The standard of living means how much people consume. It can be a bit tricky to measure. When relative prices change we may substitute some goods for others. The Laspeyres index tends to overvalue the things we used to buy while the Paasche index has the opposite problem. Currently, because of COVID, most people in the UK are spending less on foreign holidays and eating out and more on things like Netflix. Are we better off or worse off? The answer is obvious. We are worse off. As our incomes rise, we will spend less time staring at screens and more time going out and enjoying ourselves. The relevant concept is 'Income elasticity of demand' (I.e.D). If we are going without things which have high Income elasticity we are worse off. Still, tastes may change. Streaming services keep getting better while real-life is starting to suck ass big time.
There really is no big metaphysical problem here. Amartya Sen, however, takes a different view.
Within the general notion of the living standard, divergent and rival views of the goodness of life co-exist in an unsorted bundle.
No. The living standard is purely material. Moreover, it has no 'extrinsic' or 'objective' component. If people who get more Income think a higher standard of living involves spending increased income on taking a lot of drugs or indulging in reckless and dangerous behavior, then the standard of living has gone up even if health and longevity has declined.
There are many fundamentally different ways of seeing the quality of living, and quite a few of them have some immediate plausibility.
The living standard is not concerned with the 'quality of living'. Do you have more shiny stuff with high I.e.D? If so, your living standard has risen even if your wife left you and you keep wanting to top yourself.
You could be well off, without being well.
But, for a large enough group, there is a secular trend because of the 'law of large numbers'. In other words, individual idiosyncrasies get cancelled out as the sample size increases.
You could be well, without being able to lead the life you wanted.
If you were previously able to live that life, your standard of living has gone down even if your health has improved. A guy who has to give up booze and broads and betting on the ponies because he has gone bankrupt has experienced a fall in his standard of living even if he is now happier and more contented.
You could have got the life you wanted, without being happy. You could be happy, without having much freedom. You could have a good deal of freedom, without achieving much. We can go on.
Not if we are interested in the standard of living as opposed to Aristotelian eudaimonia or Buddhist nirvana or things of that sort.
There are at least two basic questions in any evaluative exercise:
No. There is only one question. Why are we doing this? The answer, when it comes to 'standard of living' is because we want to know whether people have become better off or worse off in material terms. Also, are other similar countries doing better or worse than us? Are our best and brightest moving abroad? If so, we need to stop doing stupid shit.
Some Indian economists thought a 'Gandhian' standard of living was superior. Then they noticed that they themselves had run away from India so as not to have that standard of living. This didn't stop them talking bollocks but, they had to bitterly acknowledge that everybody was laughing at them.
(1) What are the objects of value?
In this case 'material goods and services' consumed
(2) How valuable are they?
This is irrelevant. Have people got more of stuff they like or have they got less than previously?
Strictly speaking, the first - what objects? -is an elementary aspect of the second - how valuable?
No. Free and Club goods also count.
The objects of value are those that will be positively valued when the valuational exercise is fully performed.
No. The objects of value are those people are consuming. There is a 'standard of living' even if nobody bothers to compute it. It is enough for a guy to say 'look, if you transfer to the Kuwait office you will have more cool, shiny, stuff. Indeed, you will even have a maid and a chauffer' for us to know that the material standard of living, for people like us, is higher in Kuwait.
You may still say 'I won't go to Kuwait coz I want to be close to Mummy who hasn't been well recently'. This does not factor into 'standard of living'.
This may not, however, be the most helpful way of seeing the "what" question. The more immediate sense of the question lies in the direct and intrinsic relevance of these objects in the assessment of the standard of living, and this relevance has to be distinguished from irrelevance on the one hand, and indirect or derivative relevance on the other. To clarify the contrast, consider for the sake of illustration the general view of the standard of living as pleasure.
That isn't the general view. Some goods- e.g. ice-cream- are hedonic. Other goods- e.g. fire-alarms- are useful but don't yield pleasure.
This would indicate that pleasures of different types are the objects of value and the standard of living consists of pleasures.
This is nonsense. Utility or ophelimity is not hedonic. It is about usefulness.
Having a high income is not, then, an object of value in itself;
Yes it is. The thing serves a signaling and screening purpose. You find it easier to make friends or get married if people know you earn beaucoup bucks.
nor is good health;
Yes it is. That's why people go on diets or take up jogging.
nor the existence of a friendly bank manager who is ready to lend one money.
Credit is useful to have. The thing yields utility. We do say things like 'though wages are just as high, the standard of living in Germany is lower than in Switzerland because the German banking system is a bit shit.'
These things may (indeed typically, will) influence one’s standard of living, but that influence must work through some object of value - in this case, some type of pleasure.
No. Usefulness may involve pleasure but equally it may not.
At the risk of oversimplification, it may be said that if an enhancement of some variable increases the standard of living, when everything else remains the same, then that variable is clearly an object of value in the evaluation of the standard of living.
No. A guy hired to evaluate the standard of living may hate material stuff. He only does the job to earn money he can hand over to the leader of his cult. What is important is that he observes relevant protocols.
Answering the “what” question does take us some distance. We are able to say, for example, that if life style x has more of each of the objects of value than y has, then x involves a higher standard of living than y.
But we could equally say 'x represents a higher living standard than y, because more objects (valuable or shitty) are available in x.' Occam's razor says we can get rid of 'objects of value' and just say 'objects'. Otherwise we could always pretend that we are saying something new and interesting when we distinguish between 'nice objects of value' and 'naughty objects of value'. This opens the door to yammering on about 'really, really, nice objects of value which are cute and cuddly'.
The identification of objects of value yields a “partial ordering,” which can be characterised in different ways.
No. A relation R on a set A is called a partial order relation if it satisfies the following three properties: Relation R is Reflexive, i.e. aRa ∀ a∈A. Relation R is Antisymmetric, i.e., aRb and bRa ⟹ a = b. Relation R is transitive, i.e., aRb and bRc ⟹ aRc. However 'identification of objects of value' is 'intensional' and thus Liebniz's law of identity does not apply. Antismmetry does not obtain. This is the 'masked man' fallacy.
Perhaps the simplest form is the following: if x has more of some object of value and no less of any than y, then x has a higher standard of living.
No. 'Object of value' is 'intensional'. We don't know its extension. Just say 'objects' and you have a set whose extension is well defined.
I shall call this the “dominance partial ordering.”
But it isn't a partial ordering at all because the thing is intensional.
The dominance partial ordering is, of course, very familiar to economists in many contexts.
Shitty contexts where the 'intensional fallacy' causes stupid nonsense to be talked.
In welfare economics it is employed to make social comparisons in terms of individual preferences or utilities, and it stands in that case for the so-called Pareto principle: if someone has more utility in state x than in state y, and everyone has no less in x than in y, then x is socially better than y.
But utility is 'intensional'. We don't know what is truly useful or useless though we may gain knowledge about this matter. Still, as a matter of arbitrary stipulation, we can say what we like. It's just that the thing is not 'canonical', it has no 'naturality', it is merely arbitrary.
That use of dominance reasoning is often thought to be uncontroversial,
because these stupid cretins didn't understand they were committing the intensional fallacy. Still, it must have been obvious that if you don't know the extension, you aren't dealing with a set.
and indeed it would be so if the objects of value in deriving social rankings were exactly the set of individual utilities-no more and no less. Those of us who have disputed the uncontroversial nature of the Pareto principle have done so on the basis of questioning its identification of value objects for social ranking (arguing that non-utility features may have intrinsic and direct relevance).
In which case they are in fact utility features. Suppose, I see- after the party is over- that there is a piece of cake left over. If I eat it, nobody loses out. Unknown to me, a diabetic has collapsed outside my door. If I feed him the cake I could save his life. What's more the guy turns out to be my long lost brother!
My point is that nobody can know what is or isn't a Pareto improvement. All we can say is 'lets reduce transaction costs and increase the information set so more mutually advantageous deals can be done'.
But the legitimacy of the “dominance” reasoning itself has not been thus questioned.
Because Sen & Co. were stupid and didn't understand the math they were misapplying.
That particular controversy relates, of course, to the assessment of what is "socially" appropriate, and not to the problem of the evaluation of the standard of living of a person or even of a group. While the dominance partial ordering does take us some considerable distance, it is very unlikely that it would be adequate for making all the comparisons that we would want to make.
This is like saying 'knowing how to turn lead into gold in a cheap and scalable manner can help us make people richer.' The fact is, Alchemy doesn't work. Neither does Sen-tentious Social Choice theory. The guy may as well have claimed that 'yogic levitation' spreads 'peace rays'.
When x has more of one object of value and y of another, then the dominance partial ordering will leave x and y unranked.
Unless x and y can costlessly transact business. The partial ordering must be over a global configuration space. But that is unknown if not wholly unknowable.
To rank them, the issue of the relative importance of the different objects has to be faced.
Not if we are concerned only with whether the standard of living has risen or fallen and if so, by what approximate percentage. There will still be aggregation problems and 'Simpson's paradox' type situations, but if that's what you get paid to do, it isn't too difficult to do the thing.
What we need, then, are standards of comparison giving us the relative forces exerted by the different objects of value in the valuational exercise.
No we don't. Otherwise we will be back with the 'paradox of value' and guys gassing on about how come diamonds are more expensive than drinking water. Sen is trying to introduce an 'externalist' theory of value but won't come out and say so.
Sen says ' it does make a difference as to whether utility is the object of value itself or only used to evaluate other objects of value.'
This is foolish. Utility is merely a predicate of a thing. It isn't a thing in itself. I may say 'Beyonce is beautiful'. This does not mean that I can dream of getting married to Beauty though I frequently get hitched to Beyonce when sleeping soundly. Then she tries to touch me in my no-no place and I wake up screaming.
In assessing the claims of utilities in the evaluation of the standard of living,
In assessing the claims of being beautiful in judging a Beauty paegant
both the possible uses (as objects of value and as valuational methods) have to be considered.
we should give the prize to the judge because judging beauty must itself beautiful- right?
And this makes the task particularly exacting, since there are also at least three quite different ways of defining utility, viz., pleasure, desire fulfilment, and choice.
No. Utility is a 'Tarskian primitive'. It is is undefined.
Back in the old days, people like Sen's pal Sukhamoy Chakroborty- who believed Indians should never eat nice food or wear nice clothes- wanted to make a Plan for India where everybody would be forced to eat shitty food that they had decided was meet to fulfil their 'capabilities' and 'functioning'. Mrs Gandhi got Sukhamoy into the Planning Commission because she knew he was a shithead and wouldn't raise a peep about Sanju's corruption or the Government doing stupid shit like taking over the grain market- which is why Minhas resigned.
On the other hand, as a species which evolved by natural selection, it is likely that emotions- including desire and repugnance- are 'Darwinian algorithms of the mind'. However, there is a degree of plasticity in the thing for reasons of adaptive fitness.
Economists can use game theory to analyze this plasticity. Alternatively, they can rehash stupid shite from the eighteenth century-
The relation between valuing and desiring is a complex one.
No. It is an essentially emotional matter. But we can analyze what lies at the root of such emotions and psychiatrists and other therapists can help us suppress or modify or 'sublimate' certain desires
Desiring may link closely with valuation, but it is not in itself a valuational activity.
It is valuational albeit emotional rather than involving some Cost-Benefit calculus.
It is a plausible and frequent consequence of valuation, but desiring and valuing are not the same thing.
Yet, that is precisely what it is in many contexts. In Hindi we use the same word 'Chaah' to mean both love and wanting and placing a very high value on something. Mummies tend to want and desire and value their own progeny more than anything else. We reciprocate the sentiment though, no doubt, we give her a hard time.
There is nothing contradictory in asserting that one does not value something even though one desires it; or one does not value it as strongly as one’s desire.
Only because there is nothing contradictory about any arbitrary stipulation whatsoever.
Indeed, it would be baffling to identify the two and say (for example): “I must be valuing x highly since I do desire x strongly.”
Swann desires Odette though he also thinks she is a worthless strumpet. Odette has the last laugh. She becomes a Countess.
If there is a link between desiring and valuing, it is certainly not one of identity.
Because valuing is 'intensional'- i.e. epistemic- whereas desiring generally is a fact about the world.
Could it be that desiring is a source of value? This view may have some superficial attraction, but it is hard to see the relation between desiring and valuing in exactly that way.
Sen thinks nobody should have emotions. Some bunch of egg heads should decide everything for us.
It is more perplexing to argue, “I value x because I desire it,” than to say the opposite, “I desire x because I value it.”
Yet, that's exactly what Sen did when he ran off with his best friend's wife. To be frank, Sen's women have generally advanced his career. Still, we would like to think it was reasons of the heart, not calculations of the head, which caused him to abandon his Indian wife.
Valuing something is indeed an excellent ground for desiring it,
No. I may make my living valuing antiques yet have no desire to own them.
and seen in this light, desiring is a natural consequence of valuing.
Nonsense! We may be paid to do a certain type of value assessment without desiring the type of object involved.
It would be remarkable to turn this relationship on its head and see valuing as a consequence of desiring. “Why do you value x?” she asks. I reply triumphantly, “You see, it is because I desire it!”
Sen's Indian wife may well have asked why he thought his best friend's spouse was so greatly superior to her. His answer was 'I love her'. To her credit, the Indian lady did not kick up a fuss. Bengalis are a noble people. As Pascal said 'the heart has its reasons which Reason knows nothing of'. This is also an argument for letting people make their own decisions rather than putting everything in the hands of some stupid Planning Commission.
This would, of course, be a good way of earning a reputation for inscrutability,
No. It is a good way of showing you are a human being with human emotions.
but not a particularly effective way of answering the question asked. There are, of course, some activities for which desiring is an important part of the activity itself (e.g., satisfying curiosity, or making love), and in these cases desire must have an integrated role in the process of valuation.
Did you know porn stars integrate desire into their process of valuation? They don't do the thing to earn a little money.
But desire can scarcely be an adequate basis of valuation, in general.
If you are paid to do valuation in a protocol bound way, then your desires are irrelevant.
In fact, desiring plays a strategic role in making our wants credible and our aspirations viable.
Which is why my desiring Beyonce will definitely lead to her marrying me.
The importance of this aspect of the activity of desiring comes out sharply when interpersonal comparisons of desires are considered. It is not only that a poor person can offer less money for what he or she desires compared with a rich person, but also that even the strength of the mental force of desiring is influenced by the contingency of circumstances.
Nonsense! A rich guy ordering a steak has much less 'mental force of desiring' than a poor guy who finds a five pound note and rushes off to get a hamburger.
The defeated and the downtrodden come to lack the courage to desire things that others more favourably treated by society desire with easy confidence.
This simply isn't true. They lack 'effective demand' not the desire for a better life.
The absence of desire for things beyond one’s means may not reflect any deficiency of valuing, but only an absence of hope, and a fear of inevitable disappointment.
This is an obsession with Sen. Yet the fact is plenty of poor people in India were becoming as rich as fuck by fair means or foul. Sujata Kajol is worth over 100 million dollars. She was born into great poverty. What this Dalit lady shows is that not only can the poor and downtrodden rise up, they can live an affluent life without any vulgar display.
The underdog comes to terms with social inequalities by bringing desires in line with feasibilities.
This is a convenient myth if you believe- as Sukhamoy did- that Indians should never eat tasty food or wear nice clothes.
The metric of desire does not, therefore, have much fairness;
only because this cunt believes that poor peeps want to remain as poor as fuck
nor can it reflect the strength of valuations,
though our desire for food increases greatly the emptier our tummies become
especially what a person would value on serious and fearless reflection.
Fuck serious and fearless reflection. It is obvious that shite like that makes Bengali buddhijivis stupider and more mischievous to the commonweal.
What is certainly easy to accept is that desire information has evidential value, in some contexts, in telling us about what a person does or does not value.
If people keep trying to run away from your Socialist paradise, it tells you that they don't desire to be fucked over by your goons.
This indeed is not without its use, and desires of others may even, for this evidential reason, provide a ground for support. But the jump from there to treating the strength of desire as the basis of valuation is a long and precarious one.
No. If people risk their lives to run away from a place, you have evidence of 'preference intensity'.
The defects are particularly glaring in making interpersonal comparisons of well-being, or of the standard of living.
Fuck off! If you notice that smart people are running away from your country, you need to take remedial action otherwise your population will turn into a bunch of inbred nitwits.
The point is not that interpersonal comparisons of desires cannot be scientifically made (as Lionel Robbins seems to have thought) , but that they don't give us much help in making interpersonal comparisons of well-being or of living standard.
No. Observing what happens at the margin- i.e. what sort of people are exiting or entering- tells you all you need to know.
The issue is not impossibility, but distortion. As an object of value, desire-fulfilment is, for reasons already discussed, very limited, if it is such an object at all.
'Object of value' is merely a predicate. Desire-fulfilment is important. Whether you are running a company or a country or merely hope to attract better quality students to your college, you need to look at desire-fulfilment. Since young peeps are horny buggers, let them have sex. The alternative, as the French realized in 1968, is that they will go crazy and try to bring down the government.
It is also clear that the fulfilment of a person’s desires may or may not be indicative of a high level of well-being or of living standard.
No. For a large enough group of people, desire-fulfilment is indicative of well-being and living standards. Thus if we find young people have to put off getting married because the relative price of 'starter homes' has risen too steeply, then their standard of living and well being has fallen even if older people enjoy greater opulence.
The battered slave, the broken unemployed, the hopeless destitute, the tamed housewife, may have the courage to desire little,
No. They desire not being battered or having a nice job and not being destitute. 'The tamed housewife' does not want to be tamed. She'd rather be earning big bucks as the head of a business enterprise and to have plenty of toy-boys around her.
but the fulfilment of those disciplined desires is not a sign of great success and cannot be treated in the same way as the fulfilment of the confident and demanding desires of the better placed.
This craziness only exists in Sen's brain. I suppose, when people made fun of him for being an utterly useless economist from a shithole country, he would turn around and tell them that Indians like being as poor as shit. Not Sen personally. But his 'tamed wife' back home was utterly delighted he had run off with some other woman.
What about the third interpretation of utility - in terms of choice ?
This is revealed preference. We can get econometric data about what people are buying and selling.
The milder version of this approach, involving only “ordinal” comparisons, claims that if you choose x when y is available, then x has higher utility for you than y.
Or you can just say there is a 'revealed preference' to that effect. It's the sort of thing you might be asked by the Managing Director. 'How do you know people will buy our new product line?' 'Sir, we have data showing that a similar product is selling like hot cakes in the market most similar to our own'.
Stronger versions derive “cardinal” measures of utility from choice with more demanding behaviour patterns (e.g., over lotteries). Choice behaviour is, of course, of much interest of its own. But as an interpretation of well-being, the binary relation underlying choice is very strained.
Only in so far as the entire subject is ideographic, not nomothetic, and that it would be wiser to avoid definitional 'akreibia' (a foolish type of precision where the subject matter is inexact) and methodenstreit (Professors quarrelling over 'methodology')
It confounds choosing with benefiting,
No. Revealed Preference can be silent about 'benefiting'. On the other hand, the Marketing Department may want to spend money on an Ad campaign suggesting there is some hidden benefit from buying the product- e.g. you become more sexually attractive.
and it does this by what looks like a definitional trick.
Don't define things. Let them remain 'Tarskian primitives'.
The popularity of this view in economics may be due to a mixture of an obsessive concern with observability
because Companies and Treasury Departments don't want to listen to your philosophical musings. They want you to make a prediction which can be observationally confirmed. If it isn't, they tell you to fuck off.
and a peculiar belief that choice (in particular, market choice) is the only human aspect that can be observed.
Exit and entry too can be observed. If smart peeps are emigrating and stupid people are immigrating so as to get welfare checks, then you need to change your fiscal policy.
Choice is obviously a very different type of activity from valuation,
Nope. It is part and parcel of it- unless it is Sen-tentious 'Social Choice' which is simply a waste of time.
and in so far as it has any connection with valuation, this must partly arise from choice being a reflection of desire. Thus, much of what was said about the desire-interpretation of utility will apply here too.
But what Sen said was stupid shit.
Except perhaps the point about the bias of the desire interpretation against the unfavoured underdog,
which exists only in his imagination
in making interpersonal comparisons based on desire intensities. In fact, the choice interpretation does not immediately yield any practical method of interpersonal comparison whatever.
Yes it does, if transaction costs are low and information cheap and ubiquitous. People can swap things they don't like for stuff they do like. That moves us to the Pareto frontier.
Each person makes his or her own choices, and interpersonal comparisons of utility cannot come out of observation of actual choices of different individuals.
Yet we pay experts to make such 'interpersonal comparisons' all the time. Students in College need to get Career advise. I was told to go be an Accountant because I have a horrible personality. I said I wanted to be either a poet or a lion-tamer. My advisor explained I would end up a fucking hobo. He mentioned several people I knew in my First Year who were as ugly and off-putting as myself. They were thriving in Chartered Accountancy. One or two had even managed to get a g.f. I'd be better off following in their footsteps because I was similar to them. What had proved good for them would prove good for me.
Sadly, my Advisor underestimated my Stupidity. I may have a horrible personality, but I also can't add or subtract.
It is possible to extend this approach to imaginary choices, e.g., “would you rather be person i or person j, given the choice?,” and such a format has been elegantly used by Vickrey, Harsanyi, and others to derive some kinds of interpersonal comparison.
You can ask 'how much would you pay in order to be successful like person i, or how fucking lazy are you that you'd prefer to be a hobo like person j?'
But the relevance of such counterfactual choices is not clear,
it is clear enough. Indians will pay lots of money to get to Amrika. Indeed, they will even teach worthless shite if this enables them to move to an Amrikan campus where they can get affirmative action.
and the answers are difficult to interpret and build on. The choice interpretation is generally quite a strained one anyway
Sen chose to run away with his best friend's wife. If he loved her, then we feel compassion, not repugnance. But if 'the choice interpretation' is 'strained', we have to ask whether the fucker was a careerist who thought his new wife could do more for him because she came from a prominent family and was related to Sraffa and Gramsci. Incidentally, his current wife is a Rothschild who started writing about Famines before he did.
and it gets completely out of breath when trying to scale the heights of interpersonal comparisons.
Yet, it works well enough if the thing is worth doing. I did get into a good Accountancy firm. How it happened was this. The lady who did my interview had quickly determined that I was stupid and declasse. She warned me that the Partner I was going to see was a brilliant man. He did not suffer fools. I should expect the interview to be short.
It turned out the Partner was a very handsome Old Etonian with a double first from Cambridge. Since I had nothing to lose I asked him the one question which was taboo- i.e. how much money was he making? I did it in a diplomatic way saying 'Sir, you could have gone into Merchant Banking or Insurance or the Treasury. Do you feel you make the right choice by sticking with Accountancy?' ]
I was asking him to do 'interpersonal comparisons. He sat back in his chair and started thinking about those of his peers who had gone into other fields. His conclusion in each case was that he had done better than they had.
The lady from the Personnel Dept. fearing I was some sort of Bolshevik nutcase haranguing the Senior Partner, put her head through the door a couple of times but the fellow begged for more time. Finally, she had to insist on taking me to my next appointment. The Partner, feeling a little guilty, shook my hand and said that I should certainly join his firm. Initially, I'd be paid less, but quite soon I would overtake my peers in other fields.
The lady from Personnel took this as an order to offer me a job unconditionally. The poor thing thought I might be a brain-box rather than an utter dunce.
There is a further dificulty with the choice interpretation. What you choose must depend on your motivation.
Because people who become Chartered Accountants aren't motivated by the desire to make money. They all want to be lion-tamers.
While the pursuit of one’s own well-being is a good enough motivation, it is not of course the only possible one. If you do something for national pride, the glory of your football team, or the benefit of your great aunt, its impact on your well-being may be quite secondary and derivative, with the main force behind your choice relating to something else.
This does not matter at the 'macro' level. Individual differences cancel out by the magic of the Law of Large numbers.
Under these circumstances, to treat choice as a reflector of your well-being is surely to overlook the motivational complexity of choice behaviour.
No. We understand that 'well-being' may involve the comfort of your beloved Aunty or your country winning Olympic gold.
To some extent the same problem arises with the desire-interpretation also, since you may desire to do something not because it is particularly good for you, but for some other reason.
But those reasons cancel out for a big enough population.
It is, of course, quite plausible to believe that a failure to achieve what one would choose, or to get what one desires, is likely to affect the value of one’s well-being adversely.
Very true. You order a nice meal but drop dead before it arrives. Sad. But, at the 'macro' level this sort of stuff cancels out.
Disappointment, frustration, and suffering from a sense of failure, may well reduce a person’s well-being, no matter what he aims to achieve.
More particularly if he drops dead.
But it is hard to be persuaded that the impact on the person’s well-being is well reflected by the intensity of desire or the metric of choice,
Nonsense! I see a guy hopping up and down outside the Gents toilet. I understand that he has an intense desire to pee.
For a big enough sample there is always some useful enough 'metric of choice'. This may be reflected in price signals or the length of queues.
since the basic motivation is not avoidance of disappointment or frustration, but something else, like national glory or some social or political ideal. We must conclude that none of the interpretations of utility (pleasure, desire-fulfilment, choice) takes us very far in pinning down well-being or the living standard, and the failure applies both to seeing them as objects of value and to taking them to be valuational methods.
No. We must conclude that lots of people get paid to make valuations and 'interpersonal comparisons'. The thing is obviously quite useful and remunerative.
By contrast, stupid pedagogues committing the intensional fallacy are a waste of time.
Opulence, commodities, functionings, and capabilities The failure of utility to get very far, and the role of “subjectivism” in this failure, may well push us in the direction of more objective considerations.
Money. Concentrate on that. Utility and ophelimity were euphemisms for filthy lucre. There is no reason to hang on to them.
In that context, the advantages of seeing living standard in terms of commodity possession and opulence might appear to be serious enough.
This is the same type of advantage as arises from seeing what everybody else sees. This is a road, not a river. Don't try swimming down it. People will think you are mad.
Indeed, that is the way “real income” is typically viewed, and the link between real income and living standard must be fairly close. As it happens, even Pigou argued that in determining “a national minimum standard of real income” below which people should not have to fall, “it must be conceived, not as a subjective minimum of satisfaction, but as an objective minimum of conditions.”
So, if some stupid Sen says 'poor peeps don't desire nice food. They want to be beaten and raped.' tell the fellow to fuck off.
He then proceeded to characterise this minimum in terms of commodity possessions : “The minimum includes some defined quantity and quality of house accommodation, of medical care, of education, of food, of leisure, of the apparatus of sanitary convenience and safety where work is carried on, and so on.”
So, Pigou was making the thing 'operationalizable'. The Government, through careful budgeting, could create rights and entitlements under a vinculum juris for which it could itself provide remedies.
Pigou did, in fact, go on to discuss the plausibility of the promotion of utility, in the form “economic welfare” by the establishment of some “minimum standard,” and to enquire “by what minimum standard it will be promoted most effectively.”
This is stuff like raising nutritional levels because productivity rises. German economists used to go in for this. Sadly, during the Great War, they massively fucked up by killing pigs because they were 'co-eaters'.
Thus the “objective” approach of minimum real income was meant to have been ultimately based on the pursuit of utility. But Pigou did not go very far along that line. He abandoned the linking exercise on the respectable and comforting (if somewhat puzzling) ground that to pursue that exercise “it would be necessary to obtain and to analyse a mass of detailed information, much of which is not, in present circumstances, accessible to students”.
Pigou was aware that working out a full-scale 'National Plan' was a task of great difficulty. The 'Socialist Calculation debate' was very much in the air at the time. Britain, during the Great War, had been slow to introduce German style controls and most Anglo-Saxon economists- including Stephen Leacock- were aware that German planning had been a disaster. It was only later on that Communist propaganda had an effect on young- i.e. stupid- economists.
If we are to move in the objectivist direction, is this the right way to go ? There cannot be much doubt that the list of minimum requirements presented by Pigou has a good deal of immediate plausibility, and more generally, it does seem sensible to be concerned with the possession of vitally important commodities in understanding the living standard. Indeed, it is easy to argue that it is more plausible to identify someone as having a low standard of living on the ground that he or she is deprived of decent housing, or adequate food, or basic medical care, than on the ground that he or she is simply unhappy or frustrated. As a direction to go, concentration on the possession of vital commodities seems fair enough.
The thing is common sense.
The more exacting question is not whether this is the right direction to go, but whether taking stock of commodity possession is the right place to stop.
But getting information about that stock is important for fiscal purposes. Thus it will be done to a greater or lesser extent, in any case. Private enterprise, too, is interested in that sort of data.
Opulence in the form of commodity possession is undoubtedly important in enhancing the standard of living, but is the standard of living best seen as opulence itself ?
This is a stupid question. Why bother with it? Anyway, opulence is the sort of word which went out of fashion centuries ago.
Earlier on in this lecture a distinction was made between being “well off” and being “well,” and it is reasonable to argue that while well-being is related to being well off, they are not the same and may possibly diverge a good deal.
But, for a large enough population, they converge thanks to the Law of Large numbers.
The distinction needs to be further probed.
by Aliens in flying saucers who are greatly interested in the anuses of Americans from small towns.
Consider two persons A and B. Both are quite poor, but B is poorer. A has a higher income and succeeds in particular in buying more food and consuming more of it. But A also has a higher metabolic rate and some parasitic disease, so that despite his higher food consumption, he is in fact more undernourished and debilitated than B is. Now the question: Who has the higher standard of living of the two?
A, unless B has been taking medicine to rid himself of the disease.
It isn’t, I believe, a $64,000 question (or, if it is, then money is easy to earn). A may be richer and more opulent, but it cannot really be said that he has the higher standard of living of the two,
Yes it can. A is simply unfortunate in some particular respect. A billionaire with terminal cancer has a higher standard of living than me though, no doubt, he'd like to swap places with a healthy person.
since he is quite clearly more undernourished and more debilitated. The standard of living is not a standard of opulence, even though it is inter alia influenced by opulence.
Fuck off! Trump has an opulent life-style. His standard of living is much higher than mine.
It must be directly a matter of the life one leads rather than of the resources and means one has to lead a life.
No. Americans have a higher standard of living than Cubans even though a lot of Americans may die from 'diseases of opulence'. Indeed, Cuban health outcomes improved during their post-Soviet famine. But North Koreans died like flies.
The movement in the objectivist direction away from utility may be just right, but opulence is not the right place to settle down. The variation of nourishment vis-á-vis food intake is influenced by a variety of physiological, medical, climatic, and social factors. To reach the same level of nutrition, one needs a larger command over food if one has a higher metabolic rate (or a larger body frame), or if one is pregnant (or breast-feeding), or if one has a disease that makes absorption more difficult, or if one lives in a colder climate, or if one has to toil a lot, or if food has other uses (such as for entertainment, ceremonies, or festivals).
All this is irrelevant or can easily be compensated for. We get that for historical reasons, Japanese people eat more fish and less meat and thus have higher longevity. We know Americans are constantly downing bottles of whiskey in between smoking cigars and shooting each other. Still, if Japanese want to emigrate to America while Americans don't want to settle in Japan, that tells you something about their relative standard of living. On the other hand, Japan may now be winning in this respect.
Pigou’s move in the direction of food possession was clearly right, but the concern is not so much with food as such but with the type of life one succeeds in living with the help of food and other commodities, e.g., whether one can be well-nourished, has the ability to entertain, and so on.
This stuff cancels out for a big enough population.
The same applies to other types of commodities and other functioning - or living conditions - that are helped by these commodities. While Marx’s attack on “commodity fetishism” was made in a rather different context,
he thought that sooner or later there would be no scarcity. People would work just for the fun of it and give away anything they produced. This wasn't fetishism, it was a fairy tale.
that attack is deeply relevant to the concept of standard of living as well.
It is completely irrelevant. We want to know whether a country similar to our own is doing better than us. If so we should mimic what they are doing or try to move to that country to enjoy a higher standard of living.
Ultimately, the focus has to be on what life we lead and what we can or cannot do, can or cannot be.
But that focus has nothing to do with economics. Nobody will pay us to do it unless we have tenure in a shitty University Department. But, in that case, our students will get more and more moronic.
I have elsewhere called the various living conditions we can or cannot achieve our “functionings,” and our ability to achieve them, our “capabilities.”
Though nobody knows their own functionings or capabilities, let alone that of anybody else. Why not speak of horcruxes instead?
The main point here is that the standard of living is really a matter of functionings and capabilities,
No. Functionings and capabilities don't change when a country goes bankrupt or gets invaded. The standard of living, however, can fall steeply in a very short time frame.
and not a matter directly of opulence, commodities, or utilities.
Nonsense! If people have a lot of cool stuff, they can sell some of it to pay their taxes. If they don't have a pot to piss in, there won't be any fucking tax revenue.
This approach goes back not only to Marx, but also to Adam Smith.
Neither of whom ran a business or managed an economy. They just scribbled shite.
In fact, despite the frequent claim that Adam Smith was mainly concerned with “wealth maximization," there is much evidence that he was deeply concerned with avoiding concentration on commodities (and wealth) as such, and keen on escaping the fetishism of which Marx spoke later.
So what? Did he have any power? Nope. He was just a Scottish pedant with a good prose style who made a bit of money for himself by publishing books.
In fact, Adam Smith went well beyond the standard characterisations of living conditions and considered such functionings as not being “ashamed to appear in public,”
he meant that middle class Scots were having to spend more on their appearance so as to keep up with their cousins across the border. Smith knew that the working class were content with wooden clogs rather than leather shoes.
and analysed how the commodity requirements for this achievement - clothing, shoes, etc. - varied with social customs and cultural norms. These customs and norms are, in their turn, influenced by the economic conditions of the respective societies.
Smith and Hume and the 'common sense' Scottish school wanted Scotland to rise up industrially and commercially. 'Catch-up growth' has to do with Tardean mimetics- imitating the more successful and 'faking it' till you 'make it'.
Sen's shtick is to make senseless distinctions of an oxymoronic type- e.g. the
distinction between “competitive plurality” and “constitutive plurality.”
Where things differ from each other, one may say they are in some sense competitive or we can say they jointly constitute the thing itself. If one type of thing increases and another decreases, it is likely that there is competition for resources of a certain kind. But it is still the case that class is constituted by things of different sorts
Much of this lecture has been concerned with sorting out some substantive issues of competitive plurality in the idea of the standard of living.
There were no 'substantive issues'. There was stupid pedantry.
LIVES AND CAPABILITIES There are two major challenges in developing an appropriate approach to the evaluation of the standard of living.
No. There is only one challenge- viz getting somebody to pay you to do it. If the guy wants stupid lies, give them to him by all means. Prove that Cuba is richer than America and North Korea very Heaven.
First, it must meet the motivation that makes us interested in the concept of the living standard, doing justice to the richness of the idea.
The idea isn't 'rich' at all. It is very practical. Will I be better off if I move to some other country? Is some other country, similar to our own, raising living standards faster? If so, we should emulate them.
It is an idea with far-reaching relevance, and we cannot just redefine it in some convenient but arbitrary way.
Nothing wrong with defining it in whatever arbitrary way the guy who pays you insists on.
Second, the approach must nevertheless be practical in the sense of being usable for actual assessment of living standard.
It should also predict which country will have exit of a particular type and entry of a different type.
This imposes restrictions on the kinds of information that can be required and techniques of evaluation that may be used.
No. You can scrap a type of evaluation if 'verification' shows it is crap. Thus, if you find your metrics predict Venezuela will be attracting immigrants but you can easily verify the opposite is the case, then you junk your findings and start over.
Consider Joan Robinson's view of the Cultural Revolution. If it really was so wonderful how come so many Chinese people were trying to flee to Hong Kong or anywhere else?
These two considerations - relevance and usability - pull us, to some extent, in different directions. Relevance may demand that we take on board the inherent complexities of the idea of the living standard as fully as possible, whereas usability may suggest that we try to shun complexities if we reasonably can. Relevance wants us to be ambitious; usability urges restraint.
Nonsense! If we find Ukrainians of fighting age are returning to their beloved country to push out Putin's goons, we know that the 'standard of living' is irrelevant when it comes to their motivation. Still, I imagine more Ukrainians may have to emigrate so as to earn and send money home. 'Usability' just means dividing up the population so as to separate out different trends and thus make better predictions.
Another useless distinction is
Three different notions may be distinguished: (1) agency achievement, (2) personal well-being, and (3) the standard of living.
Sadly, there is no way of saying what (1) and (2) are or might be. (3) can be measured well enough for any given purpose.
The distinction between agency achievement and personal well-being arises from the fact that a person may have objectives other than personal well-being.
But we don't know if they are lying. Indeed, they themselves don't know this.
If, for example, a person fights successfully for a cause, making a great personal sacrifice (even perhaps giving one's life for it), then this may be a great agency achievement without being a corresponding achievement of personal well-being.
Or it may turn out to have been a big, fucking, mistake. Consider the case of Rehmat Ali- the man who coined the term 'Pakistan'. When he tried to go there, Liaquat confiscated his possessions and deported him.
Here's another useless distinction-
In an earlier paper a distinction was made between “sympathy” and “commitment” in the context of analysing motivations for action.
Since the two things don't mean the same thing, there is no need to make this distinction. A lawyer may be very committed to get the rapist she represents declared not guilty. But she may feel no sympathy for him.
In helping another person, the reduction of the other’s misery may have the net effect of making one feel - and indeed be - better off.
More particularly if they pay you for getting them out of jail.
This is a case of an action that can be promoted on grounds of “sympathy” (whether or not that is why the action is actually chosen), and this falls within the general area of promotion of one’s own well-being.
No. Sympathy is a feeling. Either you have it or you don't. This has nothing to do with 'well-being'. Some rich folk may get the warm fuzzies for starving people. Others might laugh heartily.
In contrast, a case of “commitment” is observed when a person decides to do a thing (e.g., being helpful to another) despite its not being, in the net, beneficial to the agent himself.
Rubbish! Commitment means working hard to achieve a particular objective even if you get paid to do it.
This would put the action outside the range of promoting one’s own well-being (linking the action with other objectives). At the risk of over-simplification, it may be said that we move from agency-achievement to personal wellbeing by narrowing the focus of attention through ignoring “commitments,
but this isn't true at all! If you are highly committed you are likely to have higher 'agency-achievement' which also means you are likely to get more money and respect and thus enjoy higher well-being.
” and we move from personal well-being to the standard of living by further narrowing the focus through ignoring “sympathies”
No. We get that Soros has a very very high standard of living even if he prefers to give money to stupid foundations rather than ensure that all the toilets in his mansions are made of pure gold.
Sen-tentious shite has a lot to do with the British Raj's paternalism. Sukhamoy and Sen thought that the Government- or some bunch of shitty mathematical economists- knew best. Sen takes on this objection as follows-
“Who are you to reject the person’s own utility?”
The answer was 'a shithead'. The Planning Commission has been scrapped.
The problem is more complex than that, since the person’s own evaluation may involve differences from his own utility rankings in the form of happiness or desire or choice.
But nobody has 'utility rankings'. What they do is compare two options and opt for the one which is more useful for them.
The issue of paternalism, when it does arise, must relate to the rejection of the person’s self-evaluation (rather than utility).
But utility is unknown- just like 'functionings' and 'capabilities'. What does exist is guys saying 'I want that rather than this.'
Being 'paternalistic' is all very well but then voters scrap the Planning Commission and suddenly you don't got no fucking job.
Third, the rejection of the Pareto principle, which builds on the unanimity of utilities, need not-for the same reason involve any paternalism at all (as is often alleged),
because even amoebae which reproduced asexually can be as stupid as shit. Seriously, have you tried talking to one? All they can do is babble about Kardashians.
Indeed, the self-evaluation of the person’s well-being or living standard can quite possibly indicate a course of action that is distinctly anti-Paretian.
We don't know- can't know because of Knightian uncertainty- what is or isn't a Pareto improvement.
The force of any dominance partial ordering
no such partial ordering can exist. The thing is too cognitively expensive and, in any case, involves the intensional fallacy.
is derivative from the relevance of the objects on which that partial ordering is based. In questioning the relevance of the individual utilities, the force of the Pareto principle is correspondingly disputed for social action.
Not if we confine ourselves to letting people trade and lowering transaction and information costs. That's all that matters.
Fourth, in the evaluation of living standard, there are many intermediate positions between a complete ordering of all alternatives and the dominance partial ordering, which may be very incomplete, of the valued functionings and capabilities.
In other words, anybody is welcome to tell stupid lies. North Korea is much richer than South Korea. This is because North Koreans lurve their fat fuck of a Dictator. Lurve like that is more precious than rubies.
As was mentioned earlier, the relative weights may not be precisely determined but fixed over wide ranges, yielding partial orderings more extensive than the dominance partial order, but short of a complete ordering.
But they still won't be partial orderings because the relation is intensional and thus Liebniz's law does not apply.
There is nothing particularly embarrassing in not being able to compare any two life styles in terms of living standard.
Yet the thing can be done easily enough for any practical purpose.
The ambiguities in evaluation (even in the identification of “contemporary standards”) may require us to be silent on some comparisons while being articulate on others. There is no great failure in the inability to babble.
Nor any great success in being unable to do anything else.
Fifth, the over-all ranking of living standard is only one way of seeing this evaluation. Sometimes the assessment of particular components of the standard of living may be of no less interest. If it turns out that there has been an improvement in, say, the standard of nourishment but a decline in the standard of being sheltered, that itself may be an interesting enough assessment, even when we are unable to decide whether “altogether” this indicates an improvement or a deterioration.
But, for any practical purpose, we can make such a decision. Indeed, in democratic countries, leaders have to get this right. After the War, the UK prioritized house building over improving diets. That's one reason Churchill came back to power. Still, the Brits wanted better housing and that is what they got. They cared less about haute cuisine in the Fifties and even the 'swinging' Sixties.
The passion for aggregation makes good sense in many contexts, but it can be futile or pointless in others
Aggregation for any particular purpose can always be useful. It's just that there is no 'natural' or 'neutral' aggregation algorithm which fits every bill.
Consider the following-
Suppose I can choose various styles of life A, B, C, and D, and I choose A. Consider now that the other styles of life - B, C, and D -become unavailable to me, but I can still choose A. It might be said that my standard of living is unchanged, since A is what I would choose anyway. But it is not absurd to argue that there is some loss in my living standard in this reduction of freedom.
It is absurd to argue any such thing if B involves being a starving slave while C involves being a starving slave who is being sodomized incessantly and D involves being a starving slave dying of dysentery while being sodomized all the time by people who say nasty things about your religion and favourite football club. The abolition of slavery, may reduce our freedom to be starve and be sodomized but only Sen will shed bitter tears over this outcome.
The fact is people understand they need to pay for National Defense and Law and Order etc. Taxes are the price we pay for Civilization. Thus, we already 'internalize' certain externalities in our decision making. Sadly, Sen did not get the memo-
what is really significant in all this is to accept the legitimacy of certain freedom type considerations as part of the conditions of life.
But those 'freedom type considerations' are already factored in to people's decisions. Why do the Chinese support the Communist Party? The answer is that they don't want to go back to War Lordism and foreign invaders raping Nanking all over again.
Freedoms cost money. Some countries will have less political freedom because what is more important is to keep invaders out or prevent War-lords running amok.
Thus the capability approach, broadly defined, is not concerned only with checking what set of bundles of functionings one could choose from, but also with seeing the functionings themselves in a suitably rich way to reflect the relevant aspects of freedom.
Ordinary people already do this. Sen was incapable of doing so. He probably thought Ukraine was right to give up nukes in return for worthless assurances from the US, UK and Russia.
The constitutive plurality of the capability approach to living standard has to take note of this as well.
It can't do so because it is stupid shit. Sen probably thought it was a dynamite 'new idea'. He was wrong. Mimetics matters, math does not. Look around and see who is doing better than you. Imitate that dude. That's it. That's the whole story.
Walter Bagehot had once remarked that “one of the greatest pains to human nature is the pain of a new idea.”
He was stupid. So what? New ideas are cool.
Happily, this pain need not occur here. The living standard is an old idea, and I have tried to argue that the pioneers who considered the demands of the idea - Petty, Lavoisier, Lagrange,
who were concerned with how to feed the population more cheaply- e.g. by spreading the cultivation of potatoes- and how to squeeze more money out of them in tax without killing off the golden goose.
Travelers of the period- e.g. Rousseau- had stories about how rapacious tax-men caused all 'opulence' to disappear. But this meant that revenues collapsed. The peasant was hiding his pork and wine and nice linen.
Smith, Marx, even Pigou,
only Pigou.
and others - did point towards the complex issues underlying the concept and its diverse relevance.
There are no complex issues. For any particular purpose there is a good enough method of doing aggregation and comparison. However, it is often the case that there is no need to do any such thing. Just look at what is happening at the margin re. exit and entry.
The fact that we have also been frequently led up the garden path should not make us overlook the value of the leads we have got.
No. If 'extrinsic' value theories shat the bed for thousands of years, that's a good reason not to touch the thing with a bargepole. Also, why can't these stupid cunts understand the 'masked man' or 'intensional' fallacy? The thing is in the mathematics. A set whose extension is unknown is not a set. A relation is not a relation if it is intensional- i.e. Liebniz identity is violated. If a thing is not computable- or is in a higher complexity class- don't pretend that people have access to it. Also, Knightian uncertainty militates for 'regret minimizing'. Kuhn's 'no neutral algorithm' and Djiksta's concurrency problem are two additional reasons to quietly bury Sen-tentious shite.
There is, of course, a long way to go.
Repeating stupid senile shite in accordance with Rothbard's law- 'economists specialize in what they are worst at.'
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