Monday, July 20, 2015

A Comment on the "Dismal Science"

Howie Lempel pointed out that my post yesterday described "today's economics" in overly broad strokes. There are indeed many economists, for example, comparing outcomes between persons. Anytime an economist argues for a policy on the basis of some averaging or aggregating metric is comparing outcomes across persons. Using the effect on GDP per capita to determine the value of a policy, for instance, implies that the gain from an additional dollar is equal regardless of who is gaining the extra dollar. Though Piketty and Saez's work on inequality is largely descriptive, it clearly implies that distribution matters. Similar things can be said for the work of organizations, like my employer, that study global poverty. Many scholars of public choice theory and welfare economics propose ways to evaluate outcomes across persons. So there is a more recent history of work with an eye toward a more robust conception of justice.

More precisely, what concerns me are the following:

1) A lot of economic theory and undergraduate instruction in economics sweep distributional concerns under the rug. It would be good to see views like those mentioned above that take comparisons of outcomes seriously be more central and explicit. Even in the examples above, many of the implied comparisons are hidden. Popular economics often separates concerns about "efficiency" from concerns about "equity." The assumption that equity can be separated out from efficiency is itself a moral claim, as my former professor John Roemer frequently pointed out. This too-common overlooking of moral claims is problematic (there is evidence that economics instruction even makes students more selfish). I do not think it lives up to the heritage of earlier economic theorists who, as I noted in my original post, supported the moral equality of nonhuman and human animals.

2) The claim that interpersonal comparisons of utility are unintelligible is philosophically ludicrous. It should give way to more reasonable approaches that perhaps acknowledge the inability to compare utility perfectly without flat out rejecting comparisons. It may be possible to reject comparisons when utility is taken as representing superficial preferences, but as soon as utility becomes a way to judge an economic outcome, as it often does, it takes on a different character. It is good for the sake of intellectual debate when views take as their basis more reasonable assumptions.

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