Archive for the ‘Posts by Dissenter’ Category

Happiness – Part 2

April 9, 2010

I had intended to do a detailed follow-up to my earlier post about happiness research.  However, I think the reasons for my scepticism of the work by Derek Bok and others have already been expressed far more cogently by Steven Landsberg, Will Wilkinson, and Richard Epstein.

Recall that Bok thinks there is a troubling disconnect between the following facts: (1) society has grown much more prosperous in the past three decades but (2) self-reported levels of happiness have remained largely constant during the same period.  Bok asks, “what is the point of working such long hours and risking environmental disaster in order to keep on doubling and redoubling our Gross Domestic Product?”  In my earlier post, I suggested that subjectively reported happiness seemed to be a thin basis on which to make recommendations about public policy settings, let alone radically reshaping public policy.

Landsburg points out a flaw in Bok’s approach, which I find reasonably compelling:

Wait a minute, now. Self-reported happiness has been flat for fifty years despite rising incomes. Self-reported happiness has also been flat for fifty years despite dramatic increases in leisure and environmental quality. (Since 1965, the average American has gained about six hours a week of leisure—the equivalent of seven vacation weeks a year.)  So why aren’t Bok and Kolbert asking why we bother to come home from the office, take vacations, and clean our air and water?

Will Wilkinson piles on:

Landsburg asks an excellent question. Income inequality has skyrocketed, but that hasn’t made Americans less happy. So why care?

I essentially agree with Wilkinson’s conclusion: 

The fact of stable U.S. levels of self-reported happiness is an ideological Rorschach test; the way it is used tells you more about the person using it than anything else.

Anyway, the answer to Bok’s question is pretty easy. There are many, many other benefits of economic growth.

Finally, there is a very good discussion between Richard Epstein and Russ Roberts, which you can download here.  Epstein discusses some of the false assumptions of the happiness researchers and argues convincingly that envy is a terrible motivation for public policy.


If you’re happy and you know it, clap your hands

March 21, 2010

Under the heading “Too much wealth can make us worse off: study”, the New Zealand Herald reported on Monday about an article published by two Canadian academics:

Using mathematical modelling, the economists advance the theory that once a country reaches a reasonable standard of living there is little further benefit to be had from increasing the wealth of its population. Indeed, it could make people feel worse off. They believe their work shows that as a nation becomes wealthier, consumption shifts increasingly to buying status symbols with no intrinsic value – such as lavish jewellery, designer clothes and luxury cars.

This month’s New Yorker magazine reviews three books on the same subject, asking “What can policymakers learn from happiness research?”

I’m a little sceptical of the research and very sceptical of some of the authors’ policy prescriptions. Given the scope of the topic, I plan to break my comments into at least a couple of posts.  (I also acknowledge that I have not read the books, though I’ve looked at a couple of the publicly available working papers discussed below).

Here’s the New Yorker’s description of Professor Bok’s book, The Politics of Happiness: What Government Can Learn from the New Research on Well-Being:

Bok, who served two stints as president of Harvard, begins with a discussion of prosperity and its discontents. Over the past three and a half decades, real per-capita income in the United States has risen from just over seventeen thousand dollars to almost twenty-seven thousand dollars. During that same period, the average new home in the U.S. grew in size by almost fifty per cent; the number of cars in the country increased by more than a hundred and twenty million; the proportion of families owning personal computers rose from zero to seventy per cent; and so on.

The New Yorker continues:

Yet, since the early seventies, the percentage of Americans who describe themselves as either “very happy” or “pretty happy” has remained virtually unchanged. Indeed, the average level of self-reported happiness, or “subjective well-being,” appears to have been flat going all the way back to the nineteen-fifties, when real per-capita income was less than half what it is today.

The New Yorker reports that, for Bok, this consistency in the level of self-reported happiness raises a profound critique of economic growth:

To suggest that the U.S. abandon economic growth as a policy goal is a fairly far-reaching proposal. Bok concedes as much—“The implications of this critique are profound”—but he insists that all he’s doing is attending to the data.

The two economists whose work is reported by the New Zealand Herald share a similar consternation about economic growth:

Nevertheless, Professor Eaton and Professor Eswaran […] do not believe the developed world’s obsession with wealth shows any signs of abating. They predict that “it is likely that conspicuous consumption will become worse as time progresses”.

I find the basic approach of Professors Bok, Eaton, and Eswaran misguided for at least four reasons.

First, subjectively reported happiness seems to me a thin basis on which to make recommendations about public policy settings.  Bok apparently regards the fact that the percentage of people who say that they are “pretty happy” is largely unchanged over the decades as a rationale for radically reshaping public policy.  I would tend to regard it as a feature of asking people to categorise their levels of “happiness”.  (Try this at home: are you “pretty happy” at the moment and were you “pretty happy” three years ago?)

Second, as John Stuart Mill wrote in Utilitarianism, it is “better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied.”  Mill’s point was not to dismiss the pursuit of happiness.  Quite to the contrary, he was explaining that happiness and the pursuit of the good life is a broader concept than mere contentment; it extends to a sense of dignity and accomplishment.  I wonder if some of the recent “happiness research” — which focuses on the avoidance of rivalry or dissatisfaction — fails to appreciate Mill’s insight.  For example, Oliver James’ book Affluenza makes the goofy suggestion of “a total ban … on the use of exceptionally attractive models in all forms of advertisement, closely policed by the Advertising Standards Authority” and Professor Lord Richard Layard of LSE has suggested that work should be taxed as a form of “pollution” on the basis that the increase in one employee’s income causes other people to be jealous and therefore unhappy.  It is not clear what to make of the type of contentment that requires an adult to be coddled from the sight of an attractive person.  However, as Mill explained in On Liberty, such a narrow, illiberal approach to life (i.e., alleviating people from the need for firmness, maturity, and toleration of other people’s choices) would be prejudicial to their development as individuals, rendering their character “inert and torpid”.

Third, there is good reason to doubt theories about what people should want that differ markedly from what people actually do.  Most people work hard to improve their lives and the lives of people they care about.  People respond to financial incentives because they want to use the money to pursue their own goals (which may mean a better car, a larger house, a more secure retirement, the opportunity to travel, or providing for their children, collecting art, and so on).  It seems dubious to second guess those revealed preferences on the basis of limited survey data about whether people say they are “happier.”

Fourth, the anti-growth policy conclusions drawn by the authors seem deeply misguided.  A prosperous and free society creates opportunities for people to follow their own idea of the good life.  However, Bok says that, ““People do not always know what will give them lasting satisfaction.”  The New Yorker continues:

Bok, for his part, argues that lawmakers should act on the findings of happiness research, even when doing so goes against the wishes of their constituents. “Most voters would probably prefer to be happy rather than have their representative mechanically accept their mistaken impressions of how to reach this goal,” he writes.

OK, so: economic growth makes people more prosperous and allows them to enjoy better living standards and buy things they want (larger houses, better cars) but Bok thinks this doesn’t make them happier.  Accordingly, he thinks policymakers should prefer his recommendations over those of the people concerned.  The New York Times’ review explains how he thinks this might be accomplished:

Government has the potential to produce happiness, but Americans dislike government.  Ever logical, Bok concludes that the state should therefore do more to encourage trust in it. Believing that the public’s attitude toward government is too “extreme” and its judgments of politicians too “harsh,” he also calls for the news media to balance their frequent stories of corruption and inefficiency “with accounts of success and accomplishment in order to give an accurate picture of the government’s performance.”

By this stage, the lessons that we’re told we need to learn from Bok’s happiness research seem not only illberal but downright weird.  I think happiness research may have some interesting things to say, but I’ll address that in a separate post.

Spending in the New Jersey gubernatorial race

March 12, 2010

Jono has previously posted on the uncertain relationship between election spending and election outcomes (noting that other factors such as national partisan swings and candidate attributes mean that election spending is not strongly determinative of election outcomes).

Spending reports from last year’s governor’s race in New Jersey, in which the Republican challenger Chris Christie beat the incumbent Democratic governor Jon Corzine, provide an interesting data point.  Reports indicate that Corzine outspent Christie by 2-1. 

Realclearpolitics reports: 

The final tallies are in for the Gubernatorial race in New Jersey last year. Jon Corzine outspent Chris Christie two-to-one the primary and general election campaigns, $31.5 million to $15.5 million. Even those numbers are a bit misleading since Corzine was essentially unopposed in the primary while Christie had a legitimate race on his hands.

Additionally, the Republican Governor’s Association spent another $7.3 million on Christie’s behalf, which was offset by $7.1 million in spending by Democratic groups on Corzine’s behalf.

Despite the $15 million spending advantage, however, Corzine lost by four points.

So when politicians say that they need to impose restrictions on advertising to control the influence of “big money”, it’s worth asking whether there is any cogent evidence that the relationship between election spending and election outcomes is as direct as they claim or whether they are just making assumptions.

The Cost of Free Speech

March 10, 2010

This post is slightly different than the usual post here. The main difference is that I am more unsure of the full implications of my current view than usual.

It seems pretty obvious to me that one still has free speech even when the speech will cost. For example, making sexist remarks may mean others judge you and think less of you. If a businessman makes racist remarks, then perhaps fewer of the relevant race will purchase goods or services from him. I do not think anyone would claim that the businessman does not have free speech because its exercise impacts him in a negative way.

Conversely, it seems to me pretty obvious that a Government that refused to grant contracts to businesses on the basis of the political speech of a director or shareholder would be limiting her free speech. The fact that she could speak her mind is technically true, but costs imposed by the Government on those who speak their mind matter – or certainly seem to matter in my opinion. Is this merely picking up on the point that Alan Dershowitz has made that Jono referenced here?

I think the answer must be no, because the implications are much larger. It suggests that a free market is a necessary, but not sufficient, condition of genuine free speech. Am I missing anything?

A culture of justification?

March 10, 2010

The New Zealand Bill of Rights Act, unlike its Canadian and American equivalents, is not supreme law. If a provision of any enactment is inconsistent with the Bill of Rights Act, section 4 explicitly states that the enactment prevails. This has led some to conclude that our Bill of Rights is “weak”. While it is certainly weaker than other models, the Bill of Rights nevertheless reflects a commitment by the New Zealand government that the rights contained in the Bill should only be subject to limits which “can be demonstrably justified in a free and democratic society”.

In light of this, it is reasonable to expect that government policy will be developed with the Bill of Rights in mind. In the words of two leading commentators, the Bill of Rights was designed to create a “culture of justification”:

A “culture of justification” means a culture in which citizens are entitled to call upon the provision of reasons for measures that affect their rights, are entitled to challenge those reasons, and in a sense more importantly, are entitled to expect that in advance of impairment thought will have been given to the reasonableness of a particular limit. [Butler and Butler The New Zealand Bill of Rights Act: A Commentary (LexisNexis, 2005) at para 6.8.1.]

Prior to the introduction of the Bill of Rights, Sir Geoffrey Palmer noted that one of the problems with the development of legislative proposals was that government officials are “not required to test them against basic principles and they are not invited to apply a set of standards to them” [510 NZPD 3761 (21 August 1990)]. Sir Geoffrey hoped that the Bill of Rights would change this.

Perhaps picking up on this suggestion, the Ministry of Justice has published Guidelines on the Bill of Rights Act to assist the public sector in the development of government policy. In those guidelines, the Ministry of Justice explains that the requirement that limits be “demonstrably justified” means that the onus is on the government to justify any limits to rights [see Ministry of Transport v Noort [1992] 3 NZLR 260 (CA) at 283]. The guidelines explain:

That means justifying your policy or proposed law with evidence such as research, empirical data, findings from consultation, reports, or the results of inquiries or reviews. As with any good policy development, it is important not to act on assumptions, but to provide a well-argued case – based on high-quality analysis and research – that clearly establishes why a particular course of action is necessary. You should avoid relying solely on comparable overseas developments to justify your proposals. The social/political and cultural context in those countries, which would go to demonstrating the justification in their jurisdictions, may be significantly different to our own.

I think that is good advice and accords with my view that “demonstrably justified” limits are limits that are based on actual evidence and not mere supposition.

Last year a friend sent the Ministry of Justice an Official Information Act request in relation to the electoral finance reform project to find out what evidence the Ministry had collected to support its apparent belief that there is a strong causal relationship between electoral spending and electoral outcomes.

The Ministry of Justice responded by indicating that it holds no documents, reports or studies carried out or procured by it on or after 18 September 2005 (ie in the period where it worked on both the Electoral Finance Act 2007 and the current review of electoral law) concerning:

  • the empirical relationship between party expenditure and electoral outcomes in New Zealand;
  • the empirical relationship between candidate expenditure and electoral outcomes in New Zealand; and
  • the empirical relationship between (non-party and non-candidate) interest group expenditure and electoral outcomes in New Zealand.

This is surprising. The Issues Paper prepared by the Ministry of Justice as part of its review of electoral laws, makes reference to the need to create a “level playing field” and highlights the concern that high spending limits may “’tilt’ the playing field unreasonable”. Given the policy decisions that have been made, these concerns must have been accepted to some degree. In fact, the rationale behind much of the Ministry’s work is that there is a strong link between electoral spending and electoral outcomes.

Has the Ministry followed its own advice? Or has it fallen into the trap it warns of in the guidelines and acted on mere assumptions?

Supreme Court grants cert. in funeral picketing case

March 9, 2010

Today the Supreme Court of the United States agreed to hear an appeal from the decision of the United States Court of Appeals for the Fourth Circuit in Snyder v Phelps, which raises difficult and controversial issues about the extent to which tort liability can arise from speech by funeral picketers.

Marine Lance Corporal Matthew Snyder died in the line of duty in Iraq in 2006.  He was buried in his home town of Westminster, Maryland on 10 March 2006.  A fringe religious group called the Westboro Baptist Church picketed the funeral carrying signs such as “Thank God for IEDs”, “God hates you,” and “Semper fi fags.”  The group has picketed other funerals and appears to regard the occurrence of military casualties as some type of supernatural retribution for the United States’ tolerance of homosexuality.  The group kept at a distance of 1,000 yards ordered by local police.

The marine’s father brought civil proceedings against the family who led the picket on the grounds that it constituted an intrusion into a secluded event, intentional infliction of emotional distress, and civil conspiracy.  The jury ruled in his favour and awarded $10.9 million damages, which the trial judge reduced to $5 million.  The Phelps (the family who runs the religious group) appealed to the Fourth Circuit, which reversed the judgment.

The Fourth Circuit concluded that a reasonable bystander would not interpret the group’s signs as indicating actual facts about the deceased but instead as signalling the group’s hostility towards the country and armed forces in general.  Accordingly, the court concluded that the signs constituted statements of opinion which were therefore subject to First Amendment protection and “[b]ecause the [trial court] judgment attaches tort liability to constitutionally protected speech” it should be reversed.

However, the Court made two contextual points.  First:

To paraphrase our distinguished colleague Judge Hall, judges defending the Constitution “must sometimes share [their] foxhole with scoundrels of every sort, but to abandon the post because of the poor company is to sell freedom cheaply. It is a fair summary of history to say that the safeguards of liberty have often been forged in controversies involving not very nice people.”

Second, the Court noted the power of local authorities to keep such protesters at a distance:

Nonetheless, the various states and localities, as well as grieving families, may yet protect the sanctity of solemn occasions such as funerals and memorials. Indeed, governmental bodies are entitled to place reasonable and content-neutral time, place, and manner restrictions on activities that are otherwise constitutionally protected.

The marine’s father now has an opportunity to argue before the Supreme Court that the Fourth Circuit should be reversed.  I do not have a clear view on how the Supreme Court will rule (or ought to rule).  I think Professor Volokh and others raise a valid concern about the potential for the scope of tort liability for the intentional infliction of emotional distress to have a chilling effect.  While the religious group’s behaviour here is contemptible and deeply offensive, it is nonetheless important to tread carefully when the First Amendment is at stake.  As the Fourth Circuit points out, we sometimes need to uphold the rights of vile people in order to maintain important rights and freedoms.

Of course, from a New Zealand perspective, it is less clear to me that the case would directly raise freedom of expression issues.  In the United States, private tort claims can implicate the First Amendment.  New Zealand law does not generally regard private tort awards based on the content of the speech as involving any kind of state action so as to directly engage the New Zealand Bill of Rights Act (though the right to freedom of expression plays a role in the development of common law torts such as defamation).

It is relevant to note in this context, that the New Zealand Court of Appeal has recently upheld a conviction (on a charge of offensive behaviour in a public place) for burning a flag at an ANZAC memorial service (see, R v Morse, though the case raises different issues from those discussed in this post).

UPDATE: The Fourth Circuit’s decision has quite a useful footnote summarising the litigation and legislation that has arisen from this group’s activities:

The Defendants have a substantial history of protesting at venues other than soldiers’ funerals. For example, on the day of Matthew Snyder’s funeral, they also protested in Annapolis at the Maryland State House and at the Naval Academy. The Defendants have also been involved in litigation throughout the country relating to their protests. See, e.g., Phelps-Roper v. Nixon, 545 F.3d 685 (8th Cir. 2008); Phelps-Roper v. Strickland, 539 F.3d 356 (6th Cir. 2008). As a result of such activities, approximately forty states and the federal government have enacted legislation addressing funeral picketing. See Stephen R. McAllister, Funeral Picketing Laws and Free Speech, 55 U. Kan. L. Rev. 575, 576 (2007).

Gambling and Tax I

March 8, 2010

It is often said that income tax law subsidises gambling. Because there is no income tax on winnings from earnings, there is a “tax expenditure” which subsidises gambling. Philosophically the concept of tax expenditure is difficult – after all, what does it mean to say that an activity should otherwise be taxed? – but the point is pretty clear: not taxing certain activities which are comparable to other taxable activities has the same effect as a direct subsidy to the untaxed activities.

It has been found by the courts on numerous occasions that winnings from gambling “with the motive of making casual gains or merely for sport or amusement” is not taxable [Duggan v Commissioner of Inland Revenue [1973] 1 NZLR 682]. In that sense, the income tax system would seem to subsidise those who casually gamble. However, in a more important sense, a progressive income tax tends to punish those who take much larger and much more serious gambles.

Assume that there are 10 typists, all of whom earn $45,000 per annum. Any one who becomes a typist will earn that much. There are also ten actresses. Nine of those actresses earn $10,000 per annum, and one earns $360,000. Any one who becomes an actress faces the nine-tenths chance that she will earn $10,000, and a one-tenth chance that she will earn $360,000. To the careful observer, it is clear that the expected value of entering into either job – typing or acting – is equal, at $45,000. And yet, the progressive taxation system results in tax treatment that is quite different. The typists will on average pay $9,290 in tax. The actresses will on average pay $14,345.

So, the tax system may subsidise risk taking in one dimension, but in another massively penalises it. By changing the payoffs in this way, the income tax encourages a form of inefficient risk aversion. In Part II, I will consider whether profits from iPredict are taxable.

I’m not sure I agree with you a hundred percent on your police work, there, Greg

March 3, 2010

The Herald reports that Police Association President Greg O’Connor is calling on the judiciary to start convicting people for insulting police to help counter a culture of disrespect. According to Mr O’Connor, such disrespect leads to assaults on police officers. Apparently yelling “bugger off” to a cop is OK but if one yells “f*ck off pigs”, the police should arrest you and charge you with insulting behaviour.

Where to start?

First, where is the evidence for the claim that a “culture of disrespect for the law leads to assaults on officers”? Many professions are held in low regard by the public, used car salesmen to use a cliched example, but people don’t generally go around assaulting them. There might be more assaults taking place against the police but in the absence of evidence of causation, I’m skeptical that a lack of respect for the police is the cause of this.

Second, it seems to me that Mr O’Connor confuses “respect for the law” with the fear of being arbitrarily arrested for using colourful language in bars. Respect is earned through the way the police conduct themselves when they carry out their admittedly difficult duties. It is not enforced through the threat of arrest. If the threat of being arrested for insulting the police leads to respect for the law and police officers, such respect must have been high indeed in the former Soviet states.

Third, Mr O’Connor seems to think that it is appropriate for the police to tell judges how cases should be decided:

He is in discussions with Police Commissioner Howard Broad to approach the judiciary with a strategic plan to improve respect for the law.

“It requires District Court judges to agree – in copybook cases – that they will convict people who are arrested for insulting behaviour.”

Perhaps the rate of convictions for this type of offending is low because the Supreme Court has said that the provisions in question raise free speech questions. And perhaps Mr O’Connor would like to reflect on the separation of powers and the appropriateness of part of the executive branch of government telling the judiciary how to decide cases.

What is freedom of speech?

March 3, 2010

New Zealand Bus’ decision not to allow the New Zealand Atheist Bus Campaign to place these advertisements on its buses has some, including some religious folks, complaining that free speech rights are being interfered with. While I think that the advertisements would have stimulated a healthy debate (a debate which is happening already to some extent thanks to the publicity NZ Bus’ decision has generated), I don’t think this is a free speech issue (at least not one that implicates the Atheist Bus Campaign’s free speech rights).

What does the right to freedom of speech mean? It does not mean that I can compel other individuals to carry my message on their buildings or billboards or put up placards on their front lawn. It does not mean that you or I have a right force others to listen to our message. You’re free to stop reading this blog for instance, although I hope you don’t.

Freedom of speech is a restriction on government action. It is essentially a right not to be censored by the government. It is not a right that imposes positive obligations, rather it limits the way in which the government can act. Alan Dershowitz explains this point nicely in his book Rights from Wrongs:

There is no right to speak freely in all contexts. If you say something your boss does not like, he may fire you. Your spouse may leave you. Your parents may punish you. Your private school may expel you, and your friends may abandon you. Only the government may not restrict your right of free speech. (at 175)

So New Zealand Bus is free to choose whether to accept this or any other advertisement. Its right to free speech allows it to make that choice without censorship or direction from the government. That is of course not to say that we might not hope that it would carry any message to promote public debate but its refusal to do so does not interfere with the atheist campaigners’ free speech rights. Critics of New Zealand Bus’ decision are of course free to exercise their right to freedom of speech to try to convince it to change its mind (as they are doing).

I note that New Zealand Bus’ decision may raise other issues, such as whether it is discriminating against the atheist campaigners on religious grounds.  That’s an issue that I think Jesse has some thoughts on, so I will leave it for another day.

Ignorant but Rational

March 3, 2010

Don Brash accused the public of being ignorant, and then said that this was caused by “the failure of teachers to teach and politicians to explain some of the basic facts of life.” The claim of ignorance on issues of public policy is certainly correct, but the diagnosis for why this is the case is wrong.

When are people more likely to be ignorant? When the costs of being informed are high, and the benefits of being informed are low. So, being ignorant about how much you earn could end up being very costly – you may accumulate debt, you will poorly assess your preferred consumption bundle, etc. That’s why people tend to know how much they earn.

But what are the costs of ignorance in public policy? Well, the cost of voting for a nonsensical idea is pretty low, because the chance of your vote determining the outcome of the election is tiny. If there’s a one in a million chance of your vote affecting the election, and the cost of tariffs for you personally is $5, then the expected cost to you is one ten thousandth of 5 cents if you vote for a party that supports tariffs. Equally, voting for policies that are illogical may have psychic benefits – you might decide to do something because of personal bias.

But if ignorance and irrationality is driven by our current institutions, then institutional change could alter those incentives. As opposed to each citizen getting to vote, we could have a higher level of aggregation achieved by cross-sectional juries of citizens. We could massively decentralise state functions and then allow greater personal choice in jurisidiction, including the possibility of virtual jurisdictions. An easy first step would be to end get out the vote campaigns.