Efficiency isn’t morality, and it is a serious confusion to think it should be. Let me try again to explain. I said: Economic welfare cares not about giving people experiences but about satisfying their preferences. … If we do something a dead person would have wanted, that counts as a benefit.
Economic welfare cares not about giving people experiences but about satisfying their preferences. … If we do something a dead person would have wanted, that counts as a benefit.
Close, but not quite. If while they were alive we did something a dead person wanted, that counts as a benefit. Doing something now after they are dead provides no benefit.
Finding win-win deals between the living and the dead is of no use if you don't find them until after they are dead. At that point it's not win-win, it's just win. And if there were a different deal that gave more to the living and less to the dead, then that's just a bigger win.
The dead do not have wants. The dead cannot participate in deals. The dead should play no part in our deal-finding framework, except to the extent that the living wish the same things the dead once wished.
Chris, it's an unproven assumption that people won't sit on their hands.
anon, you are correct that it also an unproven assumption. Robin Hanson's presentation at the Foresight Institute explains how the Luddites may have a point however.
Robert Bloomfield:"say and feel they want (a “revealed preference” model)"I think revealed preference normally suggests "actions speak much louder than words".
"legislators argue that they know preferences better than individual agents"I don't think the assumption that preferences are poorly defined and time-inconsistent is sufficient to reach that conclusion.
John:There are other utilitarian arguments for the extermination of humanity and more.
James Andrix:The enforcement costs for activities in the privacy of ones own home are high, and the people engaging in such activities normally have a much higher willingness-to-pay relative to those opposed to it. This efficiency is why David Friedman thinks anarchy would likely (though may not be) be libertarian. Using the "least-cost avoider" approach in Robin's follow-up, we might argue that those offended by others behavior can more easily decide not to pay it much attention.
i) When you augment a prisoner's dilemma game with institutional considerations, you just create another, larger game that may or may not be a prisoner's dilemma. Individuals will simply choose their maximizing strategies in this larger game. Since they'll all be maximizing, the observed equilibrium will be efficient. As long as people are maximizing utility, nothing observed can be inefficient. I fear the point is deceptively simple.
ii) I'm not sure what you mean by "none of us are perfect maximizers." If you mean that we maximize against constraints, of course. The point is that observed outcomes are the best we can do under those constraints. If you mean, on the other hand, that we don't actually maximize utility, then you must abandon traditional economic welfare analysis because prices cannot be taken to be measure of willingness-to-pay.
Hence, the observed equilibrium is the best you can get under the given constraints.
This is clearly incorrect. For one thing, the extent to which prisoner's dilemmas and other comparable situations are effectively addressed depends on broad, 'institutional' frameworks which are amenable to continuous improvement. Furthermore, none of us are perfect maximizers, so we can in fact do better even when it comes to individual actions.
The problem is that most people CANNOT perform this function to an economically useful degree.
This is an unproven assumption. In a world where most tasks were performed by machines, even a limited amount of creativity or other human-specific input would have enormous value.
While we are alive, we want our children to prosper indefinitely. Once we are dead, we no longer have that or any other wants.
Perhaps. But when a living person has made a deal which has helped her pursue her wants (such as leaving a bequest to a existential-risk reduction organization), why shouldn't we enforce this deal after her death?
I've come to think that we use the non-experiential nature of other people's preferences as an excuse to discount them, even to the point of citing different levels of experience as significant.
i.e. Some people are very concerned about what other consenting adults do in the privacy of their own bedrooms. I might say to them "What do you care? It doesn't affect you at all." I don't much care to help them with their preferences, (even ignoring the required control of others) and I say their preferences are silly because they are non-experiential.
The same people would be concerned about consenting adults displaying affection in public. I might now say "What do you care? It's not hurting you." I still don't care about this preference, but I can't deny it is experiential. I claim their preferences are silly because the experience doesn't have some other arbitrary quality.
On the other hand, if someone were to complain about something I also find morally objectionable, even though it doesn't affect me, I would want to help with that preference. I would never cite it's non-experiential nature are a reason not to care. (In fact some would claim this is a sign of noble altruism.)
Efficiency rests on assumptions about morality. For example, if I were to argue that the annihilation of the human race would be good for efficiency because it would improve the utility of earthworms that would benefit from the large feast, you might object that earthworms shouldn't be included in measures of total welfare. Following your line of reasoning, I should respond that you're confusing efficiency and morality--a world where earthworms are happy isn't necessarily good, it's just efficient.
I think most would agree that that's a silly argument. Efficiency, at its root, rests upon the assumption that we care about the desires of a particular group of entities--human beings. So there's a moral component built into the idea of efficiency--if we don't make a judgement about which entities we should care about (people, dead people, rats, single-cell organisms, rocks, planets, trees), efficiency is meaningless.
Thanks. This basic point has been made by myriad economists, but people keep ignoring it because efficiency as social welfare is such an attractive idea. I feel the paper that best puts forth the basic argument is the little noticed:
Economic Inefficiency: A Failure of Economists
# Economic Inefficiency: A Failure of Economists# Author(s): Michael Staten and John Umbeck# Source: The Journal of Economic Education, Vol. 20, No. 1 (Winter, 1989), pp. 57-72# Published by: Heldref Publications# Stable URL: http://www.jstor.org/stable...
But a prisoner's dilemma is a prisoner's dilemma; if there's a way out, it's not a prisoner's dilemma. Hence, the observed equilibrium is the best you can get under the given constraints.
I can't help but thinking there is an inconsistency here. If you assume that preferences are well-defined and time-consistent, then we can take preferences as being reflected by what people say and feel they want (a "revealed preference" model), then your economic efficiency arguments in favor of allowing puppy-torture contracts (or whatever) can be supported by economic theory. However, dead people reveal no preferences--we can just poll them after they die and confirm that. So their pre-mortem desires should be considered only as a way of convincing the currently living that their contracts will be honored post-mortem.
On the other hand, what if preferences are poorly defined and time-inconsistent. Then expressed and revealed preferences are not a sound basis for economic analysis. This might get you your 'enforce contracts post-mortem' result, but that is because you are ignoring what people say they want. That reasoning also justifies enforcing rules like "you can't contract to take that addictive drug or engage in that sexual activity for pay" because legislators argue that they know preferences better than individual agents. Isn't that pretty much what moralists say all of the time?
So you can argue that we should pay attention to dead people's prior stated preferences OR that we should let expressed/revealed preferences rule and never interfere with contracts, but I don't see how you can have it both ways.
p.s. Current evidence demonstrates pretty convincingly that people's preferences are unstable in the face of trivial changes, often self-contradictory and almost always time-inconsistent.
> If we’re all maximizers, we’re all maximizers; the world we see is the best we can do. Nothing unobserved can be inefficient.
Game theory would dispute this. A Nash equilibrium is not necessarily Pareto optimal. If both participants in a Prisoner's Dilemma defect, the outcome is inefficient even though both participants are maximizing their own welfare.
Economic efficiency as social welfare is an incoherent concept that ought to be abandoned. People use it to argue that we’d be better off if constraints taken as exogenous were removed, but as soon as one allows that those constraints themselves are endogenous to a larger framework, the possibility of inefficiency vanishes. If we’re all maximizers, we’re all maximizers; the world we see is the best we can do. Nothing unobserved can be inefficient.
The usual reply is that people will shift into what they do best, creating things. The problem is that most people CANNOT perform this function to an economically useful degree.
Unfortunately, the illusion they can was created as a result of the cognitive sorting of the 20th century. It is an exceedingly dangerous illusion and threatens the stability of the entire system because those frozen out will not simply sit on their hands.
Economic welfare cares not about giving people experiences but about satisfying their preferences. … If we do something a dead person would have wanted, that counts as a benefit.
Close, but not quite. If while they were alive we did something a dead person wanted, that counts as a benefit. Doing something now after they are dead provides no benefit.
Finding win-win deals between the living and the dead is of no use if you don't find them until after they are dead. At that point it's not win-win, it's just win. And if there were a different deal that gave more to the living and less to the dead, then that's just a bigger win.
The dead do not have wants. The dead cannot participate in deals. The dead should play no part in our deal-finding framework, except to the extent that the living wish the same things the dead once wished.
Chris, it's an unproven assumption that people won't sit on their hands.
anon, you are correct that it also an unproven assumption. Robin Hanson's presentation at the Foresight Institute explains how the Luddites may have a point however.
Robert Bloomfield:"say and feel they want (a “revealed preference” model)"I think revealed preference normally suggests "actions speak much louder than words".
"legislators argue that they know preferences better than individual agents"I don't think the assumption that preferences are poorly defined and time-inconsistent is sufficient to reach that conclusion.
John:There are other utilitarian arguments for the extermination of humanity and more.
James Andrix:The enforcement costs for activities in the privacy of ones own home are high, and the people engaging in such activities normally have a much higher willingness-to-pay relative to those opposed to it. This efficiency is why David Friedman thinks anarchy would likely (though may not be) be libertarian. Using the "least-cost avoider" approach in Robin's follow-up, we might argue that those offended by others behavior can more easily decide not to pay it much attention.
i) When you augment a prisoner's dilemma game with institutional considerations, you just create another, larger game that may or may not be a prisoner's dilemma. Individuals will simply choose their maximizing strategies in this larger game. Since they'll all be maximizing, the observed equilibrium will be efficient. As long as people are maximizing utility, nothing observed can be inefficient. I fear the point is deceptively simple.
ii) I'm not sure what you mean by "none of us are perfect maximizers." If you mean that we maximize against constraints, of course. The point is that observed outcomes are the best we can do under those constraints. If you mean, on the other hand, that we don't actually maximize utility, then you must abandon traditional economic welfare analysis because prices cannot be taken to be measure of willingness-to-pay.
Hence, the observed equilibrium is the best you can get under the given constraints.
This is clearly incorrect. For one thing, the extent to which prisoner's dilemmas and other comparable situations are effectively addressed depends on broad, 'institutional' frameworks which are amenable to continuous improvement. Furthermore, none of us are perfect maximizers, so we can in fact do better even when it comes to individual actions.
The problem is that most people CANNOT perform this function to an economically useful degree.
This is an unproven assumption. In a world where most tasks were performed by machines, even a limited amount of creativity or other human-specific input would have enormous value.
While we are alive, we want our children to prosper indefinitely. Once we are dead, we no longer have that or any other wants.
Perhaps. But when a living person has made a deal which has helped her pursue her wants (such as leaving a bequest to a existential-risk reduction organization), why shouldn't we enforce this deal after her death?
I've come to think that we use the non-experiential nature of other people's preferences as an excuse to discount them, even to the point of citing different levels of experience as significant.
i.e. Some people are very concerned about what other consenting adults do in the privacy of their own bedrooms. I might say to them "What do you care? It doesn't affect you at all." I don't much care to help them with their preferences, (even ignoring the required control of others) and I say their preferences are silly because they are non-experiential.
The same people would be concerned about consenting adults displaying affection in public. I might now say "What do you care? It's not hurting you." I still don't care about this preference, but I can't deny it is experiential. I claim their preferences are silly because the experience doesn't have some other arbitrary quality.
On the other hand, if someone were to complain about something I also find morally objectionable, even though it doesn't affect me, I would want to help with that preference. I would never cite it's non-experiential nature are a reason not to care. (In fact some would claim this is a sign of noble altruism.)
Efficiency rests on assumptions about morality. For example, if I were to argue that the annihilation of the human race would be good for efficiency because it would improve the utility of earthworms that would benefit from the large feast, you might object that earthworms shouldn't be included in measures of total welfare. Following your line of reasoning, I should respond that you're confusing efficiency and morality--a world where earthworms are happy isn't necessarily good, it's just efficient.
I think most would agree that that's a silly argument. Efficiency, at its root, rests upon the assumption that we care about the desires of a particular group of entities--human beings. So there's a moral component built into the idea of efficiency--if we don't make a judgement about which entities we should care about (people, dead people, rats, single-cell organisms, rocks, planets, trees), efficiency is meaningless.
Thanks. This basic point has been made by myriad economists, but people keep ignoring it because efficiency as social welfare is such an attractive idea. I feel the paper that best puts forth the basic argument is the little noticed:
Economic Inefficiency: A Failure of Economists
# Economic Inefficiency: A Failure of Economists# Author(s): Michael Staten and John Umbeck# Source: The Journal of Economic Education, Vol. 20, No. 1 (Winter, 1989), pp. 57-72# Published by: Heldref Publications# Stable URL: http://www.jstor.org/stable...
I think this post could have benefited from linking to your preferred version of morality.
rapscallion, it sounds like you are rediscovering the political economy of Demsetz. It is discussed in the first paper here.
But a prisoner's dilemma is a prisoner's dilemma; if there's a way out, it's not a prisoner's dilemma. Hence, the observed equilibrium is the best you can get under the given constraints.
I can't help but thinking there is an inconsistency here. If you assume that preferences are well-defined and time-consistent, then we can take preferences as being reflected by what people say and feel they want (a "revealed preference" model), then your economic efficiency arguments in favor of allowing puppy-torture contracts (or whatever) can be supported by economic theory. However, dead people reveal no preferences--we can just poll them after they die and confirm that. So their pre-mortem desires should be considered only as a way of convincing the currently living that their contracts will be honored post-mortem.
On the other hand, what if preferences are poorly defined and time-inconsistent. Then expressed and revealed preferences are not a sound basis for economic analysis. This might get you your 'enforce contracts post-mortem' result, but that is because you are ignoring what people say they want. That reasoning also justifies enforcing rules like "you can't contract to take that addictive drug or engage in that sexual activity for pay" because legislators argue that they know preferences better than individual agents. Isn't that pretty much what moralists say all of the time?
So you can argue that we should pay attention to dead people's prior stated preferences OR that we should let expressed/revealed preferences rule and never interfere with contracts, but I don't see how you can have it both ways.
p.s. Current evidence demonstrates pretty convincingly that people's preferences are unstable in the face of trivial changes, often self-contradictory and almost always time-inconsistent.
> If we’re all maximizers, we’re all maximizers; the world we see is the best we can do. Nothing unobserved can be inefficient.
Game theory would dispute this. A Nash equilibrium is not necessarily Pareto optimal. If both participants in a Prisoner's Dilemma defect, the outcome is inefficient even though both participants are maximizing their own welfare.
Crap, that should be "Nothing observed can be inefficient"
Economic efficiency as social welfare is an incoherent concept that ought to be abandoned. People use it to argue that we’d be better off if constraints taken as exogenous were removed, but as soon as one allows that those constraints themselves are endogenous to a larger framework, the possibility of inefficiency vanishes. If we’re all maximizers, we’re all maximizers; the world we see is the best we can do. Nothing unobserved can be inefficient.
The usual reply is that people will shift into what they do best, creating things. The problem is that most people CANNOT perform this function to an economically useful degree.
Unfortunately, the illusion they can was created as a result of the cognitive sorting of the 20th century. It is an exceedingly dangerous illusion and threatens the stability of the entire system because those frozen out will not simply sit on their hands.