My Life Will Be Good When ...

As a simplification, in economic theory one often writes utility as a function of market consumption and leisure. Following Gary Becker, one also might add in other arguments such as the quality of one’s relationships. (See for example Gary Becker’s book A Treatise on the Family.) But it is very easy to have an excellent situation in one’s outward circumstances, yet to totally spoil your enjoyment of that situation by unfavorably contrasting your actual situation with some imagined better situation and then directing mental barbs at one’s actual situation. I’ll bet there is often an edge—or a dangerously sharp point—to the thought “My life will be good when ….”

Conversely, though it might be hard to understand, there are people whose outward circumstances look miserable who wring a surprising amount of enjoyment out of those circumstances. Often, their hearts of full of gratitude in a situation where it appears they have much to curse.

There is a lot of mileage to understanding the ways in which it is possible to spoil our enjoyment of outwardly good circumstances—or alternatively, gain surprisingly robust enjoyment out of outwardly bad circumstances. Lauren Alaina’s video “Getting Good” gives some hint of how to do that. (I recommend it; you can click on video at the top of this post to hear it.) My series of posts on “Positive Mental Health” gives additional hints. (All of this applies powerfully even to the subset of people who have no clinically defined mental ailments.)

I want to insist that this is a big deal; the production function for happiness has what initially looks like a mysterious X-factor beyond outward circumstances. If we don’t understand that X-factor, we don’t understand happiness.

Matt Adler's Critique of Methods Based on the Value of a Statistical Life

Matt Adler is a law professor economists should be aware of. He is doing serious work related to constructing social welfare functions. And he explains the current state-of-the-art for constructing social welfare functions in a very understandable way.

A Critique of Typical Value-of-a-Statistical-Life Methods

“What Should We Spend to Save Lives in a Pandemic? A Critique of the Value of Statistical Life” is a nice introduction to Matt Adler. Reading it, I realize, for example, the naivete in how I used the value of a statistical life in “Logarithms and Cost-Benefit Analysis Applied to the Coronavirus Pandemic.” The value of a statistical life is the marginal rate at which an individual would trade off a small extra probability of death with small dollar cost. There are at least three problems with common ways of using the value of a statistical life:

  1. Some interventions are non-marginal. In particular, lockdowns can cause large reductions in income and consumption that are more-than-proportionately costly to an individual than smaller reductions in income and consumption would be. Hence, a naive application of the VSL formula will understate the utility cost of the lockdowns.

  2. The value of a statistical life can easily differ by age—both because of the number of years that would be lost from death at that age and because of the different financial situations individuals have at different ages.

  3. A good social welfare function should treat a dollar’s worth of value to someone living on $500 a month as being a bigger deal than a dollar’s worth of value to a billionaire.

Two notes: (a) The first two issues are problems even if one is treating a dollar as a dollar, regardless of whose dollar it is. (b) The different financial situations of older individuals mentioned in (2) are the kind of issue raised in (3).

On these three issues, it is worth quoting this passage from “What Should We Spend to Save Lives in a Pandemic? A Critique of the Value of Statistical Life”:

As for intuition: textbook VSL is quite counterintuitive, because it places a dramatically higher value on risk reductions for richer individuals; population-average VSL fails to differentiate with respect to age; and all three versions on the cost side are completely insensitive to the incidence of the costs of social distancing policy.

Prioritarianism

How should things be done if not through naive value-of-a-statistical-life methods? The current state-of-the-art for constructing social welfare functions can be described as “Prioritarianism.” Here is Matt Adler’s definition of Prioritarianism:

Prioritarianism is a variation on utilitarianism that has emerged in ethics over the last several decades, and (as suggested by the name) gives extra weight to the well-being of the worse off. It is appealing to those who are impressed by utilitarianism’s consequentialist structure and attention to individual well-being, but believe that utilitarianism’s exclusive focus on the sum total of well-being is too narrow. Instead, prioritarianism considers both the sum total and the distribution of well-being.

…

Prioritarianism sums expected transformed utilities, using a concave transformation function (so as to give greater weight to the worse off).

I am in agreement with Matt Adler on substance here, but I have a terminological disagreement, as follows:

  • To an economist, what Matt calls "transformed utility" is also "utility," since any monotonic transformation of utility is also a utility function that represents the same preferences. I think this needs to be explained, at least in a footnote. 

  • Because transformed utility is also utility, Prioritarianism is not a variation on utilitarianism, but a type or species of utilitarianism in which the particular representation of utility is chosen not based on convenience of functional form or some empirical or metaphysical principle, but based on ethical reasoning to make sure that that particular transformation of utility used as the utility function adequately deals with distributional issues.

  • For example, logarithmic utility is primarily based on convenience and therefore typically has little behind it that should be taken seriously in forming a social welfare function. Convenience leads to wide use; then some people mistake prevalence as a hallowing by tradition that must have some basis back in the mists of time. But often the basis back in the mists of time was only convenience. 

  • As a technical note, it is assumptions of anonymity plus a separability condition that make it so ethical considerations about inequality can be dealt with by using a particular transformation of utility as the intermediate object for aggregation. (Fleurbaey and Maniquet say this on separability: "separability conditions state that indifferent agents should not matter in the social evaluation of two alternatives.")

Conclusion

One of the most important things to be aware of is that welfare economics and the idea of constructing social welfare functions have risen again from the ashes like a phoenix after its reverses from the Arrow Impossibility Theorem and other impossibilities results. In particular, interpersonal comparison of a monotonic reference path of consumption bundles—together with a mapping for each individual of which indifference curve they are on to a point on that monotonic reference path—can substitute for interpersonal comparison of utility; thus interpersonal comparison of utility is not necessary for the construction of social welfare functions. Many economists and a few law professors and others are working hard on making theoretically sound social welfare analysis a reality. Our Well-Being Measurement Initiative (for which Dan Benjamin, Kristen Cooper, Ori Heffetz and I are the senior investigators) is marrying these principles to other principles specific to well-being measurement.

Miles Kimball's Discussion of "When to Release the Lockdown: A Wellbeing Framework for Analysing Benefits and Costs," by Layard, Clark, De Neve, Krekel, Fancourt, Hey and O'Donnell

Richard Layard, Andrew Clark, Jan-Emmanuel De Neve, Christian Kekel, Daisy Fancourt, Nancy Hey and Gus O’Donnell are to be commended for doing a transparent cost-benefit analysis based on well-being of a key dimension of the policy choice we now: how long to continue the lockdowns. And Paul Frijters is to be commended for an excellent discussion of this paper, arguing that despite their bottom line that lockdowns should be ended soon, that Layard et al. are too kind to lockdowns. Let me offer some comments that might point out some aspects of the issue that might not be fully apparent from reading the Layard et al. paper and Paul Frijters’s discussion of it. I will not focus on their assumptions about what the consequences of different policies would be, except to say that their implicit epidemiological model seems too static when exponential dynamics are crucial. I will focus on the economics-of-happiness techniques used for evaluating the assumed consequences of policies.

The first issue to mention is that Layard et al. focus on life satisfaction, but there are many other dimensions of well-being. Indeed the UK Office of National Statistics now measures 4 aspects of well-being on a huge sample each month. No doubt the typical person would be willing to sacrifice some amount of being satisfied with their lives in order to gain in feeling that the things that they do in life are worthwhile. So life satisfaction isn’t everything. I could go on at greater length, but let me bring this up along the way where I can see how it might affect the calculations.

One issue I think is important methodologically—that could affect the calculations either way—is that Layard et al. implicitly assume that life satisfaction of 0 on a 0-10 scale is the level of life satisfaction at which—if that is what one would face form now on—one would be indifferent between living longer or dying immediately. This could be wrong in either direction. 0 is pretty low and most people report quite high numbers. Even a situation in which one reported a life satisfaction of 1 might be so intolerable that if doomed to that for the rest of one’s life, one might actively want to die. On the other hand, one might very much want to continue living even in a situation in which one barely reported a life satisfaction of zero even though one might wish to die in a situation where one had a latent desire to say -4 on the survey but was constrained to a nonnegative number. (Note also that some people who give a 0 for life satisfaction might, say, report a rating of 5 to “Overall, to what extent do you feel that the things you do in your life are worthwhile?” which is another question in the same UK Office for National Statistics survey.) Methodologically, the answer is that surveys need to be used to explicitly ask about tradeoffs between losing years of life and losing points of wellbeing. My understanding is that this is done a lot in the quality-adjusted life-years literature. The corresponding work needs to be done in the well-being adjusted life years literature.

A related methodological issue is that a point of life satisfaction might mean more near the bottom of the scale than at the top (or more at the top of the scale than near the bottom). Asking about tradeoffs with longevity given different starting levels of life satisfaction would be very useful. (The tradeoffs people are willing to make may also depend on the level of lifespan.)

Also, even once outcomes are measured in life-years of a benchmark level of well-being, just adding those life-years up may not be appropriate. One needs to decide how to deal with inequality. This is not addressed in the paper. Taking into account inequality probably makes the results more favorable to ending lockdowns if the economic harm is tilted more toward those of low well-being or low life-span than the health harm is, but makes the results more favorable to continuing lockdowns if the health harm is more toward those of low well-being or low-lifespan than the economic harm is.

Now, on to some considerations that, at least individually, have a clearer direction of effect on the bottom line. On how to value income, Layard et al. write:

There have been literally thousands of studies of the relation between wellbeing and income. They yield broadly similar results, which imply that a 1% gain in income increases wellbeing (measured 0-10) by around 0.002 points.

Layard et al. claim this number is uncontroversial, but Paul Frijters writes:

So they basically chose one of the lowest wellbeing effects of income one can find in the literature, which is the effect of hardly noticed changes in income on life satisfaction –  easily a factor 10 times less than normal for how people have been found to react to noticed losses of income …

Paul also makes another points in two different ways: government dollars can be used to save a lot of lives in ways that have nothing to do with the SARS-CoV2 and to increase well-being adjusted life years in other ways. Valuing all dollars or pounds at the best possible use the government could make of those dollars is probably valuing those dollars or pounds too highly. But valuing that fraction of extra dollars that would actually be extra tax revenue and actually be used by the government to do particular additional things at the value of those additional things seems fair. Even this latter is a big number, Paul argues.

On the valuation of dollars or pounds in life satisfaction or other well-being units, let me point out two relevant concerns.

First, dollars and pounds contribute to many, many other aspects of well-being that people care about besides life-satisfaction. Relative to many other aspects of well-being, dollars and pounds have a particularly low effect on life-satisfaction.

For what it’s worth, in data that Dan Benjamin, Kristen Cooper, Ori Heffetz and our team collected, we found a 1% increase in income raising a broader measure of well-being by .03 to .04 points on a 0-100 scale on which, to avoid top-coding and bottom-coding, we had urged people to use only 25-75, but allowed them to use the whole 0-100 range. That converts to somewhere between .003 and .008 on a 0-10 scale, depending on how you count the effects of our urging of people to use only 25-75.

Second, going the other direction, in this case, we are not talking about a pure loss of income: it is a loss of income associated with an increase in “leisure” broadly construed as the time away from paid work. Some of that extra time away from paid work is devoted to home production that yields reasonably close substitutes for market goods. And some of that extra time away from paid work is devoted to things like bonding time with family and (perhaps distant) friends for which there is no close substitute among market goods. The loss of income coupled with this increase in leisure shouldn’t be as bad for well-being as the loss of income from a lower wage with the same number of hours at work.

Combining the well-being value of a dollar or pound with the number of life-years at stake and the level of well-being at which one would be indifferent between living and dying implies a value of a statistical life or the closest thing to a value of a statistical life in a well-being-adjusted life years calculation. It is crucial to grasp philosophically with the differences between the numbers obtained in this way and the numbers obtained through other methods of getting a value of a statistical life. That is too big a topic for this post, but deserves a lot of thought and discussion.

Unemployment is awful, and an important part of the well-being calculation. But because it doesn’t seem as much like a personal failure, unemployment in this situation may not be as awful as unemployment usually is. Of course, the issue is not just unemployment now, but how long one will be unemployed. That depends a lot on monetary policy. (See and “Why We are Likely to Need Strong Aggregate Demand Stimulus after Tight Social Distancing Restrictions are Over” and “Narayana Kocherlakota Advocates Negative Interest Rates Now.”)

One contribution to the cost of lockdowns that Layard et al. give a relatively small number to is the cost of school closures. Here let me simply say that closing schools now doesn’t have to mean less school total. In the US at least, if this pandemic led to a policy shift toward somewhat more total months and hours per month of schooling, that policy improvement would be an important silver lining, and in any case could soon make up for less schooling or lower quality schooling right now. See “Magic Ingredient 1: More K-12 School.”

Conclusion: On the bottom line of whether lockdowns so far have been justified and whether it is justified to continue the lockdowns for somewhat longer, what I keep coming back to as the main justifications for the lockdowns is to give us time to figure out COVID-19 science. If in hindsight we consider the danger of the novel coronavirus to be low enough that we shouldn’t have done the lockdowns given that hindsight, that is great. It might not have been a mistake given our lack of knowledge at the time, which left open the possibility that the novel coronavirus was much worse. For example, the US seems to have a much greater prevalence of preexisting conditions that interact badly with COVID-19 than South Korea. Without substantial experience, we couldn’t depend on US mortality rates being much, much worse. Alternatively, maybe we needed time to figure out less costly partial lockdowns that could do much of the same job as more comprehensive lockdowns and the more comprehensive lockdown helps us figure out what dimensions of a lockdown are especially cost-effective and what are not so cost-effective. Or maybe some test-and-trace strategy will emerge that has a great benefit/cost profile, but requires that overall incidence not be too high, which it would have been with no lockdown.

Actually, figuring out and hopefully getting somewhat greater consensus on how to approach well-being cost-benefit analysis for our current situation is part of the COVID-19 science that we have bought time for with the lockdowns.

I honestly don’t know what the right policy is going forward. But unlike Paul Frijters, I don’t regret the lockdowns we have done so far as opposed to having done no relatively comprehensive lockdowns (though I regret many other aspects of our history of COVID-19 policy, especially the lack of an earlier response).

Don’t miss these other posts on the coronavirus pandemic:

Also, click on this link to see other posts tagged “happiness.”

Christmas as a Clue to What People Want

In “An Agnostic Grace,” I write:

And we remember Jesus Christ, symbol of all that is good in humankind, and thereby clue to the God or Gods Who May Be.

Christmas, the celebration of Jesus’s birth, is a clue to men’s and women’s desiring. People want:

  • many, many things that money can buy, as the commercial aspect of Christmas attests;

  • the thrill of discovery, as the idea of gifts as surprises attests;

  • good food, as the culinary aspect of Christmas attests;

  • close, warm relationships with family and friends, as Christmas gatherings with family and friends attest;

  • not feeling bad about themselves, as the idea that Jesus came to bring forgiveness of sins attests;

  • not having death undo us all, as the idea that Jesus came to bring victory over death attests.

May we, in this Christmas season, get much of what we want now, and let us make great plans to get more of what we want later.

Don’t miss other Christmas posts:

Also see “The Book of Uncommon Prayer” and my happiness sub-blog.

On the Effability of the Ineffable

Ineffable: Beyond expression; indescribable or unspeakable.

There is a paradox in the use of the word “ineffable”: by saying that something cannot be described, the word “ineffable” often points to a common human experience—and thereby communicates. And this is not so different from ordinary words. Many ordinary words are only understandable because of the common human experience and common human nature that we share. (That is the theme of my Linguistics Master’s Thesis. See “Miles's Linguistics Master's Thesis: The Later Wittgenstein, Roman Jakobson and Charles Saunders Peirce.”) Similarly, things that are called “ineffable,” like the pleasure of a sunset, or a mystical experience in a religious context that regularly produces such mystical experiences in coreligionists, or consciousness, are understandable to the many people who share those experiences due to their human nature. (Don’t miss my sermon “The Mystery of Consciousness.”)

One of the big jobs of the Humanities is precisely to express what had previously been ineffable—to be able to point to or evoke feelings and thereby given them a name, even if the name is the length of a novel.

The subject matter of the Humanities is also reachable by science. If anything can be expressed in words or in a painting or in music, then multimedia surveys can ask about it. And once a survey can ask about it, it can be quantified. A good thing, too! Because continuing to improve human welfare at some point involves helping people grab hold of more of the wondrous intangible things that they want. I am proud to be heavily involved in research in the economics of happiness—which is really not just about happiness alone, but about all the wondrous and the quotidian, intangible and tangible things people want.

Other Related Posts:

Charlotte Graham-McLay—New Zealand’s Next Milestone: A Budget Guided by Well-Being

I am proud that the Well-Being Measurement Initiative, headed by Dan Benjamin, Ori Heffetz, Kristen Cooper and me, is involved in this New Zealand effort. In the summer of 2015, I spent three weeks at the New Zealand Treasury working on this effort. Data collection is slated to take place this summer.

I do not see guiding policy by well-being as inherently left-wing. It only becomes left-wing when important aspects of well-being that are especially important to those on the right are omitted from data collection. In our approach, we strive to include a wide range of aspects of well-being.

Tropozoics

Update: Here is a link to the slides for our presentation "How Do Subjective Consumption Vectors Vary with Age?"

I can't be at the conference advertised above this year, but it is the Well-Being Measurement Initiative team I am on (and that accounts for by far the bulk of my research effort) that is organizing the conference whose program you see above. Let me talk a little about the field of study for our paper that my coauthors Dan Benjamin, Kristen Cooper and Ori Heffetz are presenting at the conference. 

"Tropozoic" and "Tropozoics." To maximize your utility, you need to make good decisions about your interactions with the market and good decisions about interactions with others in your household. But there are also many other important decisions you face in running your life. I want to propose and road-test a word for the study of the full range of decisions people face in running their lives, including private individual decisions that don't involve anyone else, except quite indirectly. 

In searching for a word for the study of the full range of decisions people face in running their lives, I looked for an analog to the word "household" in Gary Becker's phrase "household production function." Notice that in the phrase "household production function," the word "household" functions as if it were an adjective. I looked first and foremost for an adjective. 

For the concept of "having to do with the management of an individual life in all its dimensions, including things of the heart, mind and spirit as well as outward things," I propose the adjective "way-of-life" or its Greek-derivative equivalent "tropozoic." Thus, for example, I might say something like:

Understanding the nature of tropozoic production functions is important for helping people to have rich and abundant lives. 

Let me justify my choice of a Greek equivalent for "way-of-life." First, I think that for a technical term, using a Greek derivative is an easy way to avoid making people think of secondary meanings of an English word or phrase that are not relevant. Put "way of life" into Google Translate; you will get back the Greek τρόπος ζωής, which can be transliterated as trópos zoís. Tropos means "a turn, direction, course, way, and shows up in words such as "phototropic," which means "turning toward the light." Zoís is one of the Greek words for "life," and is behind the name Zoe. Tropozoic is the obvious form for an English adjective based on trópos zoís. As far as I know, in English, "tropozoic" is a new coinage.

With the adjective tropozoic in hand, it is easy to find a name for the study of tropozoic optimization and suboptimal tropozoic decision-making. Let me call it tropozoics, a noun for a field of social science at the point where economics, psychology, sociology and anthropology meet. 

Let me know what you think. 

 

Note: The philology of the three Greek roots for "life": bios, psuche and zoe and their derivatives in other languages is complex. Christian theology sometimes distinguishes zoe as a higher kind of life. (To be clear, as a nonsupernaturalist, I view religious practice as much more central to tropozoics than theoretical theology. Live: Teleotheism and the Purpose of Life, which has links to other key religion posts, is a good place to start if you are interested in my views on religion.) I think what is going on here is this: because zoe puts the focus on being alive as opposed to dead, metaphorically it can be used to express the idea of having a desirable life. This is akin to the way English phrase "I feel alive" points to a desirable life, while the English phrase "I feel dead inside" points to an undesirable life. This connotation of a desirable life in zoe or zoís is appropriate for the study of optimization and failures to optimize in relation to one's way of life. 

Bios can refer to "human lifestyles and activities" but it is not obvious how to make an attractive English adjective out of tropos bios. Bios has an English derivative "biography" in which it has exactly the right meaning, but in "biology" it has the same focus on the physical that zois has in "zoology."

 

On failures to optimize, don't miss "Cognitive Economics."

 

My Objective Function

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A key aspect of higher religion—that holds for nonsupernaturalist religion as well as supernaturalist religion—is serious attention to choosing the governing goals for human action. Economists spend a lot of time studying how to make choices in order to best achieve their goals given the limitations of the situations they are in. But (perhaps because of the kind of modeling difficulties I discuss in "Cognitive Economics") economists spend much less time studying metachoice: the choice of the goals themselves. This is particularly true for the choice—based in part on goals that then might be fully superseded—of those goals that become an individual's ultimate goals.

Someone who successfully proposes goals for others that they had never before conceived of can be thought of as a kind of prophet—whether a supernaturalist prophet or nonsupernaturalist prophet. The possibility of a future prophet identifying a new goal that many people would gladly take on makes it impossible to circumscribe the universe of all attractive human objectives. People want more than the things money can buy. They want more than happiness and life satisfaction. And they potentially want many things that they have never even dreamed of. 

In addition to prophets, who successfully propose goals for others, there are coaches who help people choose objectives for themselves. Such coaches might be friends, teachers, clergy, psychotherapists, leaders of human growth workshops, or people who call themselves "life coaches." Metachoice is so important that most people should seek out some coach to help them think through what they want their goals to be. Those who can't find such a coach in someone else competent to do that job need to coach themselves on a careful choice of their own objective function; but that is more difficult. 

In the mid-1990's I attended a series of excellent personal growth workshops by Landmark Education. In the "Advanced Communication Course" I was encouraged to identify my personal objectives and create a symbolic reminder of them. The star whose two sides are shown at the top of this post is the result. One side of the star—which I show first—gives headings for the objectives that are designed to spark curiosity. The other side gives the objectives themselves. In the Landmark Education courses, each of these objectives is typically preceded by the stem "I am the possibility of ..." as an expression of personal identification with that goal. The relationship between the heading on one side and the objective on the other side is clear for most. For those without the Mormon upbringing I had, the meaning of "Zion" might be unclear. I explain it this way in "Teleotheism and the Purpose of Life":

Zion, the ideal society—that we and our descendants can build.

The expression of my own personal objective function that I created in that Landmark course has had an important effect on my life. I want to illustrate that in relation to my career, this blog, and my personal life.

The reason I am writing about how my career, this blog, and my personal life have been shaped by my personal objective function today is that today is the 5th anniversary for supplysideliberal.com: my first post, "What is a Supply-Side Liberal," appeared on May 28, 2012. I have had an anniversary post every year since:

  1. A Year in the Life of a Supply-Side Liberal
  2. Three Revolutions
  3. Beacons
  4. Why I Blog

Now, on to how my objective function plays out in my career, this blog and my personal life. 

Profound Relationship

My most profound relationship is my marriage. I have two Valentine's Day posts about marriage:

My relationships with my children are different, but profound in their own way. After my mother died in Fall of 2012, I made a point of visiting my Dad often, fearing he would also die soon, and was gratified to have four years to deepen that relationship. As a bonus, since the rest of my brothers and sisters lived close to my Dad, my visits to my Dad also provided occasions for my brothers and sisters and I to get together and deepen those relationships. 

I have a set of wonderful relationships that are quite intentional. Men often need more friends than they would have without intentionally setting out to have friends. In Ann Arbor, I belonged to a group of Mormon and formerly Mormon men that met every two weeks in its heyday and sporadically in more recent years to the present day. Given the closeness of the group, they were OK with my decision to leave Mormonism in 2000. I also joined a Men's Circle established by the Men's Movement within my Unitarian-Universalist Congregation in Ann Arbor that meets every two weeks. The meetings of our Unitarian-Universalist Men's Circle are consciously designed to encourage self-disclosure: sharing true stories and ruminations about our lives. My Mormon Men's Group and Unitarian-Universalist Men's Circle fostered some of the closest relationships I have outside of my own family. In particular, my friend Kim Leavitt is the one other person who belongs to both groups and my friend Arland Thornton is the one who now holds my Mormon Men's Group together.

Professionally, my most profound relationships are those with my coauthors and others I am working with. One sign of a profound relationship is when working through strong disagreements makes the relationship stronger, rather than disagreements causing the relationship to disintegrate. That describes the relationships I have had with others in what we have called the "Well-Being Measurement Initiative": Dan Benjamin, Ori Heffetz and Kristen Cooper. In the work of the Well-Being Measurement Initative, which absorbs the bulk of my research time these days, I also treasure the relationships I have had with our amazing research assistants (Samantha Cunningham, Pierre-Luc Vautrey, Becky Royer, Robbie Strom, and Tuan Nguyen), then-graduate-student coauthors (Alex Rees-Jones, Nichole Szembrot, Derek Lougee and Jakina Debnam) and other more senior coauthors (Marc Fleurbaey and Collin Raymond), but those relationships have not had occasion to weather any serious disagreements. 

My blog has led to some surprisingly deep relationships. Here are some examples:

  • Beginning my blog with his encouragement added another dimension to my relationship with my student Noah Smith, which has deepened in very interesting ways as Noah has become an important economic journalist. 
  • Joshua Hausman is one of my best friends. As you can see from "Brad DeLong and Joshua Hausman on Federal Lines of Credit," I was first introduced to Joshua by Brad DeLong in response to one of my posts.
  • I have never met Matthew Rognlie in person, but I feel I know him well from our electronic discussions, prompted by things I had said here on this blog. (See for example "Sticky Prices vs. Sticky Wages: A Debate Between Miles Kimball and Matthew Rognlie.")
  • Ruchir Agarwal was a star student in my intermediate macro class a while back, but it was Ruchir's interest in the discussion of negative interest rates I had on this blog that got us back together to write "Breaking Through the Zero Lower Bound" and do other work together on negative interest rate policy.
  • I feel I know Tom Grey well because of his frequent comments.
  • My Twitter arguments with John Davidson help me to know him much better.
  • I do Facebook as an extension of my blog, and can't help getting to know those I interact with better than I otherwise would.
  • Finally, I am always gratified when those I know in real life read a few things on my blog. It probably helps them understand me a bit better.
  • All this is in addition to the much more obvious ability of blogging to generate many relationships that may not qualify as deep, but are still quite meaningful. 

Human Connection and Justice and Welfare

When I write of "making the world a better place"—or more extravagantly of "saving the world"—I mean advancing human connection and justice and welfare. These three are very closely related. In particular, now that humanity as a whole has gained some power over nature, the greatest evils in the world come from a failure of "human connection," as groups of other human beings are seen as something less than fully human. I explore this phenomenon in "Us and Them," "The Hunger Games" Is Hardly Our Future--It's Already Here," "'Keep the Riffraff Out!'" Nationalists vs. Cosmopolitans: Social Scientists Need to Learn from Their Brexit Blunder," and "The Aluminum Rule."

Professionally, my two biggest efforts to make the world a better place right now are my work on negative interest rate policy and my work with the Well-Being Measurement Initiative to build national well-being indices that can help identify what people want and what policies are most successful in helping them get there. On my blog I also advocate many other ways to make the world a better place. To see one of my favorites, take a look at "How and Why to Expand the Nonprofit Sector as a Partial Alternative to Government: A Reader’s Guide." (I hope to give a better rundown of policies I have advocated in a bibliographic post sometime this Summer.)

I have felt some psychological pull toward more direct government service, but at this point in my life any significant direct government service seems increasingly unlikely. 

For advancing human connection and justice and welfare, I consider religion and philosophy as well as science and public policy. It has been very interesting blogging about religion every other Sunday and blogging my way through John Stuart Mill's On Liberty and John Locke's Second Treatise on the other Sundays.

Overall, there are three moral principles that keep coming up as I think about making the world a better place:

  1. Doing good rather than harm.
  2. Treating all human beings as equals, regardless of their origin.
  3. Truth.

On the third point, I find myself especially distressed when someone in an academic position cares more about advancing their career than they do about the truth. 

In my personal life, my efforts to advance human connection and justice and welfare are random but real. I don't notice everything around myself, but when I do notice an injustice, I want to do something about it. I don't mean it is all to the good, but I think the fact that I don't notice everything around myself keeps me from burning out. 

All People Being Empowered by Math and Other Tools of Understanding

Professionally, a big part of my teaching (for undergraduates as well as graduate students) is helping students to understand math. I hope I can both make potentially hard things easy and also instill some enthusiasm for math and related tools of understanding such as logic and graphs. I hope some of my papers accomplish the same job of making what could be difficult math a little easier. 

Without consciously setting out to make math a theme of my blog, it has become one. "There’s One Key Difference Between Kids Who Excel at Math and Those Who Don’t," which I wrote with Noah is by far my most read piece, and my follow-up pieces also did well (though at least an order of magnitude less in readerships): "How to Turn Every Child into a 'Math Person'" and "The Coming Transformation of Education: Degrees Won’t Matter Anymore, Skills Will." I also have many minor posts on this theme; one recent post in this category is "You, Too, Are a Math Person; When Race Comes Into the Picture, That Has to Be Reiterated." 

In my personal life, I hope I transmit a bit of my love for math through my dabbling with number theory. I have had some success in inveigling my wife Gail in memorizing hotel room numbers by factoring them. I make Archimedean solids and other geometrical shapes with Magnetix

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and try to show how each number is interesting in the birthday signs I draw for my children, such as this one for my daughter Diana:

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Adventure into the Unknown

Intellectually, I am a contrarian, which does a lot to bring me into new territory. I try hard to think up new angles on questions in front of me and to combine ideas from different sources. I love to dive into fields and subfields I haven't done research on before. (You can see this in the REPEC ranking analysis I have a link for here: one of the dimensions I rank highest among economists in the world is in "breadth of citations across fields.") 

On my blog, I delight in tackling new topics. I arranged my bibliography of "key posts" to show the variety of subjects I have written on.

Attending seminars and reading tweets continually introduces me to new ideas. 

My travels to talk about negative interest rate policy have had the fortunate side effect of letting me explore many places in the world (1, 2). Those travels have also given me a chance to see great works of art in some of the greatest museums in the world. I hope a little bit of the visual sensibility from that time in art museums comes across in this blog. 

In my personal life, I manage to do "adventures into the unknown" without being particularly daring. I like to do urban hiking to explore nooks and crannies of cities I am visiting or of my home city (which is now Superior, Colorado). I often try one of the more exotic dishes on a restaurant menu. And I read science fiction. 

Lately, I have realized that a willingness to "adventure into the unknown" is important in preserving a commitment to truth. The truth is not always what one thought at first. So a willingness to go someplace new is a prerequisite in many cases for arriving at the truth. 

A willingness to "adventure into the unknown" is also crucial for arriving at "profound relationship." One of the best ideas from the Landmark Communications courses was the idea that one should listen to those close to you as if you don't know what they are going to say next. The opposite of acting as if you always know what someone is going to say next is a surefire way to wear away any understanding you have of them. 

Fun

I started out my life as quite a serious kid. So having fun is something I have needed to work on. But now, I have a lot of fun. In my professional life, I get to spend a lot of time talking to people. In all that talk, there is both a social element and a delicious competitive element of arguing one's points. Much the same is true of my blog, and Twitter and Facebook and my writing for Quartz, which I see as extensions of my blog. Often, when I sound very confident of what I am saying, what I am really thinking is "There is no way for me to be wrong without it being interesting." And that thought is almost always borne out: either I get the joy of being right, or I get the joy of seeing things from a new angle I hadn't thought of before. 

In my personal life, fun comes in more varieties. I love the beauty of the landscape here in Colorado. I love learning new languages (something that contributed to my getting a Linguistics MA before I got an Economics PhD). I love vocal music, and often combine it with my love of foreign languages by listening to vocal music with non-English lyrics. I love reading both fiction and non-fiction. I love the great dramatic form of our age: TV. I love having friends and family come to visit. 

I am not sure I understand how to make things fun for other people. I remember once at a men's retreat all the men going around the circle and telling a little about their hobbies. The variety was astounding. People are truly different in the leisure-time activities they love. I know many of my tastes are minority tastes. I seldom fall into the trap of pretending to like something I don't really like in order to appear more cultured or cool, though I do try to stretch to get an angle to understand why other people like something. It is a rare occurrence but fun for me when I run into someone who happens to share my tastes in some leisure-time pursuit.  

Managing for Completion and Fulfillment-->All People Being Joined Together in Discovery and Wonder

The overall summary of all the objectives above is in the center of the star: "all people being joined together in discovery and wonder." After two decades or so since I took the Landmark Education courses, I still respond emotionally to that phrase. But the path to "all people being joined together in discovery and wonder" runs through "managing for completion and fulfillment." There are tasks that must be done, one by one, in order to get where I want us all to get to. 

Professionally, teaching the classes I am scheduled to teach, keeping promises (explicit and implicit) to caouthors, and the deadlines imposed by conferences and journals often provide plenty of structure to propel things forward. Other times, self-discipline must be applied to get key things done. Overall, I feel if I complete all of the research projects I have already begun, plus their obvious spinoffs, I will have had a wonderful career. 

On my blog, the rules and structures I have made up for myself have helped greatly in creating a set of blog posts I am very proud of. Trying to balance my other time demands with a determination that my blog continues to become richer and richer in its content, I have settled on the target of two substantial posts during the five weekdays (usually on Tuesday and Thursday) and a post on religion or philosophy on Sunday. It has turned out to be very easy to have a good link for the other days, including frequent links to Twitter debates that I have organized on Storify. (I would like to do many more Quartz columns than I have been doing lately. In addition to my own time constraints, current events seem to be running the editors I work with ragged on other fronts.) 

In my personal life, trying to be a good husband, father, friend and family member provides most of the structure I need to do good things on a regular basis. 

The back and forth between grand objectives and the determination to complete the day-to-day tasks needed to achieve those goals often seems counterintuitive and strange. But grand objectives without accomplishment of the crucial daily tasks along the way won't get anyone anywhere. And hard work without grand objectives is likely to get one a long way in the wrong direction. So that counterintuitive and strange back and forth between grand objectives and the determination to complete daily tasks is the only way to have much hope of saving the world—or even of making one's own corner of it a little better.   

 

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Sarah Sloat: What is Cognitive Economics? Understanding the World Through New Types of Data

Link to “What is Cognitive Economics? Understanding the World Through New Types of Data” on inverse.com.

I had an interesting discussion with Sarah Sloat a week or two ago about Cognitive Economics, reflected in the article “What is Cognitive Economics? Understanding the World Through New Types of Data” on inverse.com. This is quite an interesting article, but several things became garbled. Let me try to clarify and emphasize a few things:

A. Explaining Nonstandard Behavior

In the passage beginning 

Historically, the first thing that a behavioral economist did was try to document the things people do when their actions look strange from the standpoint of standard economic theory

what I said was that Behavioral Economics has taken as its first task to identify behavior that seems at variance with standard economic theory. Once such behavior is identified I think it makes sense to seek explanations in the following order:

  1. Some deeper explanation using standard economics that was not immediately apparent. 
  2. An explanation based on cognitive limitations or cognitive confusion.
  3. An explanation based on exotic preferences. By “exotic” I mean something like loss aversion or hyperbolic discounting. I don’t count altruism or caring about a wide variety of aspects of well-being (such as happiness, sense of purpose, power, etc.) as exotic preferences.

In the history of thought, many of the early influential behavioral economists reversed the order of 2 and 3.

B. The Goal of Economics

In the passage beginning

Like any scientific discipline, one of the jobs of economics is to understand how the world works

what I said was that beyond the scientific goal of understanding how the world works, economists in their role as policy advisors, have taken on the task of trying to smooth the way for people to get more of what they want.

C. Imperfect Information vs. Imperfect Information Processing

Sarah reports me as saying 

That’s certainly an element. If people don’t know something — what economists call imperfect information — we now have models that are very good with dealing with that imperfect information processing.

I actually said the opposite. We now have very good models for dealing imperfect information, but our tools for dealing with imperfect information processing are still quite rudimentary–primarily because of the infinite regress problem I discuss in my paper “Cognitive Economics.” 50 years ago, economists didn’t realize how much easier it would end up being to model imperfect information than it is to model imperfect information processing. And some of the ways we do have for modeling imperfect information processing model it in a way that, from a formal mathematical point of view treats a problem of imperfect information processing quite imperfectly as if it were a problem of imperfect information. I am thinking for example of the approach of Greg Mankiw and Ricardo Reis, in which what I would describe as a failure of information processing–not going to the effort of using readily available information–is described mathematically as if it were a failure of information availability–not having the information. 

D. Research with Dan Benjamin and Ori Heffetz

Where the article mentions Dan Benjamin, my coauthor Ori Heffetz should be mentioned in the same breath. Much of our joint research is described in posts in my Happiness sub-blog. I have many other cognitive economics coauthors as well–enough that I won’t try to list them all here. 

E. How Cognitive Economics Can Help Save the World

There are two different directions in which I think Cognitive Economics can help to make the world a better place. The first is in helping people deal with their cognitive limitations and in taking account of people’s cognitive limitations in designing public policy–such as in the work of the Consumer Financial Protection Bureau. The second is in using subjective well-being data–data on how people feel and how they think they are doing in various aspects of their lives–to help identify previously unsuspected ways to make people’s lives better. Because a big part of politics is energizing voters to give money and to vote, politics often sets out a very narrow agenda of controversial policies. I have the hope that using subjective well-being data to zero in on what people want will be able to shine a light on changes almost everyone can agree on.

Tibor Scitovsky: Mankind is Desperately Anxious to Have an Index of Welfare

“National account statisticians have long been aware, of course, of some of these problems and have warned against the use of national product or income estimates as an index of welfare. But since mankind is desperately anxious to have an index of welfare, such warnings have always fallen on deaf ears.”

– Tibor Scitovsky, “The Place of Economics Welfare in Human Welfare,” May 17, 1973 David Kinley lecture at the University of Illinois at Urbana-Champaign. (Available as chapter 2 in Human Desires and Economic Satisfaction.)

Matthew Vallade: Money Can Buy Happiness If You Know How

Link to Matthew Vallade’s LinkedIn profile

I am pleased to host another student guest post, this time by Matthew Vallade. This is the 27th student guest post this semester. You can see all the student guest posts from my “Monetary and Financial Theory” class at this link.

This is also the latest post in my Happiness Sub-Blog. Click this link to see the rest.

We have all heard over and over again that, “money can’t buy happiness” and the Bible even states that , “the love of money is the root of all evil.”  The idea of pursuing wealth has a negative connotation connected with it, and many believe wealth will not bring joy to ones life. This may be false though. Money can bring a sense of happiness and purpose into ones life if they use their money to buy experiences instead of material items, and if they give a portion of their income away.

Studies show you’ll get more contentment from putting cash toward experiences (like vacations) than material things (like a new TV).  Material items derive their value because they are appreciated by others. For example, shoes are only “cool” if society as a whole agrees that they are “cool”. In order to bring joy to our lives, material goods need the approval of others and the utility it brings may not be as high as as expected. Also, the value of material goods diminishes over time as new products are introduced and as one adjusts to the purchased item. Experiences are much different, they build bonds and relationships that can be extended over long periods of time. They create memories that do not diminish as time goes on. Experiences create value in our mind that is bigger and better than that of which any object can produce, and thus we should spend our disposable income on these experiences with others, rather than material goods. 

Research has been performed all over the world that shows that those who spent money on other people were happier than those who treated themselves.  This increase in happiness can be seen from those who have lots and from those who have little. Many plan to give when they are rich and have lots to give away, but it is important to give even when one is early on in their career. Giving to others can have a large impact on our happiness and should be taken into consideration during the entirety of our lives.

Money is especially important for those in the lower income bracket. We see that those who struggle to get by with the basic necessities have lower happiness levels, and wealth can help alleviate stress and make ones life more enjoyable. Also,  there is a correlation that people who have large amounts of debt also have an increased amount of stress and a decreases in happiness. Money is necessary for survival in the world that we live and financial stability is crucial in the pursuit of happiness.

The idea that money can’t bring happiness comes from those who are greedy. When money is the sole place where one finds happiness and their only joy is having more than others,  you will find a man who is miserable. The key to using money in an effective manner is to spend it on others and with others. We are creatures who were made to spend life together, and that is how we should spend our money as well.