Libertarian Optimism Bias vs. Statist Pessimism Bias

I’ve been meaning to reply to this Andrew Gelman post in which he points out that "the right" used to be against material progress while "the left" was for it, but

Nowadays, the debates usually go in the other directions, with people on the left being less positive about material progress and people on the right saying that things are great now and are getting better.

Andrew kindly points to my skeptical take on those who use happiness research to argue that consumer capitalism is making us miserable, and continues:

The connection here to "overcoming bias" is that the question, "Are things going well now?" is (a) politically loaded, and (b) is commonly treated as a factual question.  I suspect that Shaw and Chesterton (as well as modern commentators) are showing bias in that they derive their perspective on the pluses on minuses of a modern economy based on political judgments.

I had a similar thought recently while going back and forth with Barry Schwartz in the recent happiness issue of Cato Unbound. However, it doesn’t strike me so much that a left-right sort of bias drives views on whether things are sunny or dark. Rather, I suspect a bias for and against government action in certain domains may be doing some of the work of motivating cognition. Nothing beats a "crisis" to rally support for a big government effort. Right statists constantly drum up moral panics about sex and drugs. Also, Mexicans are "invading" and terrorists will surely blow us all up while singing the Star Spangled Banner at baseball games if we don’t allow the executive Jack Bauer to torture military detainees whenever he wants. Similarly, left statists warn that the shores of Manhattan will be inundated by rising oceans and very cute baby polar bears will die in droves. Also, inequality is soaring, threatening the foundations of democracy. And the middle class lives in terrifying "economic insecurity." And so on.

By comparison to people on both the left and the right who would like the government to do something, libertarians can seem either ostrich-like, pollyanna-ish, or both. I suspect the "everything is going to be OK so the government can just stay out of it" bias played a key role in motivating many conservatives and libertarians to be favorably disposed toward skeptical findings about global warming. Let’s call this "libertarian optimism bias." But I also suspect that the "OMG! there is a huge crisis so the government has to do something NOW" bias is at play at least as strongly in a number of important issues. Let’s call this "statist pessimism bias."

Perhaps it is a partly a symptom of my libertarian optimism bias, but I am completely convinced that the government badly underestimates real wage growth [pdf] due to, among other reasons, the difficulty of determining the value of new goods and quality improvements in existing kinds of goods. Also, I am completely convinced by John Mueller’s case that large terrorist attacks are massively improbable, and that it is a waste of money trying very hard to prevent them. However, I have provoked raised voices, if not outight shouting, simply by laying out the case for both propositions. What’s going on?

In the first case, it was made clear to me that voters will be complacent about poverty and inequality if they are told that they really are doing better economically than the statistics say. My reply was, "But the evidence seems to say that people are doing better." In the second case, it was made clear to me that we will all be killed by terrorists if we dangerously allow ourselves to believe that we will not be killed by terrorists, because then we won’t spend the huge amounts of money necessary to prevent terrorist attacks. "But the evidence seems to say we probably won’t be killed by terrorists," I repeated, to no avail. These cases both seemed to me clear instances of strongly motivated statist pessimism bias.

My experience writing my happiness study was often just surprise. It turns out that the evidence simply doesn’t say what lots of commentators say it says. Relatively dispassionate empiricists like Ruut Veenhoven, chief of the World Database of Happiness and the Journal of Happiness Studies, will tell you that people in wealthy liberal market democracies are quite happy and getting happier, but that’s not what you’d think happiness research says if you just read about it in newspapers and magazines.

Perhaps it is not surprising that you often don’t hear that air quality has improved, that lifespans are increasing, or that prices indicate that we are not running out of some natural resource until some libertarian like Julian Simon or Indur Golkany pops up to tell you about it, because often there is no other constituency obviously served by pointing out that there is no problem — especially when pointing it out may score you bad corporate, political, or social PR. I suspect that I am in fact somewhat biased toward evidence that says that there is no problem when the existence of the problem too-tidily serves to advance common, pre-existing political desires. The fact that I was in fact a little too disposed to be persuaded by skeptical takes on global warming in the mid-nineties has chastened me (though I plead youth and naivete!).

But I don’t worry too much. Here’s why. I think the general risk-averse fearfulness of people creates a very strong  incentive for those who have and seek political power to make things look worse than they really are, in this or that respect, in order to motivate support from an otherwise listless public. Since most people prefer to be a member of a going political coalition, rather than sit semi-uselessly on the sidelines like libertarians (it is possible we are just a deviant personality type), most intellectuals will probably identify with a competitive coalition, adopt it’s biases about how bad things are (and/or pick a coalition because it shares preexisting biases), and avidly dig up all the evidence that this or that really is a crisis. The related motivation to shout down all those who deny the putative crisis is also strong. So if libertarians like me get too vocally chipper or oblivious, the evidence that this is so cannot possibly escape our attention, and those of us susceptible to shaming are shamed.

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  • conchis

    “It turns out that the evidence simply doesn’t say what lots of commentators say it says. Relatively dispassionate empiricists like Ruut Veenhoven, chief of the World Database of Happiness and the Journal of Happiness Studies, will tell you that people in wealthy liberal market democracies are quite happy and getting happier.”

    It’s great how anyone who agrees with your priors is a “relatively dispassionate empiricist”, while everybody else is motivated by bias.

    I assume you’ve actually followed the back and forth between Easterlin and Veenhoven-Hagerty in the pages of Social Indicators Research? As yet, it’s far from obvious to me who’s winning that particular exchange. (Easterlin has certainly raised some good questions about VH’s use of incomparable data and reliance on statistically insignificant effects to support their claims, and while VH’s response using different data is somewhat more convincing, there’s still a lot of conflicting evidence out there, which they don’t really deal with all that well.)

    While blithe statements like “money doesn’t make us happy” are undoubtedly misleading on the current state of knowledge, it doesn’t strike me that blithe assertions to the contrary are much better. As you well know, the long run effects are potentially quite different for different people, etc…

  • Stuart Armstrong

    Perhaps it is a partly a symptom of my libertarian optimism bias, but I am completely convinced that the government badly underestimates real wage growth [pdf] due to, among other reasons, the difficulty of determining the value of new goods and quality improvements in existing kinds of goods

    Interesting. How did your conviction come about? Were you an expert on the subject, and when reports of real wages came out, you said “that can’t be right”? Were you not an expert, and had the same reaction, before going to look for contradictory evidence? Did you stumble upon the contradictory evidence by accident, then study it carefully and judge it correct? Were you preparing for a debate, and needed some talking point against your opponent? This matters.

    But it may matter less than we think. There are several mesures we can choose from to see how people are doing – real wages, real wages + improvements, happiness, happiness with life expectancy, inequality. People are drawn to the measure that fits their picture of the world. And there are always rational reasons to embrase one measure over another, so how you discovered it may not matter that much.

    Just one example, I found Ruut Veenhoven’s “happy life years” a ludicrous idea, and one that fits too closely with libertarian ideas for comfort. Increased life expectancy is fantastic, but is entirely unrelated to happiness. If “happy life years” are the measure, then what’s better – declining life expectancy or decreasing happiness? At what level are the two equivalent? How much would I have to increase your happiness so that I could justifiably chop a decade off your life? Why not use some other arbitrary measure like “life years with mental illness”? We should try and avoid conflating different issues unless there’s a justification.

    The true question is “are things getting better?”. And by choosing what to measure for “better”, we’re deciding the answer. So I think we should drop that question entriely, as a meaningless value question, rather than a factual one. The truth is that people are equally happy, far richer, more anxious, more unequal, less socially mobile, living longer, healthier lives, are more self-centred but less selfish, less religious, more tolerant and more partisan. Better or worst is in the eye of the beholder.

  • Stuart Armstrong

    PS: apologies Robin, you’ve already adressed my final point at the begining of your post. I was working at other things, returned to write my comments, and only re-read the second half of your post, so missed Andrew’s comment. My fault.

    As for “Libertarian Optimism Bias vs. Statist Pessimism Bias”, I must say that through the statists I know are indeed slightly more pessimistic than average, the libertarians I know (outside of university) are also very pessimistic. They see the looming hand of the state out to crush their liberties, taxes rising without limit, etc… This fear also seems to motivate them. Libertians in university seem different (maybe because they’re convinced that they can change this).

  • William Newman

    I suspect the libertarian tendency to anthropogenic global warming skepticism isn’t only their will to believe, but also a tendency to know a different set of suggestive historical facts. Well before the AGW controversy grew to its current levels, libertarians tended to see a different intellectual climate than leftists. For example, compared to libertarians, how many leftists in the early 1990s were keenly aware of things like the Julian Simon vs. Paul Ehrlich bet? If a leftist reached the early 1990s and remained generally respectful of the sound insights of the eminent author of _The Population Bomb_ (and, similarly, respectful of _Limits to Growth_ and such), then even if he weren’t predisposed to like the policies which AGW is used to support, he might tend to think it’d be a good idea to react vigorously to today’s warnings of ecocatastrophes.

    Even before they start being tempted to temper their reaction to today’s question with their policy preferences, libertarians learn history somewhat differently than mainstream academics or declared leftists. I was reminded of this when one of my birthday presents was Warsh’s _Knowledge and the Wealth of Nations_. In skimming through the book I quickly ran across a passage on the QWERTY lockin story, and had trouble reconciling it with The Fable of the Keys. So I read the book’s indexed entries for “QWERTY,” and as far as I can see, it is as though Warsh never heard of TFotK. I don’t know whether declining to mention the TFotK criticism is innocent academic error or a leftist tendency to believe factoids which support central planning. (If Milton Friedman had lectured for decades on the famous factoid claiming Sony and Honda had succeeded not because of MITI but despite it, and that factoid had been roundly debunked about 1990, would a very-well-reviewed 2006 book still be presenting it as an unquestioned fact?) But whether for bias on the mainstream side or bias on the libertarian side, I am pretty sure that a much higher proportion of libertarians will’ve heard of TFotK. Then with a different take on things like the stories solemnly told by Warsh, it would be logical (not just a tactical move to support their current policy preferences) for libertarians to react differently than mainstreamers today when a story reminds them of QWERTY.

    (Similarly, libertarians are more likely to have heard of zoning than mainstream reviewers:-| and so will tend to have a different take on the housing economics section of the concluding chapter of _Nickel and Dimed_…)

  • http://yorkshire-ranter.blogspot.com/ Alex

    The association of libertarians (in fact, a specific North American subtype of ‘em) with pollyannaish optimism was, of course, identified by Belle Waring, and a pony.

  • michael vassar

    Has anyone done a control for the effect of obesity on happiness?

    It seems to me that because utility curves and baskets of goods differ radically across economic deciles, the real GDP rate of change can’t sensibly be updated for a single measure of product quality change. I think that you are pretty clearly better off in the third income decile today than in the second income decile 20 years ago, but also pretty clearly worse off in the ninth income decile today than in the ninth income decile 20 years ago.

    I also think that the economic practice of combining standard of living improvements due to accumulation of capital with those due to technological improvement is deceptive. The standard of living in a high capital low technology society such as the US in 1900 is utterly unlike that in a high technology low capital society such as Jamaica today. Although the PPP numbers suggest similarity, both have far more similarities to the contemporary US than they do to one another.

  • http://profile.typekey.com/robinhanson/ Robin Hanson

    Let’s see. You see a bias on your side and on the other side, but you conclude your bias is less bad because “the general risk-averse fearfulness of people creates a very strong incentive for those who have and seek political power to make things look worse than they really are.” Couldn’t we also say that general overconfidence and wishful thinking creates an incentive not to admit to our problems? It seems to me you are far too quick here to conclude that the overall bias is not on your side.

  • http://willwilkinson.net/flybottle Will Wilkinson

    Robin, I didn’t say mine was less bad! I said that “I don’t worry too much,” because other people’s ideologically generated biases will be a check on mine — like mine sometimes are on theirs. And I said that if I get too far out of line, I will be “shamed,” which I thought was a pretty clear admission that I’m liable to fall out of line. Indeed, I’m pretty pessimistic about the power of my own internal resources to overcome my biases, which is why I think it’s better to submit your ideas publicly, where you can receive external correction. (By the looks of this comment thread, it’s working!) Of course, to the extent that people don’t insulate themselves in bubbles of cozy confirmation and engage more or less directly with proponents of other sides of an issue, everybody is a check on everybody. But I don’t in fact think that this check works evenly all around. People who oppose strong, vested, political interests are much more heavily checked, because there is a well-developed and culturally salient infrastructure of opinion-making and public relations around the chief partisan political interests and their issues. I guess part of the point I was trying to make is that sometimes certain truths (inconvenient truths!) don’t have much of a political constituency, but only an ideological one, and these truths can get lost in public debates that tend to break along political lines. Of course, I completely agree that “general overconfidence and wishful thinking creates an incentive not to admit to our problems?” But, I swear, I really am a better than average driver.

  • http://econlog.econlib.org/archives/2007/07/the_consequence.html EconLog

    The Consequences of Pessimistic Bias

    For three out of the four biases I discuss in my book, it’s easy to see the connection between economic…

  • William Newman

    Michael Vassar writes “pretty clearly worse off in the ninth income decile today than in the ninth income decile 20 years ago”.

    It’s not pretty clear to me, though I don’t have a terribly strong opinion the other direction either. Are there any broad quantitative measures that make it clear that I should share your strong opinion? Life expectancy, performance on literacy-related standardized tests, careful and detailed estimates of leisure time, whatever?

    Also, to what extent are you comparing poor Americans today to poor Americans 20 years ago? I remember factoids making the rounds a few months ago suggesting that some statistical measures of US down-and-out-ness are to a considerable extent measures of immigration from poor countries. That doesn’t mean they’re not disturbing, but it does mean that if you want to understand the impact on people’s lives, comparing the bottom N% of the US today to the bottom N% of the US 20 years ago might sometimes be less appropriate than comparing it to the destined-to-emigrate subpopulation of Southeast Latinostan 20 years ago.

  • http://willwilkinson.net/flybottle Will Wilkinson

    Conchis,

    I also think Easterlin is a relatively dispassionate empiricist, and I have nothing but respect for his work in a variety of fields in which he has been a pioneer. It also helps that he doesn’t go around writing ridiculously misleading books like the scholar-politican Richard Layard. Actually, I think the reason I see Veenhoven as “relatively dispassionate” is that my reading of decades of his writings seemed to indicate that his views have shifted nontrivially over time as he has compiled and analyzed more and more data. I’ve been following the Easterlin vs. Hagerty-Veenhoven exchange closely. Yes, there are good points all-round. And I don’t know what to think of Easterlin’s charge of data incompatibility vs. VH’s claim of the virtue of getting the average of a much larger dataset. My sense is that VH get the best of the debate overall, but maybe that’s my bias showing. Setting that particular debate aside (the “getting happier” part), I think my general point stands up pretty well: most people simply don’t know that the happiness data very clearly shows that the wealthy liberal democracies score tops on self-reported happiness.

  • http://willwilkinson.net/flybottle Will Wilkinson

    Stuart asks: “How did your conviction come about? Were you an expert on the subject, and when reports of real wages came out, you said “that can’t be right”? Were you not an expert, and had the same reaction, before going to look for contradictory evidence? Did you stumble upon the contradictory evidence by accident, then study it carefully and judge it correct? Were you preparing for a debate, and needed some talking point against your opponent? This matters.”

    That’s an interesting question. Let’s see… I was not an expert on the subject. I had simply assumed (I’m describing myself in my mid-twenties, mind you, and I would not have put things in these terms) real wages were rising because a kind of inchoate a priori assumption about the overall effects of accelerating technological change and casual egocentric empiricism — i.e., I was raised modestly middle class in Iowa in the 80s, and things certainly seemed to be getting better for most everyone I knew even during the “crisis” of the disappearing family farm. I was already a libertarian — much more dogmatic than I am now — and first encountered the CPI and issues surrounding it’s construction in either Reason magazine or Cox and Alm’s book Myths of Rich and Poor. After I became a professional policy analyst, I dug much more deeply into the issue, reading the Boskin report and the surrounding and subsequent debate (such as the Gordon paper I linked to), and talked about it with economists, other philosophers, and even with some employees of the BLS. That said, I’m not sure how important my autobiography is here (though it is interesting to me!). It seems to me that the important thing is actually arguing the merits of the case in and effort to find the truth.

    Would you say “happy life years” differs in any important respect from “quality adjusted life years,” a standard measure in health and medical research? We could also measure “beauty adjusted life years,” and why not, since that may be interesting to the eyes of some beholders?

    I’m interested in your series of claims:

    People are

    (1) equally happy

    Not obvious, even taking the data for granted. See the exchange with conchis. I would also argue that scale renorming creates artifical flatness in the trend.

    (2) far richer

    Yes.

    (3) more anxious

    How can you tell?

    (4) more unequal

    Which class of people, and in what respect? Increasing income inequality is consistent with decreasing inequality in material quality of life. (Goods in a class can become more qualitatively homogenous even as the price range expands.) Happiness inequality is trending downward. Income inequality within the US is up, but between China and the US, down (maybe due to the same mechanisms).

    (5) less socially mobile

    Not sure what you mean.

    (6) living longer

    OK

    (7) healthier lives,

    OK

    (8) more self-centred but less selfish

    I might agree, but not sure what you have in mind.

    (9) less religious

    I’ve seen conflicting evidence. Participation or belief?

    (10) more tolerant

    Of what? Maybe.

    (11) and more partisan

    I don’t know.

    “Better or worst is in the eye of the beholder.”

    People certainly disagree, that’s for sure. But I think it’s pretty obvious that disagreement isn’t just over values — as if the facts are clear, and we’re just fighting over what to make of them. The facts aren’t transparent, either, and they are very often contested precisely because of the effect some facts, if accepted, would have on the prospects of norms and policies embodying different value commitments. I think that people’s values are bound to motivate their approach to facts, and that this is a good thing just as long as there are widespread norms of rational inquiry and debate that tend, over the long run, to work out disagreements in a truth-conducive way. I think this is basically J.S. Mill’s view. If the discovery of truth depended primarily on people motivated primarily by an ideology of truth, we’d get way too little of it.

  • Hopefully Anonymous

    Will, great high quality post, in my opinion. Thought provoking, and sparked some interesting comments too. I like your degree of internal and external transparency in terms of how you come about your ideology, political positions, etc. If only higher visibility group policy blogs like The Corner and The Plank were written like this -acknowledge of bias and giving ultimate deference to empirical inquiry on issues of fact.

  • Stuart Armstrong

    Dear Will,

    Thanks for your response (and sorry for mistyping your name as “Robin” – yesterday was not my day :-). All the ‘facts’ I mentioned were based on various statistical surveys I’ve seen in different newspapers, sufficiently often that they weren’t single aberrations (though selection bias still applies). The decreased social mobility for example, can be seen in the economist, hardly an anti-free market publication. By anxiety, I was meaning both “worry about the future” and “mental illnesses”, both increasing (though for different reasons).

    But… I can’t help but notice that the facts you questioned or caveated were mainly the pessimistic facts.

    As you said, “I think that people’s values are bound to motivate their approach to facts”. But I’m not sure that our mechanisms serve to “work out disagreements in a truth-conducive way”. There are still people who disagree with the fact that modern free-markets are good for the majority. There are still people who disagree with the fact that markets fail, and, historically, have failed very often. If these well established results fail to filter into people’s minds, what chance to more controversial ones have?

  • Doug S.

    I thought the consensus on money and happiness was something like “Money doesn’t buy happiness, but poverty does make you miserable?”

  • Stuart Armstrong

    I thought the consensus on money and happiness was something like “Money doesn’t buy happiness, but poverty does make you miserable?”

    That’s my understanding. I think the big fight is over whether relative poverty or absolute poverty is the most important.

    Would you say “happy life years” differs in any important respect from “quality adjusted life years,” a standard measure in health and medical research?

    I see “quality adjusted life years,” as a necessary evil, a measure I’m not particularly fond of but that’s probably better for what it does than anything else available.

    But “happy life years” appear in another context entirely. The question being debated was “has happiness stagnated”, with the subtext question of “does more money fail to make people happier (in prosperous western societies)”. The answers to that, according to the graph that Ruut Veenhoven includes, are yes and yes. The other question – has life expectancy stagnated – has an emphatic no as an answer, but is unrelated to happiness. “happy life years” just fuses the two questions, without justification.
    If the debate had been about “happy life years” from the start, then that would have been fine; but as it stands it’s a cheat.