Is there any necessary connection between Choice, based on Preference, and the level of Welfare attained?
No. Our Welfare may increase if someone else makes all our decisions for us. Indeed, in 'mission critical' aspects of our life- Health, Wealth management, Education, Protection of Person & Property- we prefer to 'outsource' provision to experts using 'transferable utility'- money- which we either pay through taxes or out of pocket.
It is true that we value being able to express our preferences as a matter of asserting our individuality and so as to 'stand out from the crowd'. But this is not necessarily connected with welfare. We may value things- e.g. being able to die for our country, but also being able to kill ourselves because someone snaked our boo- which are catastrophic for our Welfare.
In an earlier post, I showed- using Maskin's essay on Ken Arrow- that the type of Social Choice Theory which Arrow founded was fundamentally misconceived. It was based on a false analogy between markets and elections and defined as a Dictator a person who clearly was nothing of the sort.
In this post, I want to consider Sen's approach to welfare economics. In particular, by adopting the viewpoint of an impartial observer at a superior vantage point, can actual choices made by Society be improved in a systematic manner?
Sen asked- in a 1999 lecture-
How can we judge how well a society as a whole is doing in the light of the disparate interests of its different members?
One answer is to compare like with like. Look at a similar society and see whether 'disparate interests' are reconciled better or worse. Alternatively, compare sections of that Society against each other. Some areas may be performing better for reasons we can identify and which can help us formulate a 'Structural Causal Model' of the Society which can be used to improve matters immediately.
The problem here is that our incentive to do this must always be less than that of people within that Society. Mimetic effects may already be ameliorating the situation more efficiently than any intervention of our own.
This was a familiar problem for Development Economics. Those countries which ignored this academic discipline did in fact Develop. Those that listened to these experts failed to do so.
Judging impartially and on the basis of all relevant evidence is a good thing if someone will pay you to do so. But if such judgments don't add value to society then such Judging will be disintermediated. There will be jurisdiction shopping or else some other resolution mechanism will gain salience.
Judging is not the same thing as deciding. Deciding is not the same thing as expressing preferences. Both may arise in a manner such that people say 'there is no real choice here. Either we do the smart thing or we embark on the road to perdition.'
Sen asks-
How do we measure aggregate poverty in view of the varying predicaments and miseries of the diverse people that make up the society?
The answer depends on whether we get paid in proportion to the amount of misery we uncover. Recently, the Scottish Nationalist Party has been spending money on 'experts' whose job is to depict Scottish women as malnourished and unable to provide for their wee bairns. The aim is to show Westminster as callously starving the Scots. However, even in the wealthiest boroughs of London we find billionaires who are suffering from food insecurity because of lack of access to arable land of sufficient quantity and quality to grow food for themselves and their mistresses and household staff. This is a truly scandalous state of affairs! Many ecological experts have pointed out that sustainable food security requires the provision of hundreds of square miles of topographically varied land and water resources so as to provide each person with adequate nutrition.
Moving away from food to address other capability deficits, we find that- with existing technology- it would be possible to extend the life of the average billionaire by ten days just by spending one trillion US dollars. Moreover, many billionaires are not getting adequate training in twerking so as to fulfil their capability to be bigger than Beyonce.
This does not mean we can't measure poverty as the deficit of some particular good or service and work out how to increase its availability. But that sort of thing happens anyway without the need for any abstract theory or wringing of academic hands.
Sen asks-
How can we accommodate rights and liberties of persons while giving adequate recognition to their preferences?
The answer is we can do so by imitating those who are already acknowledged to have this capability. We can't invent some abstract mechanism which does the thing for us. Still, some of us may earn a living by pretending to have this panacea or to have thought more deeply about it. But then astrologers too can make a good living thanks to their superior vantage point as impartial observers of the Stars and Planets. But out and out fraudsters can get yet richer- till they are caught and thrown in jail.
How do we appraise social valuations of public goods such as the natural environment, or epidemiological security?
By looking at existing methods and trying to find ways of doing the same thing better. These are ideographic, not nomothetic, issues.
Also, some investigations, while not directly a part of social choice theory, have been helped by the understanding generated by the study of group decisions
Is this really true? No.
(such as the causation and prevention of famines and hunger,
Famines and hunger disappeared when technocratic solutions- which completely ignored 'group decisions'- increased the availability of food and improved 'last mile delivery' to the vulnerable.
Saying, 'ensure women get the food. Don't give money to men- they will spend it on booze.' may feel good but it doesn't really help. Growing a lot more food, or ensuring there is less wastage in its transport and distribution, is the answer to this problem.
True, for a political purpose, a Party may pretend that lack of access to arable land is what is causing 'food poverty'. But that is merely pretense.
or the forms and consequences of gender inequality,
The evidence is that talk about 'group decisions' has been useless. Gender inequality has to be tackled directly by the enactment and enforcement of appropriate Legislation. Consider the manner in which Title IX was used to expand Women's sports in American Universities. Many more women were able to get scholarships. This more than paid for itself because female higher education is better correlated with higher incomes and thus a higher tax take for the Government.
Gassing on about how 'attitudes' must change and men mustn't hold doors open for women and so forth did no good whatsoever. On the other hand, stiff penalties for sexual harassment and 'date rape' etc. changed actual behavior.
or the demands of individual freedom seen as a "social commitment").
Such 'social commitments' get reversed pretty darned quickly because they were never genuine in the first place. At the time when Sen was writing this, plenty of countries were saying 'we are socially committed to multiculturalism' and were seeking votes from a particular religious minority. Then the pendulum swung the other way.
The reach and relevance of social choice theory can be very extensive indeed.
Whereas the reach and relevance of a fart is mercifully limited. But both are nuisances which should be curbed.
Social Choice theory thinks Choice is related to Welfare whereas what matters is Competition which raises opportunity cost. When the opportunity cost rises for all members of Society, Poverty has fallen, Welfare has increased. True, there may be people who choose to starve. But the opportunity cost of their starving is not earning mega-bucks in a job. When opportunity cost rises, elasticity rises. This means 'rents' disappear. 'Exploitation' ends. Having good and effective laws greatly changes the opportunity cost of activities with high negative externalities- e.g. crime or imposing unconscionable contracts. But bringing about these desirable changes involve 'supply side' measures of an essentially ideographic and mimetic type. Abstract theory is less than useless- it is actively mischievous. It tends to increase the dimensionality of the decision space thus engendering concurrency deadlock or McKelvey chaos.
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