After the End of History: The Curious Fate of American Materialism

Spanakopita Six: Diminishing Returns to Happiness

Spanakopita Six Diminishing Returns to Happiness Are you happy?” asked Dessie in a cheerful tone as he settled himself in the front booth next to the window that always seemed reserved for him and Adam. “Very happy,” said Adam in his usual lugubrious tone of discontent. “Why?” “Most people say they are, even in the less-developed countries,”1 said Adam. “Those of your colleagues who dare mention the word happiness think this is most people’s main goal in life,2 and in this respect, for once, they agree with Aristotle as well as Bentham. Modern utilitarians and others, however, qualify their approval: happiness must be merited to end up on the positive side of the ledger.3 Moral philosophers may do the same thing: as Kant says, ‘Being adorned with no feature of a pure and good will, yet uninterrupted prosperity, can never give pleasure to a rational and impartial observer.’4 How does utility theory handle this problem of who deserves more utility?” Dessie was really interested, although he also was expecting to score points on this issue. Happiness and Ethics Adam was glad they had moved from hedonics to ethics—not because he had better ethical answers but because he thought of ethics as a domain where, because data seemed irrelevant, people could defend almost any 101 statement with enough casuistry.5 “Utility theory is not a theory of morals,” he said, “but, as I may explain later, economics has a theory of fairness that can be applied to utility theory: a ‹rm pays its employees fairly when they receive the equivalent of their net marginal products. If they are unhappy with this, it is their unhappiness that is at fault, not the fairness of the wage. And if they are happy with less, well—” he paused for a moment and then brightened, “then they get a happiness rent.” This pleased him because it gave an economic twist to a ‹eld where economics was a bit short of answers. “I should have thought that it was the employer who received the ‘happiness rent’ when his employees were satis‹ed with wages worth less than their marginal products,” said Dessie. “But that is a side issue, since Kant and others are talking about virtue rather than productivity. I gather that utility theory is as, well, as happy when a scoundrel makes a lot of money as when an honest person does.” But Adam had not ‹nished. “And exchanges are fair when the both parties to an agreement are informed and willing to make the exchange— that is, when it is voluntary.” “Not only is there an economic literature on asymmetrical information that greatly quali‹es the implications of what is ‘voluntary,’” said Dessie, showing off a little, “but some modern utilitarian philosophers take account of ‘a person’s inability to predict outcomes by himself.’6 In short, ideas of fairness depend more on complex theories of decision making—basically theories of interactive cognition—than you acknowledge .” “There are other elements, of course,” said Adam, using Dessie’s technique of ignoring counterpoints, “like honoring contracts and ‘a fair day’s work for a fair day’s pay,’ but the ethical standing of these statements must be self-evident. In any event, utility theory is not a theory of virtue or justice. Economists have to leave something to the philosophers and the lawyers.” “Of course,” said Dessie tartly, “but that is no excuse for practicing social science without reading social science. No theory of contracts is a good ethical theory without some knowledge of the relative strengths and weaknesses of the contracting parties. That’s why Robert Nozick’s theory of entitlements7 is not a sensible account. But to get back to the bearing of utility theory on ethics, economists believe, with Bentham, that ‘money . . . is the most accurate measure of the quantity of pain or pleasure a man can be made to receive.’”8 Dessie interrupted himself to make a collateral point: “I admire your defense of women, but it is incompatible with the idea that money measures happiness. The marriage contract After the End of History 102 is one contract where the daily rewards of affection and punishments of hostility will greatly outweigh the distribution of money.”9 “We never said that ‘the measuring rod of money’ applied to utility in family affairs,” said Adam defensively. “Perhaps not, but on the main issue of ethical...