Hello everyone
and welcome today.
My name is Wickliffee Shreve.
I'm a reference librarian and
lecturing fellow here at Duke.
And on behalf of the
Goodson Law Library
and the Office of
the Dean, we're
pleased to welcome
you to our faculty
celebration for
Professor Matt Adler
and his new book the Oxford
Handbook of Well-Being
and Public Policy.
As a former resident
of New Orleans,
I would also like to
wish everyone here
a happy Mardi Gras.
One of the most common
New Orleanian expressions
for this time of year is
"laissez les bon temps
rouler" or "let the
good times roll."
These expressions represent
perhaps a most fitting theme
for the focus of Professor
Adler's new work.
At Duke Law, we are lucky to
have so many distinguished
scholars on our faculty.
While we celebrate
each new contribution
to the landscape of
legal scholarship,
we try to highlight several
book publications each year.
Before I introduce
Professor Adler,
a few important thank yous.
We'd like to thank the Dean's
office and Guy-Uriel Charles,
Edward and Ellen Marie
Schwarzman Professor of Law
and Senior Associate Dean
for Faculty and Research,
for co-sponsoring
the celebrations.
As well as interim director of
the Goodson Law Library Melanie
Dunshee and acting interim
director Jennifer Behrens.
We'd also like to thank media
services, the events office,
and Sue Hicks for all
their work to make sure
that these events
proceed smoothly.
We'd like to thank Cathy
Denobo for providing lunch.
And finally, we of course
would like to thank all of you
for being here today.
Matt Adler joined the law
school faculty in 2012
as the Richard A.
Horvitz Professor of Law.
His scholarship has
historically integrated law,
welfare economics,
and moral philosophy
to study policy,
risk regulation,
and constitutional theory.
He teaches in the areas
of constitutional law,
administrative law,
and the rule of law.
He has authored or coauthored
over 50 articles and book
chapters and has
authored, coauthored,
and edited five books, work
that spanned over three decades.
The work we're here
to celebrate today,
the Oxford Handbook of
Well-Being and Public Policy,
is a comprehensive,
interdisciplinary treatment
of what constitutes
well-being drawing
from welfare economics, moral
philosophy and psychology.
It covers empirical methods
of policy assessment,
conceptions of
well-being, and discusses
what are the best
or most appropriate
methods for measuring what
well-being actually is.
So without further ado, I'd
like to introduce Professor Matt
Adler.
Thank you so much,
Wick, Jennifer, Melanie,
the dean's office
for organizing this
and thank you all for coming.
Thank you for the
generous introduction.
OK so a little bit about the
handbook and some basic facts
before we get into the
content we're here detail.
I coedited with Marc
Fleurbaey, who's a welfare
economist at Princeton.
The aim is to provide a
systematic overview of both
of methodologies for
assessing governmental policy
and evaluating social
condition in light
of individual
well-being, as well
as the philosophical
underpinnings
of the different approaches.
It's a big book.
It's a big book.
I hurt my arm
carrying it around.
It's 30 chapters, 900 pages.
Not that that's the
metric of quality
but it is big at least in
the physical size sense.
It does make it
mean a paperweight.
38 authors.
So what was the editor's job?
And I was very privileged
to be able to coedit this
with Marc, who's really a
great person and scholar.
We came up with the overall
structure of the handbook.
We proposed it to
Oxford University Press.
I guess it's a truism
that you always
find what you're looking for
in the last place you look,
but we sent it to other presses
and they were not interested.
And we say let's
try one more time
and we were lucky to
get OUP interested.
We then recruited
the authors for
different specific chapters,
so it's not an anthology.
We went around and
found specific authors
to fill the different niches.
I'll show you the table
of contents in a second.
It's often said that trying
to organize academics
is like herding cats, a
lot harder than herding
dogs or sheep.
So we had to herd this
team of very capable cats
and then we wrote our own
chapters plus an introduction.
The authors are economists, law
professors, philosophers, and--
Well I have their
psychologists, I
guess I should say
professors of psychology.
But in any event, a
interdisciplinary group
of scholars from a lot
of different places,
universities in Alicante Ambari,
Birmingham, [INAUDIBLE],, CNRS,
which is the French National
Research Institute Columbia
Duke Glasgow Caledonia,
Indian Cisco Institute,
Queens in Canada, LeVal, LuVan--
I'm testing my French here.
LSE, Maryland, Michigan State,
Mercy in Nevada, OECD, Oxford.
the Paris School of Economics,
Princeton, Rochester,
Queensland, St. Louis,
Stockholm, Toronto, UCSD,
Vanderbilt, the
World Bank, and Yale.
So I wouldn't say that we
are globally representative
but certainly inclusive
not just of US
scholars, but also
European and UK,
and some other places as well.
So here's the table of contents.
And in a moment I'll
highlight some themes
and talk about the
stuff in greater detail.
But just to see what we
covered, introduction
and then four parts.
So what's the structure here?
So first we cover methods
of policy assessment.
And the idea is to
have chapters covering
all the different systematic
methods for assessing
governmental policy
that have been developed
in the academic literature.
Now some of these are also
very widely used in government.
So for example, GDP,
cost-benefit analysis,
equalities, that's a measure
of health and longevity.
Some quality-based cost
effectiveness analysis
is used in the UK in making
public health decisions.
Some of these are
not using government
but are important
and well developed
in the scholarly
literature, and often
used in public discussions.
For example, global
inequality metrics,
when one hears about the Gini
coefficient, or the Atkinson
index, or the
coefficient of variation,
that's a type of
inequality measure.
Or poverty, when one hears not
just about the headcount ratio
but a more sophisticated
poverty metrics, that's
based on this literature
on poverty measures.
Social welfare functions,
fair allocation,
social welfare functions,
multidimensional indicators,
happiness-based policy analysis.
We think that's it.
There may be something
else out there.
But in terms of
systematic policy tools,
part 1 covers the map.
Part 2 covers different
philosophical conceptions
of well-being.
And I'm going to talk
a little bit more
about this in a second.
But basically, there are three
main philosophical schools
regarding the nature
of well-being.
So preference space views,
mental state approaches,
and objective good
views of well-being.
We have chapters
covering each of those.
And then we talk about
the burgeoning literature
on subjective well-being,
a mental state view,
both in psychology
and in economics.
And I'm going to
come back in a minute
and say a little
more about that.
So having laid out
all the different ways
to think about policy
assessment in part 1,
and the underlying conceptions
of individual well-being,
we then really drill down on
the question of measurement.
Because at the end of
the day, the mission
here is to measure well-being so
that we can think about policy
choice in light of well-being.
And chapter 3 does two things.
One is to talk about different
measurement approaches
corresponding to the different
philosophic conception.
And again, I'll talk about this.
But for example, equivalent
income and extended preferences
are both preference-based
measures of well-being.
SWB is a mental state type,
happiness-based measure
of well-being.
We also in Chapter 3
talk about the choice
between a multidimensional
approach to policy analysis
and an approach that's based
on a well-being measure.
And again, I'm going
to say something
about that in a minute.
And then finally, part 4--
we don't want to feel like we've
solved all the problems here.
There are pervasive
problems or difficulties
that anyone who wants to
use a systematic policy
to grapple with, and chapter
4 has separate chapters
going over that.
So for example, how
do we evaluate policy
under conditions
of risk, where we
don't know exactly what
the outcome of the policy
is going to be?
We might not even be able
to assign probabilities.
How do we adjust policy
choice to take out
of individual responsibility?
It might seem that we want to
differentiate between someone
who is at a given well-being
level through bad luck
and someone who is at that
level because he or she has
made poor choices.
How do we do that systematically
if we want to do that?
How do we take account
of heterogeneous prices
and preferences?
So I got a certain
income amount,
you got a certain income amount,
but the benefit of that to me
depends first of all,
on the market prices.
And to compare my
well-being with yours we
have to take account of
the different prices we
might be facing, as
well as our preferences.
So this becomes
quite complicated.
We're all used
inflation adjustment.
But underlying
the whole practice
of inflation adjustment
or price adjustment
is the whole theory of taking
account of heterogeneous prices
and preferences.
Often we have data on a
household level, household
income.
But the household is
not a single unit.
There are people
in the household.
So how do we estimate
the well-being
of the members of
the household given
just household level data about
house size, household income,
and so forth?
Preference inconsistency.
One of the ways in which
the handbook actually
could be even longer, we could
have gone over 1,000 pages,
is through bigger coverage of
so-called behavioral economics,
this whole huge field
about how people
have irrational preferences.
We don't have multiple
chapters on that but that
is covered in this one chapter
on preference inconsistency.
Lifetime well-being.
In principle, it would be
nice to measure well-being
over a whole lifetime.
People exist over a lifetime.
And so in principle,
we want to take
account of lifetime well-being.
That poses some challenges.
One, what philosophically
is the structure
of lifetime well-being?
Is it just additive?
Are there more complicated
interaction effects
between periods?
And there's the
matter of estimation.
How do we figure that out.
And finally, future generations.
Climate change, other
policies involve trade-offs
between the well-being
of the current generation
and the well-being of
future generations.
How should we think about that?
So that's the table of contents.
There's a lot in here.
But let me just highlight
some of the main themes.
I'll try not to go too
long because I would
love to have time for Q&A.
The themes I want to highlight
that run through the handbook
are--
and there are others but I'm
going to focus on these--
beyond GDP and beyond CBA.
Beyond gross
domestic product and
beyond cost-benefit analysis.
Second, this notion of the
social welfare function.
If that sounds
weird don't worry.
I'll explain it in a minute.
This is, as I'm going to say, a
pervasive theme of a handbook.
The different
accounts of well-being
that I mentioned going
over the table of contents.
The debate about
these and the debate
about their
associated measures is
one of the pervasive
themes of the handbook.
And finally-- I love acronyms--
IMWB.
I don't think this acronym
existed before this handbook.
Maybe it shouldn't.
Inclusive measure of well-being.
So policy assessment based
upon an inclusive measure
of well-being.
IMWB base policy
assessment versus
the multidimensional approach.
That I'm sure is
totally obscure,
but as I'll explain
in a little bit,
that too is one of the
themes of the handbook.
Let me just say something about
beyond GDP and beyond CBA.
These are, respectively,
the headline measures
of societal condition,
how a country is doing,
and policy assessment.
We see them all the
time in the news.
They're used in government.
The US government,
many other governments
have whole statistical
departments
in the government geared up
to calculate and report GDP.
Cost-benefit analysis.
Cost-benefit analysis
is a pervasive part
of policy assessment
in the US government
and various other
governments as well.
GDP is, again, the leading,
the headline measure
of societal condition,
how a society is
doing at a given time.
And as you learned, if
you took macroeconomics,
GDP more precisely is the
value at market prices
of final market of goods and
services produced in a country
during a year.
That is GDP.
We have a whole system of
national accounts set up
to calculate that, as
do many other countries.
So that is a quantification both
of national output, the output
of market of goods and services,
which in turn are going
to be used either for
consumption by households
or for investment.
So I buy a sandwich,
that's consumption.
Facebook buys a server,
that's investment.
So these are two things that
are important for well-being.
At the same time, GDP is
not just a measure of output
but it's measure of income.
So the income from the
sale of goods and services
flows to individuals as wages
or as return on capital.
So it's obviously, in a rough
sense, an important sense,
a measure of how a country
is doing during a given year.
But it is also limited
in various ways.
It ignores non-market sources of
well-being, and a lot of them.
Health, longevity, environmental
condition, social cohesion,
happiness, et cetera,
except as reflected
in market transactions.
So if I buy a blood
pressure monitor,
that counts as a purchase
of consumption good.
If I go out and exercise to
improve my blood pressure,
that has no effect
on measured GDP.
If I hire someone to
provide child care,
that counts as the
consumption of a service.
If I provide childcare
myself, zero effect on GDP.
So it just looks at all these
different inputs to well-being
as reflected in
market transactions.
This is what economists call
the production boundary.
Stuff which is not in the
production boundary, which
is not marketed
doesn't enter into GDP.
GDP also ignores the
distribution of income.
Again, GDP measures
total income that
flows to people in the form
of interest dividend, return
on capital or wages, but
ignores distribution.
Does that accrue just to people
at the top, at the bottom?
What's the distribution of that?
Again, completely
ignored in GDP.
GDP is a measure of societal
condition, how a society is
doing in a given year.
Cost-benefit analysis
is the leading tool
for policy assessment for
deciding whether a policy is
a good policy relative
to the status quo
or relative to
some other policy.
In the US it's was put in
place for regulatory choices
by President Reagan and has
remained in place since.
Every president has tweaked it.
Trump has preserved it and
added some further requirements.
But basically, remained
in place for a long time.
As my ad law
students know, I love
to talk about
cost-benefit analysis.
I will try to
suppress that here.
But what is
cost-benefit analysis?
Cost-benefit analysis
assigns a value
to each policy equaling the
sum of monetary equivalence.
So for each person or
each group of people
we can quantify the
policy effect on them,
positive or negative, in terms
of a monetary equivalent,
how much you're willing
to pay or accept
relative to the status quo.
Now it's important to understand
that non-monetary effects can
be reflected in that.
So for example, if
your health is better,
then you're willing
to pay for that.
If a policy improves
your health you'll
have a positive
monetary equivalent.
If it reduces your
mortality risk
or improves the
environment, again, that
could be reflected in
the monetary equivalent.
So non-market
effects are reflected
in these monetary equivalence.
Indeed, there's a whole
sophisticated literature
that tries to estimate those.
But the CBA is limited in
a couple of critical ways.
One is CBA is insensitive
to the distribution
of monetary equivalence.
So it doesn't matter whether
the person benefiting
is rich or poor.
A policy that has a certain sum
total of positive equivalence
and a certain sum total
of negative equivalence
is seen the same
way whether or not
all the benefits go to
the rich and the costs go
to the poor or vice versa.
So it's totally insensitive
to the distribution of money
or monetary equivalence.
A related point is that
CBA, at least textbook CBA,
is biased towards the rich,
is biased towards the rich.
People who have more
money tend to spend more
for non-market goods.
If I'm wealthy I'm
going to pay more
for environmental quality
of a risk reduction
than if I'm poor.
The so-called VSL,
the Value System
of Life, which is
your willingness
to pay for a unit
of risk reduction,
if you actually calculate
that accurately,
increases with income.
So that means that
if government did
textbook CBA it would
be willing to spend more
to produce risk reductions for
the rich than for the poor.
It would be willing to do more
to produce health improvement
for the rich than for the poor.
That is politically
controversial.
So in practice government
doesn't do that.
What it does is to
use population average
monetary equivalence.
So OIRA, the cost-benefit
oversight department
in the US government
says, we're going
to value a risk reduction at
the very same amount regardless
of whether that benefits
someone who is rich or poor.
But that itself
creates difficulties.
So for example, if lower
income people not just benefit
from the risk reduction
but bear the costs,
the cost may be reflected
in increased prices,
we may be putting in place
risk reductions which
have greater costs than
they're willing to bear.
So that's the problem.
These are very
important techniques
but they're also limited.
And so one of the things
the handbook wants to do
is to move beyond them.
We're not the first
to think about this.
This has been out there
in discourse for a while.
But the handbook is trying to
develop policy frameworks that
move beyond GDP and CBA.
So one way to do that, my
preferred way to do that,
is this notion of a
social welfare function.
So I'm going to talk
about that a little bit
and then I'll talk
about how this
is one of the pervasive
themes in the handbook.
So the social welfare
function sees each outcome--
an outcome is a
possible consequence,
what might happen as
a result of policy.
So an outcome, in effect,
is a possible allocation
of different attributes among
the population of interest.
It tells us how much
income different people
or different groups get,
what their health is,
what their expected
longevity is, and so forth.
So the idea of the
social welfare function
is to see any given
outcome as a pattern
of individual well-being.
And we're going to try
to do that numerically.
We're going to have
a well-being measure.
And so, we take
a given outcome x
and we're going to convert
that into a list of well-being
numbers.
When you take all
the information
about how individuals might
do in [INAUDIBLE] an outcome,
and try to summarize that in
a list of well-being numbers.
So w1x there, is
simply the well-being
of individual one in outcome x.
Of course we're not going to
literally do this individual
by individual.
We'll think about individuals
as members of groups.
But this is the
underlying theory.
Once we've done
that, various rules
can be used to compare outcomes.
So the utilitarian
social welfare function,
an idea that goes back of
course to Jeremy Bentham,
simply says, you just add
up well-being numbers.
You compare outcomes understood
as patterns of well-being
by just adding up
well-being numbers.
A prioritarian social
welfare function,
rather than adding up
well-being numbers,
adds up well-being numbers
plugged into a transformation
function.
The effect of that is
to give greater weight
to those who are worse off.
So instead of just adding
up numbers, these well-being
numbers, we add up
well-being numbers
plugged into this
kind of function.
The effect of that's going to
be that we give greater weight.
The value here is going to
be bigger for a well-being
hit that affects
someone who is worse off
than if someone
who is better off.
This idea of the
social welfare function
is principally a
policy assessment tool.
I'll say it in a
second, I'll mention
the different literatures
where it's used.
Because again, a given
policy, a regulation,
an infrastructure project,
a spending program,
any kind of
governmental policy can
be seen either as an outcome--
if we're certain,
then each policy
will produce for a
certain given outcome.
Realistically, we're not going
to know that, but at least
we might think about policy
as a probability distribution
across the outcomes.
Using this idea of the
social welfare function
will rank policies
as a function of
the different possible outcomes
and their probabilities.
And so, assuming
we can do it, this
is straightforwardly an
approach for policy assessment.
It can also be used as a
replacement for a supplement
to GDP as an indicator
of societal condition.
We can look at the annual flow
of income and other attributes
and think about the social
welfare that results from that.
Now the critical
thing about this
is that unlike CBA, both the
utilitarian social welfare
function and the prioritarian
social welfare functions
are more specifically
prioritarian and social welfare
functions.
Because utilitarianism simply
adds up well-being numbers.
This is just one way
to rank the outcomes.
Prioritarianism
is a whole family.
It takes curves like
this, and the more concave
this is the greater
priority to the worse off.
So really, it's a whole family
of social welfare functions.
But both of these
social welfare functions
are sensitive to distribution.
This is a critical difference
from cost-benefit analysis.
The utilitarian social
welfare function and equity
distribution is sensitive to the
diminishing marginal well-being
effect of income.
So giving a unit of income
to someone at low income
has bigger utility, makes a
bigger bump to well-being,
than giving the unit of income
to someone at higher income.
And utilitarianism
is sensitive that.
Utilitarianism prefers
to give a unit of income,
ceteris paribus, if
nothing else changes,
to someone with lower
income as opposed
to someone with higher income.
Prioritarianism is sensitive
to the diminishing marginal
well-being effect of income.
But beyond that, it has
a generalized preference
for the equalization
of well-being.
If you can imagine,
imagine two outcomes
with the same total well-being.
In one of that, the
outcomes, well-being
is distributed unequally.
In the other outcome
it's distributed equally.
Utilitarianism is
indifferent to the two.
Utilitarianism simply says all
we care about is the sum total.
Prioritarianism says we actually
prefer to equalize well-being.
We prefer an equal distribution
of a given total amount
of well-being to an
unequal distribution.
One way to think
about that is imagine
a change in someone's
attributes that
can benefit someone who
is well-off or someone who
is badly off but produces the
same change in well-being.
So for example, we might
think that whether you
are rich or poor, a
change in your health
produces the same change
in your well-being.
So utilitarianism, then,
will be indifferent
to whether the health
improvement benefits
someone who is rich or
someone who is poor.
While prioritarianism will
prefer the health improvement
to benefit the poor
person, ceteris
paribus, because
it gives priority
to well-being changes
affecting the worse off.
One other thing to note here,
I'm a middle of the road guy.
So I like equity but I also
like efficiency, the Pareto
principle.
The Pareto principle, which is
the way that economists think
about efficiency, is
this notion that if we
can make some people
better off and harm
no one that's a good thing.
I think that's great.
I love the Pareto principle.
But there's no inconsistency
between the Pareto principle
and principles of equity.
And cost-benefit analysis
respects the Pareto principle
but does not care for
equity, either in terms
of the distribution of income
or in terms of the distribution
of well-being.
While both the utilitarian and
prioritarian social welfare
functions respect the
Pareto principle but
they also take
account of equities.
So they hybridized these
two, it seems to me,
very important concerns
in terms of policies.
This is just an
axiomatic presentation.
If we think of these
as well-being numbers,
Pareto superiority, so
there's four people--
obviously, a hypothetical
case, four people.
Pareto superiority says if you
take that fourth person there
and move her from 12 to
13 that's an improvement.
Anonymity says if you
take well-being numbers
and just reorder them, they
actually make no difference.
Severability say if we
have some people who
are unaffected it doesn't
matter what their well-being
levels are.
Continuity says small changes
don't make a big difference.
Pigou-Dalton-- so the thing
to understand in here is that
Pareto superiority, anonymity,
which is neutrality as to which
particular people
get well-being--
if we have a given pattern
of well-being and we
rearrange that, that
itself should not
make any ethical difference.
Utilitarianism satisfies all of
these except for Pigou-Dalton.
Pigou-Dalton is the equity
in well-being axiom.
Prioritarianism satisfies
all the axioms here
that you utilitarianism
satisfies, but also satisfies
Pigou-Dalton.
We think here--
I have a pointer here-- but we
think here, the sum total here,
we've taken two units of
well-being from someone who is
worse off--
sorry, two units of well-being
from someone who is better off.
He is moved down
from 10 to eight.
She has moved up
from four to six.
Total well-being
does not change.
So utilitarianism
is just indifferent.
The sum total is the same.
But prioritarianism
prefers the equalization.
That's the theory in what?
Three minutes.
So if you want to know
more read the handbook
or read my prior book.
[LAUGHTER]
So take my class.
But let me say, I'm happy to
say, I didn't make this up.
I'm just I'm standing on the
shoulders of giants here.
Social welfare
functions are widely
used in various
economic literatures,
so theoretical welfare
economics but also more applied
literature.
So what optimal tax theory tries
to figure out how should we
design the tax system to
both maximize social welfare,
either in the utilitarian
sense or the prioritarian
sense, but also take
account of incentives.
And that is done--
that's a difficult
set of trade-offs--
and that is done
in the literature
through social
welfare functions.
Climate economics, the
so-called social cost of carbon,
we're trying to decide what are
the trade-offs between reducing
damage to future generations and
reducing income or consumption
for the present generation.
To make that trade-off you
really need a social welfare
function.
And that's how it's
done in the literature,
environmental economics,
growth and development.
So as I said, I'm plugging
my prior work here.
I've got a very long book, not
as long as this book but a long
book, Well-Being and
Fair Distribution,
exploring the idea of the
social welfare function,
and a forthcoming--
certainly shorter, and I
hope more accessible book
on the same topic.
So this is-- it's
not the only thing
but it's a central
theme in the handbook.
Many different chapters
explore this notion
of the social welfare function.
And this is something which
is not yet used in government,
but let's wait.
It is a pervasive
tool in scholarship.
And the hope here is to
further that development.
Cost-benefit analysis.
It turns out that if you
do cost-benefit analysis,
not just summing up monetary
equivalence but using so-called
distribution of weights--
so these are waiting
factors which
are bigger for those
who have lower income--
that is a way to approximate
a social welfare function.
And Robin Boadway, who is
truly a world class economist,
in his chapter on cost-benefit
analysis in the handbook,
talks at great depth about that.
Inequality measures.
So a prioritarian
social welfare function
can be represented as a
combination of total well-being
and a concern for the
inequality well-being.
So inequality
measures are related
to social welfare functions.
There is, of course, a chapter
on social welfare functions.
There's something called
social ordering functions,
which is a related idea.
A chapter on happiness-based
policy analysis
seeks to measure well-being
not in terms of preferences
but in terms of happiness,
and to feed that
into a social function.
Social evaluation.
How do you apply a
social welfare function
under uncertainty?
This turns out to be tricky.
Are you going to apply the
social welfare function
in your next ANI measure.
That is to say,
are you concerned
with the distribution
of expected well-being
or with the expected
distribution
of realized well-being?
The distribution of expected
well-being or the expected
distribution of
realized well-being.
Expected inequality or
expected realized inequality,
these are not the same thing.
These are not the same thing.
So the chapter on risk and
uncertainty talks about that.
Individual responsibility.
How might you refine a
social welfare function
to take account of uncertainty?
The authors there, Chico
Ferreira and Vito Peragine.
And she goes at the World
Bank, and is a pioneer.
The Word Bank actually does
this in terms of their measures.
And so they have a great chapter
of there, "Lifetime Well-Being
and Future Generations."
I know you came into the
room here for two reasons,
because lunch was
offered and because you
heard about happiness.
So I haven't said
much about happiness.
So now I'm going to say a
little bit about happiness.
This is a second
theme in the handbook
that I'm going to
highlight, which
is the nature of well-being.
And let me say, this idea of
the social welfare function
is worth is basically
agnostic, at least
in theory, about what
exactly well-being is.
It says, whatever well-being
is, let's measure it and let's
plug it in.
But it's up to you to tell
us what well-being is.
Now it turns out that the nature
of well-being is contested.
There are three
distinct families
of views that are represented in
the contemporary philosophical
literature, each of which
has deep historical roots.
So one of these is
the preference view
that says basically, what's
good for me is what I want--
is getting what I want.
My well-being depends upon the
satisfaction of my preferences.
The idea there is that
my well-being is about me
so certainly my
perspective should matter,
it should be what I want.
Of course, my natural
preferences might be screwed up
and so there are refinements
of this view that
talk about my fully
informed preferences,
my rational preferences,
and so forth.
The second type
of view, I'm going
to call it mental state view--
the paradigm of
that is hedonism,
which says your
well-being just depends
upon what goes on in your head.
So hedonism, again,
the paradigm of that
says your well-being
depends just
upon your pains and pleasures.
This goes back to Bentham.
Now sometimes it's not really
clear about how this view is
different from a
preference view but if you
reflect upon the fact that
people can prefer things
other than their
own happiness you
can see that they are different.
Lots of people have
goals, different things
they want to accomplish
with their life, lots
of different kinds of
things, and what they
want is to accomplish that.
They don't want just to have
certain beliefs about that,
they actually want
to accomplish that.
And they may want
to accomplish that
even though that may not
be the best way to maximize
their well-being.
That's the way I feel about
teaching and scholarship.
I want to actually be a
good teacher and scholar.
I don't want to
actually just think
that I'm a good teacher
and scholarship.
If my students are complaining
about me behind my back
I care about that.
Further-- I like it, but if I
were sitting down and trying
to figure out what is
the way to maximize
my pleasure of my lifetime I'm
not sure that would be that.
I'm not doing it to maximize
my pleasure and happiness.
I'm doing it because that's
kind of life I want to lead.
So these are not the same thing.
But there is a tradition,
certainly in philosophy,
that thinks about
well-being in terms
of the mental
states, either pains
and pleasures or some
package of mental states.
In terms of how these
views are reflected
in current scholarship,
the preference view
is the standard in
welfare economics.
This is the cornerstone
of welfare economics.
Improving someone's
well-being is
a matter of satisfying
their preferences.
So-called utility
functions, which
again are a cornerstone
of economics,
are measures of preferences.
But there is this now very
large revisionary branch
of economics,
happiness economics,
that focuses not on preferences
but on so-called subjective
well-being.
This part of economics
focuses on well-being
as measured by
surveys, either surveys
that ask people
how happy they are
or how satisfied they are
with their lives, or perhaps
other things.
So for example, surveys
that measure affects
like are you sad, are you
anxious, are you angry,
are you enjoying yourself?
But measuring one or another
type of mental state.
There's some big
literature in economics,
so-called subjective well-being,
well-being understood
as what goes on in
your head as opposed
to realizing your preferences,
which is very important now.
Objective good, this is
a view that goes back
to Aristotle, which says
things could be good
for you other than your pains
and pleasures, and indeed,
can be good for you even if they
don't realize your preferences.
And there's a whole big
philosophical literature
on that.
And this is represented in a
lot of policy work inspired
by Marcia Senn and
Martha Nussbaum
on so-called capabilities.
These are lists
of goods which are
positive as being
good for people,
whether or not they prefer
them, and goods that
transcend their mental states.
Now you might wonder, so how
to identify these things.
I'm not going to take
too much time on this.
John Finnis, the
Oxford philosopher,
says the list of objective
goods is life, knowledge, play,
aesthetic experience,
sociability,
practical reasonableness,
and religion.
Nussbaum has a different list.
Life, bodily health, bodily
integrity, the senses,
imagination of thought,
emotion is practical reason,
affiliation, other
species, play,
control over one's environment.
How did we come up with these?
One way to think about
these, typically--
Finnish says, well, I just know.
They're self-evident.
I think a more defensible
approach is to say that
typically, and I think Senn
and Nussbaum talk about this,
is these are matters
for deliberation.
People collectively
deliberate about what they
view as being the good life.
So you can view these as flowing
from collective preferences
as opposed to each
individual's preference.
In that understanding they're
related to a preference view,
but still they represent
collective deliberation
as opposed to each person's
preference about our own life.
A lot of the
handbook's about this.
There are, as I
already said, chapters
that review and synthesize
philosophical scholarship
regarding each approach,
chapters specifically
about subjective well-being, the
underlying scales, the surveys
originate in psychology and
now are used in economics.
So there are separate
chapters for viewing that.
Chapters about measurement.
And then an
empirical comparison.
Does this matter?
I love to theorize
but does it actually
matter whether we
think about well-being
in terms of preferences,
subjective well-being, that
is mental states,
or objective goods?
The aim of the
handbook is to provide
firm theoretical foundations
for policy assessment
rather than to survey
the application
of different frameworks
to specific policy arenas.
Maybe that will be
the next handbook.
That said, I think it is quite
clear from the literature
on subjective well-being that
subjective well-being based
policy would be quite different,
would different significantly
from policy owing to the
preferences or objective goods.
So a pioneer in the
literature, Richard Easterlin,
documented this paradox
that increasing income
doesn't seem to lead to
increasing happiness.
He looked at increasing income
in a given country over time,
at comparisons across
countries, and comparisons
within a country.
Now the extent to
which that's true
has been disputed empirically.
But I think it seems to be true.
I think there's consensus that
at least above a certain level
of income, subsistence
or middle income,
there's only a weak correlation
between income and happiness.
That has big policy
implications.
If you care about
preferences, income
is, as John Rawls put
it, an all-purpose good.
Income is a good thing.
It's a way to realize a lot
of different preferences.
It's not the only thing,
it's not that the end-all,
but it's an all-purpose
resource for preferences.
If you care about
happiness, then
again, beyond a certain point,
giving people more income
may not make a difference.
There's a big literature
that talks about adaptation.
It seems like people can
adapt to a lot of bad health
conditions.
It's hard to adapt to
conditions that involve pain
or that are
uncertain, but there's
lot of other health conditions.
So paraplegic, for
example, or other kinds
of chronic, certain
not painful conditions
that people adapt to such that
their happiness is actually not
much lower.
So that would suggest that
a happiness-oriented set
of policies might focus less on
producing health improvements
because they don't make a
big difference to happiness.
On the other hand, people have
a strong preference for health.
In terms of choosing between
types of health programs,
not surprisingly, mental
health, various kinds
of mental health conditions have
a terrible effect on happiness.
That's almost analytic.
So it might be that if
we're orienting policy
towards happiness as
opposed to preferences
we'd focus more on mental health
as opposed to physical health.
We do have-- and this is
really one of the best chapters
in the handbook, I think--
and it shows both how to apply
these different approaches
empirically and
that they matter.
So [INAUDIBLE] and Dirk Neumann,
a Belgian and a German young
economists, great guys--
there's incredible--
there's something called
the SEP, the
Socioeconomic Panel, which
is a huge survey of Germans.
I think that something
like 15,000 people
who were surveyed--
annual survey about lots
of different things.
Their income, their employment
status, other demographic
attributes, how happy
they are, and so forth.
And de Konk and
Neumann in this chapter
used the data from that
survey to calculate well-being
according to five
different approaches.
Income, an objective
index, life satisfaction,
how satisfied people-- so one
of the things that respondents
were asked was how
satisfied they are--
and two different measures that
looked at people's preferences.
And then what they
did is they said
who are the worst off,
what is the worst off 10%
of this big group, according
to the different measures.
And they find
significant differences.
The objective index
is a combination
of the person's income.
They had data about the person's
income, employment status,
and health.
And not surprisingly,
because employment
is weighted significantly
in that index, the worst
off, according to the objective
index, tend to be unemployed.
If we look at the worst off in
terms of life satisfaction, who
are the worst off in terms of
their expressing happiness,
it's remarkable that the
worst off-- the average income
of this worst off decile
is nearly the same
as the average income
of the whole population.
Again, consistent with
the Easterlin point.
But they're likelier to feel
sad and to have a low sense
of control over their lives.
So these dispositional
characteristics,
dispositionally unhappy, tend
to pull down life satisfaction.
In terms of the
preference measures,
in my chapter in the
handbook develops--
I'm a preference person--
a preference-based approach
to measuring well-being.
If you look at the worst off
according to the preference
measure, as well as a different
kind of preference measure
that Mark Clearbay in
his chapter develops,
a large percentage of the
worst off are in poor health.
That reflects the
fact that people have
strong preferences for health.
People want to be healthy
independent of whether being
healthy makes them happy.
So this actually doesn't
make a difference, again,
consistently with what one
would expect from the existing
literature.
So in-- because I want to get to
questions-- but in two or three
minutes I'm going
to say two things.
One, to make good and
my promise earlier,
to explain what this
horrible acronym, IMWB means.
And then to say something
about, as my professor Owen
Fiss at Yale Law School
used to say, why bother?
But let me first say about IMWB.
The social welfare function,
as I've described it,
and as I've talked about the
measurement of well-being,
is structured around
an inclusive measure
of well-being.
That is to say at the
level of each individual,
or again, at the level of
each group of individuals,
we think about individuals in
terms of their characteristics.
But in theory, at the
level of each individual,
we aggregate over the attributes
at the individual levels.
We look at each
individual's well-being
as a function of her income, and
her health, and her longevity,
and so forth.
We summarized that in an
individual well-being number
using one or another
measure of well-being,
whether it's based on
preferences, or mental states,
or objective goods.
And then we assess
policy in terms
of the distribution of
individual well-being numbers.
Attributes are aggregated
over at the individual level.
And then we assess policy
in terms of the pattern
of individual well-being.
But that approach
can be contested
in a so-called multidimensional.
Now again, the term is confusing
because the social welfare
function is also
multidimensional.
Because again, we aggregate
over the different dimensions
of well-being at the
individual level.
But there are multidimensional
approaches which are different.
Now the simplest
way to do this is
through a so-called dashboard.
Let's imagine that we have a
bunch of different dimensions
of individual flourishing.
So we look at income,
we look at education,
we look at longevity,
we look at health,
we look at environmental
condition, and so forth.
And we can then see what the
effect of governmental policy
is on each dimension.
Governments often do that.
The OECD does that.
That could be useful.
The problem with that is that's
insensitive to interdimensional
correlation.
For example, what
you might do is
for every dimension
look at the total amount
and the inequality.
So there is the total
amount of income
and the inequality of income,
the total amount of health
and inequality of health.
That's one way to do it.
But that ignores the
fact that, for example,
those who are badly
off in terms of income
might also be badly
off in terms of health.
So ideally we want to look not
just dimension by dimension
but at correlations.
So there are actually
sophisticated multidimension
and policy indicators
that are not
structured around an inclusive
measure of well-being.
So the social welfare
function approach
does take account of
how well each person is
doing on other dimensions.
It's actually possible
to do that but
without using this individual
level well-being measure.
The best example of that is
a so-called multidimensional
poverty metric that's used by
the UN and that's pioneered by,
developed by Sabina
Alkire and James Foster.
And we were fortunate
enough to Alkire to write
a chapter in the handbook.
Why bother?
So the handbook survey
synthesizes and refines
academic methodologies for
evaluating governmental policy
and assessing social condition.
What's the actual policy impact?
In general, one can point to
at least three different kinds
of impacts.
The various
methodologies can be used
in academic studies, which in
turn influence public debate.
The methodologies are used
directly by various NGOs.
For example, the
World Bank, the UN,
OECD uses variants of
these methodologies.
And of course, they can
be used within government.
And here I should
stress the choice
of methodology, the
choice of approach
to thinking about well-being,
the choice of measure,
the choice of
parameter, that has
got to be made by democratically
accountable policymakers.
So these are in a sense
technocratic tools.
But in order for them to
be legitimately adopted
in government, that's got
to be done by democratically
accountable policymakers.
Think about
cost-benefit analysis.
That comes in because in the
US, every president since Reagan
has said I like that.
And to the extent
that we're going
to shift to for example
social welfare functions,
that would have to be through
the democratic process.
So these are theoretical
channels for influence.
In the current political
moment, with public debate
fueled by the anger, fear,
resentment, and outrage,
much of it justified,
an academic discussion
of policy methodology may
seem utopian and out of touch.
But I think if you look at
the history of GDP and CBA,
these things which are now
really pervasive to policy
conversations,
governmental practice,
they both originate
in work by academics.
So GDP arises as a response
to the Great Depression
as academics realize
that we need better tools
for measuring what's
actually going on
in countries' economies.
So Kuznets and
Keynes are pioneers
in terms of developing GDP.
Cost-benefit analysis goes back
to a French engineer, Dupuit,
and then was pushed along
by British academics, Kaldor
and Hicks, and many others.
And I think the history of those
shows that scholarly efforts
to develop better policy
tools can have a huge payoff,
if not immediately
then in the longer run.
Thank you.
[APPLAUSE]
So I don't know
whether or not we're
going to be able to solve
in five minutes empirically
the issue of
well-being, but we'd
like to open up the
floor for questions.
I love this, I always have.
And thinking about it
in terms of policy,
the approach is to understand
individual well-being
and then aggregate
across a population.
And I wonder if we're
missing something
by not thinking
about communities.
So we think about
not only communities
being the source of both
economic and social well-being
for individuals but also a
really important instrument
in achieving policies.
We have healthy communities, we
might have healthy individuals.
That might be a better way
to think through policy.
Right.
No, absolutely.
It's a viewpoint.
So one is that the
attributes that
feed into individual
well-being might
include relational attributes.
So for example, what my
social cohesion is like,
or what my relative income is
might influence my well-being.
Often economists simplify by
saying my well-being is just
a function of my own income,
my own health and longevity.
But that's way too simple.
And let me say, by
the way, although I
don't think that happiness
is the total measure,
I think happiness can be
an input into well-being.
And happiness in
turn is obviously
improved by social cohesion.
The other thing, is in
terms of policy, policies
to build community
can be good policies
to increase social welfare.
So in those two
ways it's in here.
And as these are used in
more sophisticated ways
they will take into
account communities.
Neil.
So I wonder whether the
reason CDA and GDP are used
and not SWF is not simply
because they came first
but because, notwithstanding
all of their problems,
they're easier to do.
There are
distributional problems,
there are problems
with measuring,
but you still know
what you're measuring.
Whereas here, you're pointing
out fundamental disagreement
about what well-being entails.
Is it subjective,
is it objective,
is it preference-based?
And I don't know
that we're going
to persuade one another that
I'm right and you're wrong.
You're preference-based.
It's completely
intuitive to me why
people could have a lot of
money and get what they want
and be very unhappy.
So how do you expect the
social welfare approach
to be adopted by
government when there's
so much basic fundamental
disagreement about what
human welfare is about?
Thank you.
There are really two
different points.
One is complexity.
Let me say, you got to look
at how GDP is calculated.
It's Incredibly complex.
There's a whole system
of national accounts
that has to be
set up to do that.
The analogy I make is risk--
part of the reason the
EPA has been so successful
is because Ruckelshaus comes
in as secretary in the 1970s
and says, we're
going to put in place
systematic and very complicated
techniques for risk assessment.
The UK, which likes
happiness, has now
put in place methodologies
for assessing happiness.
If you want to measure
it you can do it.
But the other point is that
it involves normative choices.
And that's right.
But by the way, so does CBA.
CBA thinks about well-being in
terms of preferences as opposed
to objective good or happiness.
CBA measures
monetary equivalence
in terms of preferences.
And it makes a
normative choice that we
are indifferent to the
distribution of those.
That is the very contestable
normative choice.
Who made that?
Well, Ronald Reagan, Bill
Clinton, both Bushes, Obama,
and Trump.
So I agree with you.
Matt Adler doesn't get
to say the US should
use social welfare function.
I tried to persuade the
Obama OIRA to incorporate
distribution of weights that
would make cost-benefit closer
to a social function.
They didn't do it.
Who knows what happens in 2021?
Pardon.
How do you know whose well-being
should be incorporated
into policy assessment?
Are you just content
to leave that up
to a democratically
accountable policymakers?
Even if so, then
might we still not
need specific
measurement methodologies
for particular types of
people, or future people
versus current people, or
foreign versus domestic,
or nonhuman animals versus
people animals, children,
mentally ill, et cetera?
Again, the approach assumes
that there is a population
of ethical concern.
And what that population
is up to the policymaker.
As an ethical matter,
that population
is everyone, everyone who
existed, currently exists,
and will exist, from
the ancient Romans to us
now here in the room to the
people in the 25th century.
They're all people.
And by the way,
another area, which
we don't talk about, but a
big issue now in scholarship
and social welfare
functions is animals.
Huge issue.
And this is interesting
because there's
a long-standing literature
on animal rights.
But for welfarists
there's a similar issue.
Should animals be incorporated?
Animals are not taken account
of in cost-benefit analysis,
at least directly.
In so far as people care about
animals, they're incorporated.
But animals are not
themselves independent units.
Whether they should be,
and if so which animals,
that too is a matter
for ethical discussion,
and ultimately, for
democratic discussion.
If there are no
further questions,
I'd like to again
thank Professor
Adler for his presentation.
Thank you so much.
[APPLAUSE]
