This is not an argument of any kind. I’m not trying to make a point. This is thinking out loud. And you are going to help me.
Anne and Betty each prefer to positionally dominate the other—they both like coming in first better than coming in second. However, each has a different hedonic payoff from positional domination and subordination. How do we think this through?
|
Anne |
Betty |
|
|
A |
1st; 1000h |
2nd; 800h |
|
B |
2nd; 900h |
1st; 900h |
Which world state, A or B, does a benevolent planner choose?
In Pareto terms, the planner is indifferent. Both Anne and Betty prefer to come in first, but both can’t. The Benthamite planner is also indifferent: same sum of hedons.
What about willingess to pay? Well, pay for what? Positional domination or hedons? When Layard says that people undermine their own welfare by seeking status despite the fact that it doesn’t make them "happy," it sort of sounds like he’s saying that people sometime value status more than they value hedons, but are wrong to do so. Let’s get rid of the normative judgment and think about what it could mean to value positional domination independent of hedons.
Suppose that whoever pays most to positionally dominate positionally dominates. You can have an auction. Anne’s highest bid is $2000 and Betty’s is $2700. So does that mean that Betty gets a bigger hedonic payoff from dominating. No, by the stipulation of the matrix, she doesn’t. (And by stipulation of the matrix, the distribution of hedons is not the dimension of positional competition.) So does this mean that Betty is willing to pay more for a hedon? Maybe, maybe not. Why think Betty is bidding on hedons? It could be that Anne and Betty value the marginal hedon at the exact same rate. In which case, Betty is just bidding for positional domination, which she values for its own sake, not for the hedons that fall out of domination.
Or maybe you can think of the choices between A and B as choices between packages of hedons and positional domination, which are independently valuable, but causally connected. This is value pluralism. There are lots of independent values: hedons, positional domination, etc. The value-to-money and money-to-value exchange rates may not be the same for each value. (Or in each direction; the endowment effect for a hedon and a dollar may be different. Misers may trade hedons for dollars, on the assumption that the dollars will pay off in even greater hedons, but, when the time comes, they are unwilling to give up dollars for hedons, so the dollars just accumulate.) And the money worth of some values might decline on the margin faster than others.
Suppose that there is a point of hedonic saturation (I believe this is true.) At the point of saturation, an extra hedon will have no money value, since there is in some sense nowhere to put another hedon. (Hedonically saturated states dry up pretty quickly though.) Suppose that positional domination doesn’t saturate, and remains ever valuable. It is never enough to be mayor, or governor, or president, or ruler of earth; there is always value in dominating on another positional dimension, or dominating a dimension of broader scope. So, one could be hedonically saturated, and unwilling to pay for another hedon, but not be positionally saturated, and perfectly willing to pay to become Generalissimo of the solar system.
Suppose the willingness-to-pay planner chooses world state B on the strength of the higher money value of positional domination to Betty. Is such a planner really benevolent? If coming in second is a positional externality imposed on Anne, what is the value of the externality.
Are you confused yet?
I am.
I have also caused myself to wonder whether it might be possible to take money away from people under one description, and give it back to them under another, resulting in a net gain in hedons Could be! The issue wouldn’t be the transfer per se, but the description under which the transfer takes place. (This has nothing obvious to do with the above.) Does support for the state depend on a kind of gratitude stemming from an (illusory for most people) sense that the value of public goods consumed is greater than taxes (direct and indirect) paid? It’s like thinking somebody’s your best friend since that gave you $4 bucks after they took $5 out of your wallet but gave you the $4 so warmly.
</brainstorm>
[Cross-posted to Happiness & Public Policy, which is back online.]
It’s odd that your planner can measure hedonic value directly, but has to measure the value of positional dominance through revealed preference / WTP. I guess that’s what you mean when you say that you believe in hedonic value, and you’re trying to figure out what it mean to have other values.
I think this asymmetric approach reflects inconsistency between your assumptions and your beliefs. I don’t have much sympathy with this kind of value pluralism. I might have sympathy for different parts of the individual, especially heuristics, having different values.
Phrasing things in terms of willingness to pay reduces multiple values to a single one; I’ll call it utiles, since you’ve artificially claimed hedons. Of course, you don’t expect people to have completely coherent preferences, but at this point in your essay, you discover that these problems exist even with a single value being compared to money (or, really, a single value being compared to real choices). You seem to admit in your description of the miser that the problem is poor heuristics, not the complications of multiple values.
It’s odd that your planner can measure hedonic value directly, but has to measure the value of positional dominance through revealed preference / WTP. I guess that’s what you mean when you say that you believe in hedonic value, and you’re trying to figure out what it mean to have other values.
I think this asymmetric approach reflects inconsistency between your assumptions and your beliefs. I don’t have much sympathy with this kind of value pluralism. I might have sympathy for different parts of the individual, especially heuristics, having different values.
Phrasing things in terms of willingness to pay reduces multiple values to a single one; I’ll call it utiles, since you’ve artificially claimed hedons. Of course, you don’t expect people to have completely coherent preferences, but at this point in your essay, you discover that these problems exist even with a single value being compared to money (or, really, a single value being compared to real choices). You seem to admit in your description of the miser that the problem is poor heuristics, not the complications of multiple values.
L,
It’s not odd. Revealed preference reveals an ordinal ranking. It shows us how things stack up. But there is no way to attach comparable cardinal values to an ordinal rank ordering.
Willingness to pay gives us a sort of cardinal measure for ordinal preferences, but not really. It is really just an ordinal ordering of money/decision pairs. It tells us nothing about how the individual values money, so there is still no valid interpersonal comparison.
One of the main reasons folks like value hedonism is that it seems to provide a medium for interpersonal comparisons. But I don’t think so. Different people value pain and pleasure differently, so a subjective states with the same amount/intensity of pleasure/pain may not be equally valuable. So while you can directly measure hedons, you can’t directly measure the value of hedons. That’s my view. In the post I was just toying with different efficiency standards without defending one.
L,
It’s not odd. Revealed preference reveals an ordinal ranking. It shows us how things stack up. But there is no way to attach comparable cardinal values to an ordinal rank ordering.
Willingness to pay gives us a sort of cardinal measure for ordinal preferences, but not really. It is really just an ordinal ordering of money/decision pairs. It tells us nothing about how the individual values money, so there is still no valid interpersonal comparison.
One of the main reasons folks like value hedonism is that it seems to provide a medium for interpersonal comparisons. But I don’t think so. Different people value pain and pleasure differently, so a subjective states with the same amount/intensity of pleasure/pain may not be equally valuable. So while you can directly measure hedons, you can’t directly measure the value of hedons. That’s my view. In the post I was just toying with different efficiency standards without defending one.
After I wrote the next paragraph, I went back and reread you last paragraph. Maybe I’ve completely misunderstood everything. The distinction between hedons and the value of hedons seems silly to me. I always asumed that hedons were the value of hedons. If you introduce something that you can measure, but it isn’t value, then it might as well be the color of the sky. So what if you can measure it? Talking about hedons and the value of hedons doesn’t seem to be much different than talking about money and (what I would call hedons), except that I know what money is, and I have no idea what your hedons are.
I’m probably missing the point and going off on a tangent…
Of course revealed preference / WTP don’t let you make interpersonal comparisons. But they do let you make internal comparisons, they let you flatten multiple internal values into a single one. Of course, this is only in theory, and perhaps only marginal value, not actual value. But they let you see how many hedons the person thinks coming in first is worth, in a way that captures both the hedons your planner is measuring and the separate value of coming in first.
If your planner values hedons and can make interpersonal comparisons of hedons, why shouldn’t your planner trust people to translate other values into hedons, and use this to make interpersonal comparisons?
After I wrote the next paragraph, I went back and reread you last paragraph. Maybe I’ve completely misunderstood everything. The distinction between hedons and the value of hedons seems silly to me. I always asumed that hedons were the value of hedons. If you introduce something that you can measure, but it isn’t value, then it might as well be the color of the sky. So what if you can measure it? Talking about hedons and the value of hedons doesn’t seem to be much different than talking about money and (what I would call hedons), except that I know what money is, and I have no idea what your hedons are.
I’m probably missing the point and going off on a tangent…
Of course revealed preference / WTP don’t let you make interpersonal comparisons. But they do let you make internal comparisons, they let you flatten multiple internal values into a single one. Of course, this is only in theory, and perhaps only marginal value, not actual value. But they let you see how many hedons the person thinks coming in first is worth, in a way that captures both the hedons your planner is measuring and the separate value of coming in first.
If your planner values hedons and can make interpersonal comparisons of hedons, why shouldn’t your planner trust people to translate other values into hedons, and use this to make interpersonal comparisons?