Voting for Our Better Selves; and Rules to Flourish By

Mike Pesca, in one of his artful spiels on The Gist podcast, punctures the conventional wisdom that we Americans want folksy presidential candidates, that we yearn for a leader just like us, someone we can relate to, imagine having a beer with.  While we do like candidates to be down-to-earth (perhaps echoes of our anti-monarchical national origins), Pesca convincingly argues that what we really want is not a leader like us but one who is like our better selves -- not someone who plays to our fears and prejudices but someone who can embody our virtuous aspirations.

Indeed.  As I argue in The Good Life: Aspiration, Dignity, and the Anthropology of Wellbeing, we aspire to be certain sorts of people -- a key part of our identity is not just who we are, but who we want to be. Our aspirations reflect certain sorts of values, what matters most to us in the big scheme of things. These aspirations, and our better selves, can be undermined by short-term gains and hedonic pleasures. And so we need leaders to remind us of our better selves and guide us down the often more arduous path of long-term personal and collective fulfillment.

For these same reasons, we also need rules to hep us be our better selves.  A recent RadioLab episode (Nazi Summer Camp) looked at how the U.S. treated the 500,000 or so German and Japanese POWs in U.S. camps. It turns out we treated them exceedingly well, fully following the letter and spirit of the Geneva Convention, even when we saw that the Japanese and Germans were not so scrupulous in their adherence. Significantly, we treated the U.S. citizens of Japanese descent much worse at the internment camps. As U.S. citizens, paradoxically, there were no international rules to govern their treatment, and the country showed it worse side.  Similar examples of how rules can help us be the sort of people we say we want to be can be found in Lynn Stout's excellent book Cultivating Conscience and in my book The Good Life.  

Gratitude and Wellbeing

I heard psychologist Dacher Keltner, a founder of the Greater Good Science Center at UC Berkeley, on the radio this morning calling for more gratitude as a counterweight to the materialism of the season.The work of Keltner and others has shown that gratitude is closely associated with health and overall wellbeing.
The value in gratitude for our sense of self is related to the sorts of positional consumption arms races that Bob Frank has written about.  (The value of "positional goods" owes more to their scarcity and social identity aspects than to their material properties: the real utility of that $3000 Birkin handbag (to carry stuff around) is about the same as a plastic shopping bag.)  We adapt to new material circumstances quickly and then aspire to more. When I started my career, my imagined dream position was where I am now; and yet, in arriving here, my dreams and aspirations have changed and expanded so that I still fell as if I am missing something in my life.

Such aspiration is important, gives meaning and direction and energy to our lives (as I argue in The Good Life). There is a lot of subjective value in anticipation, as an article in the Atlantic highlights. And yet it can also be a source of constant discontent if not combined with gratitude for what we have. This is a propitious time of the year to think not about what we lack but also what we have--and it is a useful exercise to do this while thinking about what we wanted ten or twenty or thirty years ago.

Research also shows that experiences matter more than things in overall wellbeing--we remember them better and they increase of overall sense of life satisfaction. Psychologist Thomas Gilovich and his colleagues have shown in a number of studies that money spent on experiences (rather than objects) provides more enduring happiness among subjects. As with positional goods, experiences are tightly linked to identity--in many ways our identities are built from experiences.

Stuff is certainly important, but as Elizabeth Dunn and Michael Norton note in Happy Money: The Science of Smarter Spending, new-ness wears off quickly and is often followed by disappointment. We need things, but the meaning of things goes beyond their material properties--a thing, anything, also serves as a vessel for our ideas, a container for our hopes and dreams. And our aspirations often give more meaning to objects than they can handle, leading to disappointment.

So, while gratitude cannot replace aspiration, it is a necessary counterbalance for wellbeing.

The Good Life: Page 99 Test

The Page 99 Test blog takes its cue from Ford Madox Ford, who remarked "Open the book to page ninety-nine and read, and the quality of the whole will be revealed to you."

I was asked to apply the Page 99 Test to my new book, The Good Life: Aspiration, Dignity, and the Anthropology of Wellbeing:
          In this era of globalization, of transnational corporations and ubiquitous internet access, it is easy to forget just how different national economies sometimes are—and what we might learn from different ways of organizing markets.

         Germany’s soziale Marktwirtschaft (“social market economy”), also known as Rhenish capitalism, places a greater emphasis on stakeholders . . .   CONTINUE READING at Page 99 Test: http://page99test.blogspot.com/2014/11/edward-f-fischers-good-life.html

Measures for the Good Life: Stated Preferences and the Greater Good

The goal of the economy, politics, and social institutions should be to promote wellbeing among people as broadly as possible. Yet, the questions remain: what exactly is wellbeing? and, How do we measure it for public policy purposes?

Economists privilege revealed preferences (what we actually do) as more true than stated preferences (what we say we want). Yet, as I argue in The Good Life, stated preferences often better reveal our long-term aspirations, desires, and vision of the sort of person we would like to be and the sort of world we would like to live in. Stated preferences often take longer time horizons and are more generous in their pro-social stance.  

An important new paper by Daniel J. Benjamin, Ori Heffetz, Miles Kimball, and Nichole Szembrot (2014) "Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference" makes the case that while neoclassical economics focuses almost exclusively on revealed preferences, in the public policy domain this is impossible as individuals rarely make such choices. They constructed an instrument to measure stated preferences along with subjective wellbeing. By asking respondents to gauge stated satisfaction from alternative scenarios, they are able to measure marginal utility of aspects particular aspects of wellbeing.

It turns out that the eudaimonic aspects (being a good person, living according to certain personal values, having a life that is meaningful) rank among the highest.

Cash, Credit, or The Good Life

When shopping, we behave differently when we pay in cash versus when we use a card (credit, debit, or gift). This is one of those everyday anomalies that belie our economic rationality, and many theoretical expectations, and yet that make sense. The feel of having cash in hand, the deliberate act of handing over bills, the material loss of paying--the very physicality of the act focuses our attention sharply on price. Using a card is "one step removed from having green cash money leave [your] flesh-and-blood hands," and thus the pain of paying is made more distant, as Ron Lieber argues in the NY Times.

Studies have shown that customers are willing to pay significantly more for the same item when using a card, and that card paying consumers are more concerned with features and quality compared to price. Thus, Dave Ramsey and a host of self-help gurus advise us to use cash as a way of nudging us to be more rational and prudent. Paul Roberts argues in The Impulse Society that credit cards feed into our accelerating desires for instant gratification.

But perhaps there is an upside to being less price sensitive (within reason, of course). In my book The Good Life, I look at German shoppers, who still mostly use cash in their supermarket transactions. They often express a preference for products that carry positive social values (organic, fair trade, etc.) and for quality. Yet, when the cash actually changes hands, they often opt for lower priced alternatives. This suggests that paying in cash curbs our enthusiasm for doing the right thing. Perhaps, then, when one can afford it (a separate issue), we would be doing more for the greater good to be less price sensitive--willing to pay for quality and the job dignity and social values that go with it.

Measures of Happiness and Wellbeing

Who are the happiest people in the world? In what countries do we find the highest life satisfaction? These are different questions, with different answers. Cheery contentment (hedonic happiness) is not the same as long-term wellbeing (eudaimonia), as I argue in The Good Life.

Martin Seligman, in his book Flourish, writes that "Colombia, Mexico, Guatemala, and the other Latin American countries are a lot happier than they should be given their low gross domestic product." High GDP might not guarantee happiness or wellbeing--but it also doesn't hurt as a comilations of wellbeing indices assembled by Korn Ferry shows:  

World Database of Happiness Top Ten:

1.     Costa Rica

2.     Denmark

3.     Iceland

4.     Switzerland

5.     Finland

6.     Mexico

7.     Norway

8.     Canada

9.     Panama

10.  Sweden

The Legatum Prosperity Index

1.     Costa Rica

2.     Denmark

3.     Iceland

4.     Switzerland

5.     Norway

6.     Finland

7.     Mexico

8.     Sweden

9.     Canada

10.  Panama

 

The Legatum Prosperity Index

1.     Costa Rica

2.     Denmark

3.     Iceland

4.     Switzerland

5.     Norway

6.     Finland

7.     Mexico

8.     Sweden

9.     Canada

10.  Panama

And Gallup has a new "Positive Experience Index" (measuring the occurrence of certain positive experiences the previous day) that tilts heavily Latin America:
 

Gallup’s Positive Experience Index

1.     Paraguay

2.     Panama

3.     Guatemala

4.     Nicaragua

5.     Ecuador

6.     Costa Rica

7.     Colombia

8.     Denmark

9.     Honduras

10.  Venezuela

11.  El Salvador

Downsides to Thrift: Germans Saving Too Much Water

Germans need to flush their toilets more often, says Hans-Jürgen Leist, a scientist at the Ecolog Institute in Hanover, as quoted in a Wall Street Journal article.

In my new book, The Good Life, I look at how Germans choose their eggs--and it turns out that their preference for organic and free-range are driven by the same values of thrift and social solidarity that stop them from flushing their toilets. Germans rightly pride themselves on their thrift, from tedious and obligatory recycling regimes to crazy ways of saving grey water, and on their sense of social and ecological obligation ("solidarity" is is a value extolled by the political left and right).

But too much thrift is a bad thing for a water system. With energy efficient washing machines and quest for personal thrift has led per person water consumption to drop by more than 15% over the last 20 years (to 32 gallons/person). At the same time, and based on the same values of thrift and long-term investment, German cities have built up infrastructure capacity.  And, as the WSJ reports, with low flow volumes, sewage systems develop all sorts of problems, from smells to corrosion.

What We Do Not Always What We Want

Customers hate Spirit airlines. Passengers routinely swear they will never fly it again; it ranks dead last in airline consumer satisfaction. Everything costs extra--the seats don't even recline. Planet Money's Zoe Chase and Jacob Goldstein took a trip recently and discovered a new category of customer, what that call hate fliers: "the guy who knows what he's getting into, doesn't like it, but flies Spirit anyway because it's so cheap."  And business is booming.

What gives? People say they hate the airline, that they won't use it again, and then they do, over and over.  Of course, what we say is not always what we do. We have a whole range of aphorisms and admonitions privileging the later over the former, and economists distinguish between stated preferences (the things we say we want) and revealed preferences (what we actually do, taken to be our true preferences).

A conventional economic analysis would say that folks really do want what Spirit Airlines offers; their protestations to the contrary are cheap talk. This is true, but only to an extent.  I argue in my forthcoming book that in some contexts we need to value what people say they want as well as what they do. When our stated preferences are in conflict with our revealed preferences, the stated preferences often contribute more to a common good. But we we head to the checkout lane or click the mouse to buy an airline ticket, the lure of saving a few dollars is too much to resist--even if we think we would all be better off with the alternative in the long run.

Along these lines, the NY Times reports that while the French say they love their local shops and are leery of behemoths like Amazon, they flock to the large online retailers when the discounts are compelling ("Principles are no match for Europe's love of American web titans").  Indeed, France just passed what is called the "Anti-Amazon Law" that promotes small bookstores by limiting discounts, nudging (or forcing) folks to do what they say they prefer.

Intrinsic Motivations and a Secret of the Good Life

In the Sunday NY Times, Amy Wrzensniewski and Barry Schwartz argue that the secret of success is internal versus instrumental motivation.  They find that being driven by intrinsic values (say, studying in order to learn) rather than instrumental ones (studying to get a good grade to get a degree to get a good job) is highly correlated with success among entering West Point cadets. Intrinsic motivation would appear to best achieve the unrequited ends sought by instrumental values. Schwartz has a keen eye for such paradoxes--his earlier work on the Paradox of Choice shows why more is not necessarily better.

Aristotle intuited the importance of intrinsic motivation in his understanding of virtue, and philosopher Alasdair MacIntyre relates this to internal mastery of a practice. In The Craftsman, Richard Sennett shows the satisfaction that comes from doing a job well for its own sake.  Lynn Stout, in her book Cultivating Conscience, argues that focusing on instrumental values in compensation schemes (i.e., pay based on meeting predetermined performance metrics) undermines the moral basis of intrinsic motivation (and inhibits true excellence): teachers and doctors, for example, should be working to improve people's lives, not just to meet a metric to make more money.

In my forthcoming book The Good Life, I look at the lives and aspirations of German consumers and Guatemalan farmers, and find that in both (radically different) circumstances, dignity and commitment to larger purpose are both fundamental elements of wellbeing. As I argue, understanding the elements of what makes us better off can provide the basis of a positive anthropology as well as practical policy suggestions.  

21st Century Capitalism, Inequality, and and the Policy Toolkit

Capitalism qua capitalism is a topic of serious discussion for the first time in the U.S. in a very long time, at least among the NY Times/Atlantic/New Yorker reading demographic. It has been spurred by post-2008 real world conditions and channeled through Thomas Piketty's new book Capital in the Twenty-First Century. A surprisingly weighty tome to top the Amazon non-fiction list, Piketty's book marshals a massive amount of data to show the recent rise in inequality to new gilded age heights. In itself that is not a revelation, but Piketty observes that it is not driven by high incomes (the executive salaries that routinely make headlines) but rather by returns on capital.  He illustrates the growth of the economy versus returns on capital (figure taken from Kruger review of Piketty):


The first amazing fact captured in this diagram is the dramatic drop in the rate of return from capital during the 19th century--the shift away from feudalistic rent-taking to competitive capitalist production. And now the troublesome divergence that emerged in the 1990s and 2000s.

There is good evidence to suggest that a certain degree of inequality is correlated with economic growth.  Too much inequality, however, disarticulates the production and consumption sides of the economy, constricts the opportunities open to the majority of people, a poses serious ethical dilemmas over what is acceptable. Where to draw the line is a technical and moral question, one that we tend to avoid.

Still, there is hope and even some practical solutions. Piketty calls for a 15% tax on capital and an 80% tax on incomes over $500,000.

Piketty's work reminds me of Jon Shayne's interview of Andrew Smithers (previously blogged here) in which Smithers shows the divergence of earning shares going to labor and going to profit:

Smithers argues that executive compensation has introduced a number of incentives that encourage managers to maximize short term profits at the expense of long-term investment in labor and productivity. This is troubling, and unhealthy for the economy in the long haul, as future collective prosperity is foregone for immediate rewards.

In terms of speculation that produces little social benefit, Jon points out that one alternative would be for the capital gains tax rate to become progressively lower over time (i.e. rewarding holding and long-term investment). Economist Bob Frank promotes a steeply progressive consumption tax that would discourage the arms race of conspicuous consumption of positional goods.

From nudges to smart regulation, there now exists a policy toolkit to fix our economic, political, and social woes. If only we would use it.

Minimum Income, Wellbeing, and Deirdre McCloskey on Parisian Beggars

Let us accept, if just for argument's sake, that the goal of politics and economic systems is the provisioning of the good life, as variously conceived, as broadly and fairly as possible. How then to achieve that aim? On the one hand, it would seem to require a commitment to individual freedom, old school Enlightenment style liberalism: people should be empowered to choose their own good life. At the same time, it also requires a commitment to common goods, the collective basis for individual flourishing and the source of much of our social wellbeing. In Sunday's NY Times, Tony Schwartz makes the case that our lasting successes and and life satisfaction are based on doing something that really matters, having the sense "that we're truly adding value in the world" (also the argument in my forthcoming book on The Good Life).

Economist Deirdre McCloskey has been wrestling with this contradiction throughout her career (which began as Donald McCloskey). In a chapter in Cash on the Table, she observes that economists overvalue self-interest and anthropologists overvalue social goods--and that both miss the complicated interplay.  As she explains to Paul Solman in a recent PBS NewsHour interview, this isn't just theoretical. She generally supports market approaches, but she also advocates a guaranteed minimum income on the grounds of moral values:
I was on a subway in Paris a long time ago, and this guy came into the car, and the first thing he said was: I’m 24 years old. Because he couldn’t beg if he was 27 years old — that’s when the minimum income came in. That is, if you were 27 in France, you got a minimum income. So he couldn’t persuasively beg. I’d like people who can’t make enough income to be helped out this way.

In the context of the developing world, guaranteed minimum incomes are a variant of conditional cash transfers (paying folks to keep their kids in school and healthy) and unconditional cash transfers. Give Directly gives $1000 to selected households in Kenya and Uganda; families do not apply, they are identified as needy and given the windfall. Overhead costs for such programs are minimal compared to traditional aid, and supporters argue that folks themselves know best what they need to get ahead.

Supporters of a minimum income argue that it both prevents extreme poverty and can encourage entrepreneurial behavior (by reducing the costs of failure). And more than just entrepreneurial ventures it can allow a greater range of life projects and wellbeing. 

Prosperity, Poverty, and Wellbeing

Prosperity, wellbeing, the good life--this elusive condition that we are all presumably striving for--is notoriously difficult to measure. We have long used income as a shorthand for wellbeing, but we are now realizing how limited that is as a proxy. An adequate income is certainly necessary, but alone is insufficient, for wellbeing. Part of the problem in measurement, as I argue in my forthcoming book on The Good Life, is that often precisely what is most valuable in life in least quantifiable, such as dignity, aspiration, and larger purposes.

Nonetheless, the urge to measure and rank countries produces lots of interesting data. The Legatum Institute's prosperity index uses 8 equally weighted sub-indices to calculate prosperity:
1. Economy
2. Entreprenuership and opportunity
3 Governance
4. Education
5. Health
6. Safety and Security
7. Personal freedom
8. Social capital
Nathan Gamester reports their 2013 findings in a recent issue of the Harvard Business Review, and there are several interesting results:

• Norway, Switzerland, Canada, and Sweden come out on top
• Since 2009, the United States has dropped from 12th to 24th
• Germany has gone from 16th to 9th
• Guatemala has drop from 82nd to 90th (out of 142).