a government attempting to run schools and hospitals out of Canberra would do a better job than one trying to run them from some office in a state capital? Absolutely none! And I think that Tony Abbott agrees with me. What he has in mind is that if the federal government was able to over-ride the states on health and education the most likely result would be for public hospital and school services to be “provided on a contestable basis by a range of independent and autonomous organisations as well as by state-government instrumentalities” (p 129). That sounds to me like a move in the right direction, but we can’t be sure that some control freak in charge of the central government would not attempt to intervene more directly in the management of hospitals and schools if he/she had the power to do so.

As I see it, the main problem of the federation arise from the stupidity of the central government in its choice of forms of intervention. The basic problem in both hospitals and schools prior to federal intervention was that people were unhappy with the services that state governments were providing from tax revenues. Instead of giving state governments more money to waste, the central government should have given people back some of the money they had paid in taxes so that they could purchase alternative services.

The central government does not need additional power in order to achieve contestable service provision. It just needs to stop propping up inefficient state bureaucracies and give power back to the people.

In concluding I would like to commend Tony Abbott for presenting his views in a forthright manner. It is nice to be able to disagree with quite a lot of the things he has written and yet still feel that, as politicians go, Tony Abbott is not a bad bloke.

Postscript: August 2018

Nine years on it is obvious that the defining characteristic of Tony Abbott’s policy stance hasn’t been centralism, Hayekian liberalism or Burkean conservatism. The defining characteristic has been his attitude to climate change.

It is possible to point to some differences between his current approach to climate change, the approach he adopted when prime minister and the approach adopted in Battlelines. However, I see reasonable consistency in his position on this issue. In Battlelines he wrote:

“It sounds like common sense to minimise human impact on the environment and to reduce the human contribution to increased atmospheric gas concentrations. It doesn’t make much sense, though, to impose certain and substantial costs on the economy now in order to avoid unknown and perhaps even benign changes in the future”.

In a recent speech Abbott said:

“I have never thought that reducing emissions should be a fundamental goal of policy, just something that’s worth doing if the cost is modest.

I have never thought that climate change was, to quote Kevin Rudd, the ‘great moral challenge of our generation’.

It was an issue, that’s all, and – at least on the actual changes we’ve so far seen – not a very significant one compared to man’s inhumanity to man; maintaining and improving living standards; and even to many other environmental issues such as degraded bush and waterways, particulate pollution, water quality in the third world, deforestation, and urban overcrowding.”

In my view Tony Abbott has shown too little recognition of the risks associated with climate change. He would be on firmer ground to argue that emissions reduction targets do little to mitigate those risks.

As politicians go, Abbott seems to have been fairly consistent in his views. However, I have revised my view that he is “not a bad bloke”. His recent behaviour in destabilizing the leadership of the Liberal Party has been appalling.

In Battlelines Abbott posed the question: “How can Australians, individually and collectively come closer to being their ‘best selves’ and what can the Liberal Party do to bring this about?” Abbott should think more about his own contribution in that regard. He hasn’t even been able to avoid doing harm to the electoral prospects of the Liberal Party. If Abbott’s recent failure to be his best self assists a Labor government to come to power in the near future we are likely to see not only deeper cuts in carbon emissions and higher energy prices, but also the adoption of policies that will make citizens increasingly subject to government regulation in many aspects of their lives.

How can consciousness be explained?

Before reading “Out of Our Heads”, a recently published book by the philosopher Alva Noё’, I would not have questioned Francis Crick’s claim that “you, your joys and sorrows, your memories and ambitions, your sense of personal identity and free will, are in fact no more than the behavior of a vast assembly of nerve cells and their associated molecules” (quoted by Noё on p 5).

If someone had asked me how I felt about that statement before I read this book I would probably have shrugged my shoulders and said that it was just one of those things we have to accept whether we like it or not. I might have added, however, that I thought that Friedrich Hayek made a good point over 50 years ago (in “The Sensory Order”) when he said that the type of explanation that the physical sciences aim for is not applicable to “mental events”. Hayek argued that human decisions are the result of the whole of the human mind (or personality) and we cannot reduce them to something else.

Alva Noё goes further than Hayek in casting doubt on the capacity of neuroscience to explain consciousness. He claims: It is misguided to search for neural correlates of consciousness – at least if these are understood, as they sometimes are, to be neural structures or processes that are alone sufficient for consciousness. There are no such neural structures. How could there be? (p 185).

Noё suggests: “To understand the sources of experience we need to see those neural processes in the context of the conscious being’s active relation to the world around it. ... Consciousness of the world around us is something that we do: we enact it, with the world’s help, in our dynamic living activities. It is not something that happens in us” (p 64).

He further explains: “The brain does not generate consciousness the way a stove generates heat. A better comparison would be with a musical instrument. Instruments don’t make music or generate sounds on their own. They enable people to make music or produce sounds” (p 64).

This is obviously a very different explanation of consciousness than that provided by Francis Crick. Noё doesn’t discuss the views of other neuroscientists, such as Antonio Damasio, that seem to me to be more similar to his own view. For example, Damasio writes: “The secret of making consciousness may well be this: that the plotting of a relationship between any object and the organism becomes the feeling of a feeling” (“The Feeling of What Happens”, p 313).

It will be interesting to see whether Noё’s view becomes widely accepted. Daniel Dennett’s comment (on the dust jacket) suggests that those with different views may consider this book to be a worthy challenge: “Those of us who disagree with its main conclusions have our work cut out for us”. In “Freedom Evolves” Dennett takes as his starting point that we are “each made of mindless robots and nothing else” (roughly a hundred trillion cells) and sets himself the task of explaining the evolution of human consciousness. Dennett’s explanation is that human consciousness evolved for sharing ideas i.e. it is associated with the development of language and the enhanced survival capacity of groups in which reflective agents accepted responsibility for their actions.

Noё has a very different view of when consciousness began. He views life as the lower bound of consciousness: “once you see the organism as a unity, as more than just a process, you are, in effect, recognizing its primitive agency, its possession of interests, needs, and a point of view. That is, you are recognizing its at least incipient mindfulness” (p 41).

That is the part of Noё’s view of consciousness that I have most difficulty accepting. Attempting to explain the capacity of humans to reflect upon their own actions is a different project than attempting to explain the incipient mindfulness shown by a bacterium – even accepting that both forms of behaviour are enacted with the world’s help by organisms engaged in dynamic living activities.

Finally, how would I respond now if asked how I feel about the quote from Francis Crick at the beginning of this post? I would say that Alva Noё has persuaded me that Francis Crick’s claim is as misguided as attributing music solely to the components of musical instruments.

What is diaphysics?

Some readers might be wondering whether diaphysics has something to do with the views of L. Ron Hubbard. It doesn’t. If you thought it did you were probably confusing it with dianetics.

Diaphysics is the title of a book by Troy Camplin, an interdisciplinary scholar, poet and short story writer, who maintains the blog, Interdisciplinary World. The book was published recently by University Press of America. (I bought my copy from Amazon.)

Troy defines diaphysics as “a set of natural laws that manifest themselves in different ways at different levels of complexity, which then give rise to new levels of complexity” (p vi).

So, what does that mean? The levels of complexity are levels of reality (or perhaps stages in the evolution of reality). The first level is pure energy. This gives rise to the second level, quantum physics, which gives rise to chemistry. From this level we get the emergence of biology and the evolutionary processes that result eventually in various levels of human thinking (276 -278). The higher levels of reality are more complex than the lower levels of reality. “With emergence into each new level, those new levels are able to use more and different kinds of information and energy not available to the levels below them” (99).

Troy’s theory is that “a common thread” runs through the emergence from each level of complexity to the greater level of complexity that follows it. He is proposing “a mechanism for creation of more objects, and more complex objects and emergent orders of complexity ...”. “Evolution occurs such that the fitness landscapes evolve towards increasing smoothness ... . Once smoothness, or a new symmetry, is reached, a new set of fitness landscapes emerge with the emergence of the new, more complex level from the far-from-equilibrium state” (267).

The passage quoted above seems to be at the heart of the theory, but I don’t understand it. The author seems to be saying that there is a natural law at work such that as the fitness landscape becomes smoother a new fitness landscape must emerge. I don’t see a common mechanism by which smoothness of the fitness landscape always results in the emergence of a more complex level, but that may just reflect the limits of my cognitive capacities. The nature of the common mechanism that Troy is attempting to describe remains a mystery to me.

It would be nice to think that there might be a common thread, that is not beyond my understanding, that could explain the evolution of complexity from the big bang to modern civilization. I am content enough, however, to be able to understand what Friedrich Hayek wrote about the relatively recent evolution of modern society:

“It is because it was not dependent on organisation but grew up as a spontaneous order that the structure of modern society has attained that degree of complexity which it possesses and which far exceeds any that could have been achieved by deliberate organization. In fact, of course, the rules which made the growth of the complex order possible were initially not designed in expectation of that result; but those people who happened to adopt suitable rules developed a complex civilization which then often spread to others” LLL, Vol. I, p 50.

Before I end this review I must commend Troy Camplin for the many nicely written passages in his book. For example: “ ... in a region of phase transition, in an edge-of- chaos regime, we have complex interactions, swirls and eddies, a combination of the predictable and unpredictable. In other words it is like a good story, which can be neither purely ordered and predictable nor disordered and unpredictable, but must have elements of both in order to be enjoyed” (272).

Troy’s book is not just an attempt to identify a common thread in our past. He also speculates about the future direction of human development. Diaphysics is probably the most ambitious book I have ever attempted to read.

What makes a planet happy?

I find it hard to take seriously the concept of a happy planet. Is Earth happier than Mars? How would we know? It seems to me that only sentient beings can be happy, but that might just reflect the limited perspective of a sentient being. For all I know a rock might have a completely different perspective.

The happy planet index constructed by the New Economics Foundation (nef) doesn’t actually attempt to compare the happiness of different planets. What it attempts to do is to assess how happy our planet is with what is happening in different countries. I hope that makes you smile because if you take the happy planet index too seriously I think you are at risk of becoming unhappy – and that might make the planet unhappy!

The countries that are given the highest ratings in nef’s index are Costa Rica, Dominican Republic, Jamaica, Guatemala and Vietnam. These places don’t seem to me to offer the ideal of a good life for the people who live in them, even though many of these people say they are satisfied with their lives.

The authors claim that the results show that a good life is possible without “costing the earth”. Andrew Norton has pointed out that the results do not support this conclusion. Average happiness levels are relatively low in several countries that are ranked among the top 50 in the happy planet index.

As defined by the nef the happy planet index is a productivity measure. The numerator (or output measure) is happy life years, measured by multiplying average life satisfaction levels by average life expectancy. The denominator (or input measure) is a linear function of the average “ecological footprint”, which is a measure of the total amount of land required to provide all resource requirements plus the amount of vegetated land required to absorb CO2 emissions.

The basic idea seems to be that “the planet” becomes happier when people in a particular country become happier without using more “land” or when people maintain their current happiness level while using less “land”.

How do we know that this is what makes the planet happier? How do we know that the planet cares whether or not humans are happy?

My point is that the happiness of the planet only exists in the mind of the human who thought up the idea of the happy planet index. There is nothing wrong with trying to imagine what it would be like to be a planet that has feelings, but this is a game that anyone can play. Some people could imagine, for example, that the happiness of the planet will rise if more CO2 is produced. After all, CO2 is food for plants and planets like plants. Don’t they?

It would be possible for everyone on earth to have their own happy planet index that takes account of the things that they imagine that the planet might value. It would probably be preferable, however, to come down to earth and acknowledge that there is potential for everyone on the planet to vary in the extent to which they value various things that are important to them.

If nef’s happy planet index serves a useful purpose I think it is to remind us that surveys that measure our subjective well-being do not necessarily take into account all the things that are important to us. When we report how satisfied we are with life we take account of the things that are most salient to us at the time. We don’t necessarily take into account our own future well-being and the well-being of future generations of family members, let alone the well-being of other relatives and friends, the well-being of other humans, the well-being of animal pets, the well-being of other living things, or other matters that might be important to us.

Is there an issue of respect involved in climbing Uluru?

When I visited Uluru for the first time about 10 days ago I learned a little about its significance to the Anangu (western desert people) who are the traditional owners. A few days later, while we were driving home to New South Wales, the board of management of the Uluru - Kata Tjuta National Park released a draft management plan for 2009-2019 which raises, among other things, the question of whether visitors should continue to be allowed to climb the rock. The board was seeking comments from the public.

Before we got home, however, Kevin Rudd, Australia’s prime minister, had weighed in with the view that it would be “sad” if people were banned from climbing the rock. While citizen Rudd is entitled to express his views on anything and everything (as he does incessantly) I think it will be sad if his intervention closes off further discussion of this issue.

The significance of Uluru to Anangu is reasonably clear. They believe that as direct descendants of the ancestral beings who created the landscape at the beginning of time they are responsible for its protection and appropriate management. They also believe that they have a responsibility to safeguard visitors to their land. The main reason that traditional owners have given to discourage visitors from climbing the rock is the danger involved: “We feel great sadness when a person dies or is hurt on our land”. The draft management plan suggests, however, that an issue of respect may also be involved. It quotes Tony Tjamiwa: “That rock is really important and sacred. You shouldn’t climb it! Climbing is not a proper tradition for this place” (p 86).

What is the significance of Uluru to visitors? Some of the literature about it suggests that it has something to do with the size of the object – it is 9.4 kilometres in circumference and rises about 340 metres above the surrounding plain. That might seem big to those who think of rocks as large stones, but Uluru is actually a remnant of an ancient mountain. It is composed of sedimentary rock that has become heavily eroded over time.

Uluru is a natural object of great beauty. The explorer Ernest Giles described it as “ancient and sublime”. Giles, however, was not the first European to visit the rock. William Gosse got there first, in 1873, and named it Ayers Rock, after Henry Ayers (a South Australian politician who is most remembered these days for having had Uluru named after him).

Tourists have been interested in travelling to Uluru for over 60 years, with the first vehicular track being constructed in 1948 in response to this interest. In the early 1950s several motels and a camping ground were built at the base of Uluru. Increasing tourism resulted, in 1958, in the area that is now the Uluru – Kata Tjuta national park being excised from an aboriginal reserve. Traditional ownership of the park was recognized in 1985 under an agreement in which it was leased back to the federal government for 99 years.

Most visitors to Uluru presumably go there primarily in order to see Australia’s most recognisable natural icon first hand. Although climbing the rock has become something of a tradition, only about one-third of visitors now choose to climb. I imagine that fewer people would climb if it was made clear in the literature distributed to visitors that an issue of respect may be involved as well as concerns about safety.

It seems to me that this is the crux of the issue. Is there a way that it would be possible for visitors to be permitted to climb the rock that would be consistent with appropriate respect for this place?

Do people make good choices between income and leisure?

“What are the applied implications of our findings? In the work area we suggest that a balance between hours of work, social time and leisure will produce the highest well-being, whereas even work that is enjoyable will produce less well-being if carried out for too many hours. Conversely, it would be an error to assume that people would be happiest if all their time were spent in pleasurable leisure activities. ... At the policy level an implication is that too many work hours, without sufficient free time or vacation, will prove less rewarding for most people” (Diener, Weiting Ng and Will Tov, 2008, ‘Balance in life and declining marginal utility of diverse resources’, Applied Research Quality Life).

This quote is from the conclusions of an article which assesses how average happiness levels differ with differing amounts of time spent in various ways (free time, with family and friends, and commuting) as well as with income levels. The findings seem to confirm the predictions of standard economic thinking in this area i.e. as our consumption of any good (including non-market goods such as leisure) rises the marginal utility of adding an additional unit of the good tends to decline.

What does the article tell us about marginal utility? The part of the study that seems most informative uses data from the Gallup World Poll, a representative sample of people almost covering about 95 percent of the world. As its main measure of happiness the study uses affect balance, which measures relative experience of positive feelings (enjoyment, and smiling and laughing) and negative feelings (depression, anger, sadness and worry) for the previous day.

The results suggest that the marginal utility of “free time” and “time with family and friends” is quite high for the first few hours of each activity (in the time category zero to four hours) and then declines to around zero. The marginal utility of additional income rises steeply for incomes up to around $US 40, 000 and then increases moderately, if at all. (The ladder of life indicator shows a similar pattern, but with the marginal utility of income remaining positive at high income levels).

How much additional income would a person need to earn to compensate for the loss of utility associated with the sacrifice of an hour of free time or an hour with family or friends. My rough calculation suggests that the hourly rate of pay required would be around $28 for a person with an income of around $20, 000 per year. (The loss in utility for sacrifice of an hour of leisure equals 0.075. Income on the preceding day would have needed to rise by $28 in order to raise utility by 0.075.)

For people with higher incomes, the hourly wage rate needed to compensate for the loss of an hour of leisure time would be very much higher. At first sight it might appear that with incomes in excess of around $60,000 the hourly rate of pay required to compensate for sacrifice of an hour of leisure would be huge. We need to remember, however, that some of the people earning this additional income might be saving it to spend at times of their lives when their earning capacity is diminished and the marginal utility of additional income is much higher. There are also some people who enjoy their work so much that they would not require any compensation for sacrificing an hour of free time. More research is required before we will have a good understanding of why people make the choices they make between income and leisure.

The quote at the beginning of this article suggests that the choice that individuals make between income and leisure is a government policy issue. Why should it be? The weight of evidence suggests that when governments attempt to regulate how people live their lives they tend to make people more miserable rather than happier. As I see it, the main benefit of research of this kind is that the findings may help individuals to improve their own well-being and that of their families by enabling them to make better choices.

Can we use dollars to compare how much various life events affect well-being?

The life events I propose to discuss here are things like major improvements or worsening in financial situation, getting married or divorced, having a child, serious personal injury, death of a spouse, being made redundant and change of residence. I will focus on subjective well-being, as measured by surveys which ask people for a numerical rating of their satisfaction with life.

One way to compare the impact of life events on well-being is to calculate what change in income would have an equivalent impact after controlling for other factors. Some readers might recall research findings for the U.S. and Britain which suggested that the increased income equivalent of a lasting marriage is around $100,000 and an increase in income of around $60,000 would be required to compensate for the loss in well-being associated with becoming unemployed. (These numbers come from some pioneering research by David Blanchflower and Andrew Oswald published in 2000.)

There are several problems with the methodology of this early research which tend to overstate the income changes equivalent to life events. First, the methodology is based on estimates of the (small) impact that higher incomes have on current well-being without taking account of the impact of higher incomes on future well-being. Higher incomes enable the wealth accumulation (and the redistributions through tax and welfare systems) that make it possible for people to maintain their well-being during periods when earning potential is diminished (e.g. during retirement) or when they incur heavy costs or heavy costs are incurred on their behalf (e.g. education and medical expenses).

Second, the methodology focused on the impact of being in a particular state (e.g. married or unmarried) rather than on the duration or timing of the effects that life events have on well-being. Life events typically have large impacts on life satisfaction for only a relatively short period.

Third, the methodology was unable to distinguish causation. For example, it was unable to assess whether married people are happier than unmarried people because marriage tends to make people happy or because happy people are more likely to get married.

Research in this area has progressed a great deal in recent years, with the use of ongoing surveys that enable changes in the well-being of the same sample of people to be linked over time to life events. The HILDA survey (Australian data) shows that the events with the greatest positive effect on life satisfaction for both males and females included a major financial improvement in the past three months, having been married in the last three months and birth of a child (less than nine months ago). The events with greatest negative effect on life satisfaction included being detained in jail, a major financial worsening at any time in the last year, a recent separation from a spouse or partner and recent death of a relative or family member.

A recent paper by Paul Frijters, David Johnston and Michael Shields estimates the one-off windfall improvement in finances needed to compensate for various life events (‘Happiness dynamics with quarterly life event data’, DP 3604, IZA, July 2008). The windfall approach seems preferable because a comparison of the effects on current well-being of different life events avoids the conceptual and measurement problems of attempting to compare the effects of life events with the effects of differences in income levels.

The authors obtained the following estimates of compensating windfall financial gains for various life events:

Death of spouse/ child: + $178, 300
Serious personal injury or illness: + $ 59,200
Change of residence: - $ 53,000
Birth or adoption of child: - $ 18,300
Marriage - $ 16,500
Separation from spouse or partner: +$ 14,900
Fired or made redundant: + $ 6,900
Victim of property crime: +$ 2,700

(Currency: Australian dollars; $A1 = about $US 0.80. Assumed discount rate = 5% ) .

I should note that these compensating windfall estimates are additive. For example, a person who is fired might become separated from his or her spouse and experience a major financial worsening at the same time.

It seems to me that the magnitude of these estimated compensating windfalls generally make a lot more sense than do the much larger estimates of income-equivalents of life events. Nevertheless, I feel uneasy about the idea that the life satisfaction of people who suffer the death of a spouse or child would be unaffected, on average, if they received a windfall gain of around $A 178,300 at the same time. Can any amount of monetary compensation actually be sufficient to enable life satisfaction to remain unaffected while a person is mourning the loss of a loved one?

Do well-being surveys measure utility?

Economists often think of utility and well-being as the same thing. If a person chooses to buy an additional unit of good A rather than an additional unit of good B, they tend to assert that this “revealed preference” shows that the marginal utility provided by good A exceeds that provided by good B. If asked to explain what this means in simple terms an economist might say that the additional unit of good A increases the person’s well-being by more than an additional unit of good B.

At this point some readers will immediately want to bring in complications like the possibility of irrational behaviour. A branch of economics (behavioral economics) explores this possibility, but I want to put this possibility aside for the moment.

The question I want to focus on is whether well-being surveys that are conducted by asking people questions relating to their personal well-being are measuring the well-being or utility referred to by economists. Some economists assume that it is, but I think they are mistaken.

What is it that the surveys actually measure? They measure a variety of different things. Most commonly they measure happiness or satisfaction with life by asking people to provide numerical evaluations in response to a single question. Some more complex surveys (e.g. the ACQOL survey) measure perceptions of the quality of life by asking questions about satisfaction with various aspects of life such as standard of living, achievements, relationships and health. Others ( e.g. nef’s “National accounts of wellbeing”) incorporate a framework of questions relating to life evaluations, emotional well-being, vitality, resilience and self-esteem, and feelings of autonomy and competence etc.

I think it is fair to say, however, that the surveys measure how people feel about their current lives. (Some do include questions about future security but when this averaged with other factors most weight is given to how people feel about their current lives.) For the purposes of this discussion let us call this “current well-being” and assume that the surveys measure it accurately.

At this point the economists reading this will immediately recognize that the surveys cannot be measuring utility because people often make trade-offs between their current well-being and future well-being. This is most obvious in savings decisions where current consumption may be sacrificed to enable a higher consumption levels to be enjoyed in future. It also occurs, for example, when people decide to put up with working long hours or spending a lot of time commuting in order to make their families more financially secure.

Economists still probably learn at an early stage of their study of the subject how to picture these kinds of choices in their minds, but for the benefit of anyone else who might be reading this I will draw a relevant diagram below. Readers who prefer stories to diagrams might prefer to read an earlier post, entitled “Do good decisions always make us happy?”. For the benefit of any readers who might find an appeal to authority more persuasive I should also mention that Gary Becker and Luis Rayo have suggested that the happiness measured in surveys can be viewed as “a commodity in the utility function in the same way that owning a car and being healthy are” (comment on Stevenson/Wolfers paper, Brookings Papers, Spring 2008: 89).


The possibilities curve in this diagram (shown in red) encompasses the various combinations of “current well-being” and “security” that are attainable by the decision-maker. It can easily be seen that points on this curve are superior to all attainable points closer to the origin.

The indifference curves (shown in blue) reflect the preferences of the decision-maker between current well-being and security. The decision-maker is indifferent between the combinations of “current well-being” and “security” on particular curves. She maximizes her utility at the point of tangency between the possibilities curve and the highest attainable indifference curve.

The point I am trying to make is that as a result of the decision-maker’s preferences she views point A, where current wellbeing is at a maximum, as inferior to point B, the point at which utility is maximized.

The obvious implication is that it is foolish to rush into policy recommendations based solely on consideration of how people can improve their well-being as measured in surveys. If happiness surveys suggest that people are behaving in ways that are contrary to measured well-being we should ask ourselves whether we have an adequate understanding of what is motivating their behavior, rather than assuming that it is a result of ignorance (an information problem) or human frailty (predictable irrationality).

Should governments collect subjective well-being data?

The idea of governments collecting data on our subjective well-being might seem slightly Orwellian to many people. It could bring to mind images of officials from the government statistics office knocking at your front door and telling you that they are from the government and they have come to help you by collecting information about what is going on in your mind.

However I don’t think anyone needs to worry a great deal about the implications for their personal liberty of proposals for government collection of subjective well-being data, such as in the recently published book, “Well-being for Public Policy” by Ed Diener, Richard Lucas, Ulrich Schimmack and John Helliwell. As discussed in an earlier post, such data would be unlikely to increase the influence that paternalistic interventionists may have on the policy making process.

The important issue is whether the collection of this additional information is warranted in terms of its potential contribution to discussion of policy issues.

In their concluding chapter the authors ask themselves whether enough is known about subjective well-being for government agencies “to initiate systematic programs for measuring it”. This is how they summarise their reasons for answering “yes”:
“The measures are sufficient to reveal some of the groups in society that are suffering, and they also tell us which groups are thriving. The measures already provide strong clues about the characteristics of nations that lead to the experience of a satisfying life for citizens, along with those that predict the opposite. The measures give clear clues about the activities and circumstances that tend to lead to ill-being and well-being. And when national accounts of well-being are instituted our understanding of these issues will only grow.”

Do we really need systematic programs for collection of information on subjective well-being to tell us about such matters? The measures of subjective well-being generally tend to confirm what we know already from information on incomes and other objective indicators of the quality of life. It seems to me that the important issue is whether collection of more data on subjective well-being would add reliable information that is not available from other sources.

The book discusses the potential contributions of subjective well-being measures in providing new information that could be relevant to discussion of policy issues relating to externalities, non-market goods, taxation, setting fines and compensation for lost welfare. Some specific examples caught my eye. It is possible that information on the extent of misery caused by different diseases could result in better allocation of public funds for medical research (p 134). Some research findings suggest that effects of airport noise on well-being of people in affected areas may currently be under-stated by its effects on residential land values (p 147). Subjective well-being information may help in assessing the value of public facilities such as parks to residents of cities who have access to such facilities (p 155).

The critical issue in considering the contribution that subjective well-being data can make to public discussion is whether this information is reliable (yields consistent results) and valid (actually measures well-being). My assessment of the relevant literature (in my draft paper on Gross National Happiness) is somewhat less optimistic than the view presented in this book. Despite all the noise in this data, however, I think the authors may be correct that enough randomness washes out in large samples to make the responses to single item questions sufficiently reliable for the purpose of creating national indicators (p74). Multiple item questionnaires such as those suggested by Ed Diener and Robert Biswas-Diener to measure “psychological wealth” (in their recent book, “Happiness”) could provide much more reliable information.

I think the authors make a fairly strong case that the surveys are measuring an aspect of well-being although I think it is an over-statement to claim that “the measures behave as they would be expected to behave given widely accepted ideas about what well-being is” (p 93). For example, the measures show a decline in well-being when people have children, despite the widely accepted idea that having children has something to do with well-being.

There is a risk that subjective well-being measures will cloud public discussion of policies rather than shed additional light on relevant issues if they come to be viewed as definitive measures of overall well-being. In interpreting these measures it is important to bear in mind that it is quite possible for people to make rational decisions to sacrifice some of their current satisfaction with life, in order to improve their own future well-being or that of their families.