Economic Realism Beyond Gread and Fear

Yesterday's Financial Times ran an insightful and provacative editorial by Paul Collier:

"Greed and fear have shaped the design of the modern Anglo-American company. Belief in the potency of greed drove the trend to tighter links between wages and performance. Belief in the potency of fear drove the subjection of managers to the takeover threat, policed by the capital market. The economics profession took pride in this bleak realism, gleefully extending the model to the family and smugly contrasting itself with the gentler communitarian values of the softer social sciences. Uncomfortably, perhaps reflecting the internalisation of these values, psychology tests revealed that economics graduate students were unusually selfish.

While undoubtedly bleak, this paradigm no longer looks realistic . . . .    READ THE REST

The Debt Deal: Hurting Employment, Equality, and Future Competitiveness

The CEO of the giant bond investment firm Pimco, Mohamed El-Erian, stated that the debt ceiling deal that Obama and Congress have settled on “does nothing to restore household and corporate confidence. So unemployment will be higher than it would have been otherwise, growth will be lower than it would be otherwise, and inequality will be worse than it would be otherwise.”  See the full interview.



Yesterday's news also brought word of China's massive increases in research and development spending.  While we should be happy for China's growth, it should also remind us of the importance of investing in infrastructure, education, and research now to ensure our continued prosperity for decades to come.  This is a dangerous time to be pulling back from key investments that give our country its competitive advantage. 

Stated Preferences and the Alternative-Vote

Thursday Britain votes on changing its electoral system in favor of an alternative-vote (AV) process. David Cameron is campaigning against the change, while his junior coalition partners are pressing hard to see it win. If passed, the AV system would certainly hurt the Tories and Labour, the two dominant parties, most. (See coverage in The Economist and in The New York Times.)

In an alternative-vote system, voters rank their candidates in order of preference. Votes are counted in rounds. Each time, the lowest rank candidate is eliminated and his or her supporters’ votes move to their next highest ranked candidate. And so on, until a candidate reaches 50% of the vote.

The AV system speaks to the distinction between “revealed” and “stated” preferences. Economists usually argue that we have to consider revealed preferences—what folks’ actually do, what they spend their money or votes or time on—to be the true preferences. I have been arguing that we need to revalue stated preferences—what folks say they would like to do. What about when we have to make choices between unsavory alternatives? Do such choices reveal our true preferences? I think not.

The AV system allows one to vote for the candidate he or she truly supports, the candidate that best matches their vision, without regard for the pragmatics and cosmetics of electability. They can thus reveal their true stated preferences while, through ranking candidates, still support their least worst alternative.
Stated preferences, as compared to revealed preferences, tend to be more pro-social, long-term oriented, and less concerned with immediate gains. Through our stated preferences, we can imagine the world as it ought to be, not just as it is, and mechanisms such as AV allow us to pursue those visions. No wonder the established political parties are worried.

Variety gives MUSICA CAMPESINA a big thumbs up!

The film I helped produce got a positive review in Variety, the Hollywood bible. Check it out:

Variety Reviews - Musica Campesina/Country Music  - Film Reviews - Buenos Aires -
Review by Robert Koehler
As easygoing and rambling as its wandering hero, Alberto Fuguet's "Country Music" is a likable tale of a Chilean man trying to get his bearings in Nashville.  Pic might qualify as the first Latin American-made mumblecore movie, preserving many of that genre's ambling, talky qualities, and adding the accent of a foreigner attempting to make sense of America, and maybe find a way into the music biz. Distribs typically averse to South American cinema may show interest, as will a long roster of fests.
READ THE REST OF THE REVIEW HERE

Música Campesina U.S. Premier 17 April at the Nashville Film Festival

That Renaissance man of Latin American arts and letters, Alberto Fuguet, has a new film, shot while he was in residence at the Vanderbilt Center for Latin American Studies.   Música Campesina tells the story of Alejandro Tazo who follows a girl from Chile to the States and winds up in Nashville.  It is a beautiful and complex story of identity and immigration, love and music, that captures the spirit of the new Nashville.  (Full disclosure: I am the Executive Producer.) 

Trailer Música Campesina from Cinépata on Vimeo.

The Good Life: More Money? More Constraints?

The good life.  We all want it.  Even if we disagree, sometimes violently, over its precise manifestation and the best ways to achieve it, we are in unison in striving for a good life.

(By "the good life" I refer to the Aristotelian concept of eudaimonia, also rendered in English as a "meaningful life" or the "fulfilled life."  This differs from everyday happiness [hedonic happiness] in that it evaluates the wide sweep of life projects: not "are you happy right now?" but rather "how satisfied are you with your life as a whole?"  I have discussed this in earlier postings.  An Aristotelian "good life" or "meaningful life" need not be wed to Aristotle's provisional list of Greco-centric virtues but rather more broadly to the idea and ideal of virtues-those ends that we desire for their own sake.)

A recent study by Daniel Kahneman and Angus Deaton suggests that income may have different effects on hedonic happiness and life satisfaction.  The Easterlin paradox notes that happiness derives from relative income; if all boats rise, relative poverty leads to the same level of happiness or discontent.  Easterlin's argument is that the link between income and happiness only holds within countries and not between them; this is to say there is not a significant correlation between national income and happiness.  But the Kahneman and Deaton study suggests that perhaps what holds for hedonic happiness does not hold for life satisfaction.  They conclude that (within the U.S.) "high income buys life satisfaction but not happiness."

Margarita Corral (working with the Vanderbilt Latin American Opinion Project) reports on a large-scale comparative study of life satisfaction across Latin America.  She finds a close association between national economic development (as reflected in income) and evaluations of overall life satisfaction.  This makes sense: we adapt our hedonic happiness to the daily norm of our lives but in looking at the wide sweep of our life projects we feel more intensely the opportunities not presented or taken because of financial exigencies. 

All the same, recent research suggests that while income may be important in life satisfaction, it is not determinant.  That is to say that it is necessary but not sufficient.  Indeed, if we take "the good life" (as variously and broadly conceived) as our shared end, it makes us look at the economy and markets in new ways.  And there is a growing body of scholarship that suggests that there may be ways we can structure the economy and our lives to best promote the common good. 


And it isn't always in ways that seem apparent.  For example, The Economist recently reported on a study by Daniel Benjamin, Ori Heffetz, Alex Rees-Jones, and Miles Kimball.  They asked folks if they would rather earn $80,000 a get an average of 7.5 hours sleep a night or make $140,000 and sleep only 6 hours a night.  About 70% reported they would prefer to earn less and sleep more.  The kicker comes next: the researchers then asked this same sample what they would actually do: depending on the question between 17% and 25% said they would still do what they said they would not prefer. 

An economist would most likely say that we have to give the most weight to what folks would actually do-that this "revealed" preference is the true preference.  And yet, as I have argued, we should also take seriously the stated preferences, how folks say they would like things to be.  I hold that our stated preferences are more attuned to our overall life satisfaction, and that revealed preferences are most sensitive to hedonic happiness.  
If this is the case, it sheds new light on the role of smart regulations.  It suggests that we sometimes need structure and flexible constraints to be our best.  And the immediate pull of hedonic pleasures may entice us to make decisions counter to our long-term better judgment.

Lynn Stout's book, Cultivating Conscience, provides amble examples of how this might work, as do Thaler and Sunstein in their book Nudge and Bob Frank in various places.

Stout also points out the pitfalls of bad rules and regulations.  Specifically, she argues that financial incentives often undermine the very moral basis of work and vocation in a way that is both inefficient and contributes to dissatisfaction.  We all know that specific rules can have unintended consequences, but it is surprising how rules themselves can sometimes undermine the common good they are meant to ensure. 
A number of recent books address this point from different angles. 

Barry Schwartz and Kenneth Sharpe in their (2010) Practical Wisdom: The Right Way to Do the Right Thing (NY: Riverhead) make a strong case for revaluing the Aristotelian virtue of phronesis, or practical wisdom.  They argue that doctors and lawyers are bound by so many rules and regulations that they have little room in which to exercise their discretion, their practical wisdom based on the particular context.  With the proliferation of ethical (and other) guidelines, acting morally seems to clear: stay within these established boundaries and ipso facto you are acting ethically.  But, as common sense tells us, it isn't that easy.
Practical wisdom, Schwartz argues, is not a list of rules but a state of mind, a perspective built up through experience. 

Elsewhere, Schwartz argues (and thanks to Jaime Kyne for this reference) that, "it is distressing that modern social trends are conspiring to make wisdom ever more difficult to cultivate. These trends can be organized around two core features: increasing market pressure and increasing bureaucratization. The pressure to make a profit threatens both skill and will. It threatens the development of the skills demanded by practical wisdom by depriving people of adequate time to get to know people and situations well enough to exercise judgment wisely. Doctors who see eight patients an hour can't possibly be expected to discern the unique circumstances of each patient. And it threatens the will by substituting financial incentives for motivation to do the right thing."
Incentives actually act to undermine the use of wisdom: "the more financial incentives crowd out people's desire to do the right thing" and, in fact, "market incentives and bureaucratic rules may be an appropriate short-term response to greedy doctors or unimaginative teachers, but in the long term, they only make doctors greedier and teachers less imaginative."


Indeed, the market is starting to respond with a number of products that help us enforce our better inclinations.  Leanne Italie reports on new technological products that help us stop ourselves from doing things we don't, in our more rational and contemplative moments, want to do: Intoxalock stops you from starting your car if you have had too much to drink; Don't Dial places hurdles on calling under the influence; NOTXT stops texting and driving; and, as discussed in a previous post, Mastercard's new inControl system stops you from overspending.

In We Have Met the Enemy: Self-Control in an Age of Excess (2010, NY: Penguin), Daniel Akst distinguishes between "first-order desires" ("immediate pleasures, not necessarily conscious or at least not contemplative decisions" and "second-order desires" (which are actively chosen and evaluated; these speak to our better selves, involve a higher level of reflection).  He sees a loosening of social norms and rules and elevation of more hedonistic self-fulfillment that has led us away from second-order desires. 

Akst writes that we are all like Odysseus and need to control our raw impulses. And the best way to do that is through precommitment devices.  These are promises, often enforceable, that one makes to do in the future, setting up circumstances that make it hard to back out of.  He suggests, for example, that folks could sign up to pay extra taxes if they gained weight.  See his article in Slate.

Dan Ariely also studies precommitment and how it links to our propensity for "hyperbolic discounting": discounting future gains and pleasure at a very steep initial rate.  Precommitment devices help us give full weight to our future selves' preferences by signing a contract for Weight Watchers or a health club; allocating portions of future raises to retirement plans; and so on.

David McRaney writes on "Procrastination" in the entertaining and enlightening blog "You Are Not So Smart":
He cites a 1999 study by Read, Loewenstein and Kalyanaraman that had participants pick from a selection of highbrow and lowbrow movies to watch now or in a few days.  Folks tended to pick lowbrow movies for their more immediate pleasure and highbrow movies for later.  They wanted to watch the highbrow movies, but not right away (they'd rather have their guilty pleasure first).

He argues that metacognition is central to overcoming these deep biases in our pleasure circuits:  "Thinking about thinking, this is the key. In the struggle between should versus want, some people have figured out something crucial - want never goes away.  Procrastination is all about choosing want over should because you don't have a plan for those times when you can expect to be tempted.  You are really bad at predicting your future mental states. In addition, you are terrible at choosing between now or later. Later is murky place where anything could go wrong."

 McRaney writes that, "the trick is to accept the now you will not be the person facing those choices, it will be the future you - a person who can't be trusted. Future-you will give in, and then you'll go back to being now-you and feel weak and ashamed. Now-you must trick future-you into doing what is right for both parties."

All of this new research recalls the classic the 1960s Walter Mischel experiment with marshmallows: the kids who were able to hold off eating a marshmallow for a few minutes did better on later rewarding tasks that required short-term sacrifice for longer-term gain:

Ivory Towers and Productive Engagements

The ivory tower.  We frequently hear the phrase invoked these days in popular discourse, but most often dripping with disdain.  It is not the real world, but the distant, removed, elitist Ivory Tower, inhabited by Mandarins who think they know better than the common folk.

Sure, the academy is in some ways removed from contingencies of daily life (although less so than many imagine).  But this is not so much a liability as an asset, perhaps our greatest asset.  Removed from the so-called real world, we are able to examine that world with a bit more distance, judicious distance that allows one to question suppositions and assumptions, to speak what may be left unspoken, and so spur creativity and new ways of looking at things.

As Derek Bok has persuasively argued, universities are becoming more vocational, responding to pressures to show their value added to society and to individual students in directly instrumental ways.  In this way they are becoming less ivory tower-like.

An existential crisis can result if scholars stray too far for too long from the ivory tower, at least in the humanities and social sciences.  We can find an analogy in business consulting: consultants are sometimes hired to justify an a priori position, but their most productive use is to get an unbiased yet informed outside opinion.  Being too embedded within the organization becomes a liability.  Writ large, scholars' value comes from critical distance.

AT THE SAME TIME, it also seems that scholars should weigh in on the problems of the real world-to use their critical distance toward productive ends when possible.  The paradox is that that requires engagement and engagement can lead to compromising the very critical independence that gives value to our position.

Directing a Center for Latin American Studies, I spend a lot of time engaging folks outside of the academy.  I find it rewarding, the attempt to nudge people to look at issues from a slightly different angle, to inform them about the impressive work my colleagues are doing.  But there is always linguistic, semantic, and even moral compromises involved in talking across these boundaries.  One cannot convey the full complexity of problems, the nuances of arguments-something gets left out when translating to non-specialist audiences.

Where does one draw the line between engagement and collusion, between putting our ideas into practice and compromising our critical distance?  That there are no easy answers was brought home to me recently after I led a panel discussion for a military audience.  Florida International University hosts a number of applied academic seminars on Latin American countries aimed at the US military leadership at the Southern Command.  At the seminars, academics, scholars and pundits working at places like the Inter-American Dialogue and the Washington Office on Latin America as well as more obscure, neoconservative think tanks, meet with current and former military area specialists.  I led the seminar on Guatemala, and there was a lively discussion and clashing of views as well as many points of consensus.

It is not easy talking to folks who hold different worldviews, with whom one fundamentally disagrees on certain key points.  Preaching to the choir is much more comfortable.  (Indeed, I have spent the last few years getting to the point where I can have meaningful scholarly conversations with economists about anthropological critiques of economic models.)

Writing the Guatemala report was difficult, summarizing a wide range of opinions and yet putting my editorial and analytic stance forward.  In fact, I thought I might catch flack for the report, but my fear was that it would come from the Guatemalan oligarchy, military and police, and narcos, of whom the report is highly critical.

But, alas, the rebuke came from the left, which presents much less bodily danger but far greater moral bite.  A fellow anthropologist saw in my engagement a sort of nefarious collusion, aiding and abetting a military guilty of countless atrocities in Latin America.  This bloody collusion was nowhere more apparent than in the violence of Guatemala's civil war, determined by a U.N. commission to be officially a case of "genocide."  I discuss this in the report, although the seminar was more focused on the broad historical sweep and social landscape-the 50,000', 2000 year perspective.  The report was focused on the social and power structure of Guatemala over time, showing how the colonial legacy, military dictatorships, and elite interests have led to the current power structure of narcos and organized crime (with close ties to the military) exerting the most influence in a weak and corrupt state.  (For the critique of this report and a link to the original see here ; for a more journalistic summary see the posting below and link to The Guatemala Times article.)

I appreciate the stance of moral purity, of a distancing and opposition that refuses to compromise.  Indeed, I think we have too little substantive opposition in this country and think we are all richer for its existence.  Yet, I also see a space and a need for engagement.  There are major inequalities and problems with the way things are and I can easily imagine a better world order.  We should not lose sight of our utopian dreams.  At the same time, being a realist, it also behooves us to make things even incrementally better.  We have to maintain a dual consciousness (and conscience): dreaming of the possible and supporting that end while also working on the practical, taking modest gains where we can.

Revaluing the German Model

Six years ago, when I first started studying the German economic model (the soziale Marktwirtschaft, or social market economy, also known as the Rhenish model, ordoliberalism, or the stakeholding model), it was in serious disrepute.  Unemployment seemed permanently high, taxes were high, and it was claimed by many pundits that the soziale side of the equation was choking the Markt's efficiencies in a case of terminal Eurosclerosis.

But during the economic crisis of the last couple of years, the German model's virtues have become apparent, and it is back in favor.  Angela Merkel now proclaims from the Davos podium that other developed countries need to follow the German example.

Even The Economist is singing Germany's praise.  The current issues has three pieces on Germany, calling the economy "a machine running smoothly," a success case that "owes more to judgment than to luck," and a model to be emulated.  As The Economist's chart here shows, it has been a splendid decade for Germany.

The Economist, true to their liberal perspective, gives too much weight to the effects of capital and labor market liberalization.  These are certainly important factors, but, as I have argued in previous posts, Germany's current success owes much to the ethos of Mittelstand companies (often family-owned and valuing long relationships with employees) and programs such as the Kurzarbeit system that kept many Germans working, albeit with reduced hours, during the downturn.

Even Merle Hazard is (literally) singing Germany's praises

Ethnographic Science and Bayesian Statistics

Is anthropology a science?  As I suggested below, a lot rests on how one uses the word “science,” and I follow Deirdre McCloskey in an ecumenical, expansive definition.

But, even taking a stricter understanding of science, can ethnography based on participant observation pretend to be as rigorous as random sample surveys and rigid statistical analysis?  I think so, and to understand why we need to look back to Thomas Bayes’ (1702-1761) approach to statistics.  

Bayes was a pioneer of statistics, but in the pre-probablistic era of the field.  So, Bayesian statistics works off fewer and less random data points.

Thomas Griffiths and Joshua Tenenbaum (2006, an article in Psychological Science) have taken a surprising look at how folks actually make predictions and found support for a Bayesian model.

Griffiths and Tenenbaum came up with experiments in which they presented participants with an isolated piece of information and ask them to make a generalized inference from it:

Movie grosses: Imagine you hear about a movie that has taken in 10 million dollars at the box office, but don’t know how long it has been running. What would you predict for the total amount of box office intake for that movie?

Poem lengths: If your friend read you her favorite line of poetry, and told you it was line 5 of a poem, what would you predict for the total length of the poem?

Terms of U.S. representatives: If you heard a member of the House of Representatives had served for 15 years, what would you predict his total term in the House would be?

Baking times for cakes: Imagine you are in somebody’s kitchen and notice that a cake is in the oven. The timer shows that it has been baking for 35 minutes. What would you predict for the total amount of time the cake needs to bake?

Waiting times: If you were calling a telephone box office to book tickets and had been on hold for 3 minutes, what would you predict for the total time you would be on hold?

It turns out that people’s predictions about such things were extremely accurate.  Significantly, in all of these items have well-established probability distributions (normal, Erlang, power-law, poisson, etc.), distributions that people know intuitively and thus are able to place lone pieces of data into these internalized distributions.  This allows accurate predictions from lone pieces of data.

Working with good priors, Bayesian inferences are at the heart of ethnography.

Ethnographers who spend lots of time in a place and a lot of time talking to people there, internalize distributions and probabilities. For certain domains they become almost intuitive. Turns out we are pretty good at estimating those things with just one data point BECAUSE we have a pretty good distribution curve in our minds already.

Film Subsidies, Coordination Problems, and Network Effects

A headline in yesterday’s International Herald Tribune read: “In a budget bind, U.S. states consider cutting film subsidies.”  And well they should—why should we taxpayers subsidize the cost of Hollywood (or even independent, although there is more of a case to be made here) films?

This is a case in which reducing choice can actually increase freedom.  State film subsidies started as a way to attract the well-paying, if temporary, jobs they bring.  Add a little inducement and reap the rewards of huge crews with big budgets.  But as more and more states adopted the practice, competition emerged, pushing up the subsidies beyond the point of reason.  A Massachusetts study in 2009 showed that film subsidies cost that state $88,000 per job.  Even California provides $100 million a year in film subsidies.

Now states would be better off just trying to attract films on their own merits and not resorting to the costly inducements.  But it is hard to get out of the game with everyone else competing (they are stealing our jobs!).  So, an agreement (or even law) that prohibited such subsidies would benefit those now freely participating in the competitions.

This is a sort of coordination problem or network effect, in the terms of economics.  A network effect is when the value of something depends on how many others use it.  Telephones are the classic example: the more people that have phones the more valuable it is to have one.  The internet economy has many examples (including the internet itself).  We generally think of the network effect in terms of “positive network externalities,” but there are down sides as well. 

Robert Frank has written about the subtle and profound network effects of status (and status income) competition (see his books Luxury Fever, The Winner-Take-All Society, and Falling Behind).  With positional goods, a goodly portion of their value comes from how many (or few) others possess the same of similar items, a network effect, if inverse to that of telephones and Facebook.  If everyone one knows has a 10,000 square foot house, that become the norm.  And in a social environment in which aspirations are to exceed the norm, positional competition pushes up average sizes well beyond what the material utility justifies.  In such cases, regulations can solve the coordination problems (I won’t do it as long as no one else does) without reducing satisfaction  

Every Night This Week on the PBS NewsHour website: Merle Hazard

Pioneer of that musical subgenre pecuniary country Merle Hazard's new European country country songs will be rolled out this week (Jan. 24-28) on Paul Solman's segment of the NewsHour website.  Check out: Merle Hazard Makes Sen$e

Planet Money's "Ranking Cute Animals" Experiment

Planet Money--consistently one of the most thoughtful sources of news and analysis on the economy--recently conducted a clever experiment.  Inspired by Keynes' quote that the stock market is like a beauty pageant in which judges try to determine who everyone else will think is prettiest (not who they themselves think is prettiest.)   

Using photos of three cute animals (a kitten, a polar bear, and a loris), participants were asked to select the cutest one.  And then they were asked to select which one other participants would think is the cutest.  While only 50% thought the kitten was cutest, over 75% thought that others would think the kitten was cutest.  And as played out in the market, these are predictions that can make themselves come true (and reward a supposed widely appealing mediocrity over excellence). 

Two Kinds of Happiness--and the the influence of inequality

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

What sort of happiness was Jefferson et al. referring to here?  We can be pretty sure what was meant by “life,” and while the contours of liberty are much discussed there is general agreement of its essential core.  But happiness?  What exactly is it?

Researchers who study these sorts of things generally distinguish two types of happiness.  There is “hedonic” happiness, that everyday contentment (and the vacuous cheeriness the term calls to mind in common American usage).  But there is also a broader sense of “life satisfaction,” judged by the criteria of “wellbeing” and “the good life”—Aristotle’s “meaningful life” (eudaimonia).  Surely, the founding fathers were referring to happiness in this older, classical sense of fulfillment (and one firmly embedded in the collective as well as the private good.)

While Easterlin and others have pointed out that income above a certain level does not seem to affect hedonic happiness proportionately, new research does show that income plays a big role in overall life satisfaction.  Research by Daniel Kahneman, Angus Deaton (mentioned below) and others show that income is positively correlated with overall life-satisfaction (“happiness” in the sense of fulfillment).  Di Tell and McCulloch (2008) find a positive correlation between happiness and “absolute income, the generosity of the welfare state and (weakly) with life expectancy; it is negatively correlated with the average number of hours worked, measures of environmental degradation (SOx emissions), crime, openness to trade, inflation and unemployment” in OEDC countries.

This makes sense: we adjust our daily expectations to what is “reasonable” for us and our circumstances, and adapt our happiness to that norm.  But when we look back (or forward) over the broad sweep of possibilities, of what was obtainable and what was not in terms of life paths, we are struck more by what could have been.  And the more income one has, the smaller the universe of what-could-have-beens.

As I have discussed previously, we must expand our notion of poverty out from just income.  As Amartya Sen argues, poverty is also about a lack of freedom, the lack of capabilities and power to chart one’s own life course.  And we must consider poverty in all of its multiple dimensions (as do Sabine Alkire and James Foster at the Oxford Poverty and Human Development Initiative).  This new work does remind us that we should not forget the importance of income—income allows greater degrees of self-determination (Sen’s freedom) that lead to greater overall life satisfaction. 

BUT: poverty is also always relational, and so poverty is felt more intensely in situations of great inequality.  Eduardo Porter, in his new book The Price of Everything, notes that inequality often reduces folks’ motivations.  In winner-take-all games, people are less likely to exert effort and more likely to cheat.  Some inequality is good and necessary—the hard working and deserving should be awarded as in our meritocratic ideals. But too much inequality reduces the sense of common purpose and ground rules and erodes the desire to succeed. 

Deirdre McCloskey's Bourgeois Dignity, and Anthropology and Science

In her new book, Bourgeois Dignity, iconoclast economist Deirdre McCloskey makes an eloquent case for capitalism’s virtues.  It is at once erudite and fun truly fun to read—perhaps a first for the dismal science.  At times she may press forward with a Leibnizian optimisism, an enthusiasm that can brush aside serious critiques and shortcomings.  But she rightly reminds us of the enormous wealth created, and the drop in absolute poverty worldwide—the hockey stick of income levels of the last centuries.  And, for an anthropologist, she makes the important observation that the capitalist revolution was driven not only by technology and new modes of capital accumulation but more importantly by ideas and ideals, particular cultural traditions and values, and a rhetoric that valued bourgeois dignity. 

In the book, she uses the word “science” in its older, wider sense of “systematic inquiry,” which, as she notes:

Is what it means in every language except the English of the past 150 years: thus in Dutch wetenschap, as in kunstwetenschap [“art science,” an English impossibility], in German Wissenschaft as in die Geisteswissenschaften [the humanities, literally a very spooky sounding “spirit sciences’], or in French science as in les sciences humaines [serious and systematic inquiries concerning the human condition, such as studies of literature or philosophy or anthropology, literally “the human sciences,” another impossible contradiction in modern English], or plain “science” in English before 1850 or so.  Thus Alexander Pope in 1711: “While from the bounded level of our mind / Short views we take, nor see the lengths behind: / But more advanced, behold with strange surprise: / New distant scenes of endless science arise!”  He did not mean physics and chemistry.  John Stuart Mill used the science word in its older sense in all his works.  Confining the word to “physical and biological science,” sense 5b in the Oxford English Dictionary—which was an accident of English academic politics in the mid-nineteenth century—has tempted recent speakers of English to labor at the pointless task of demarcating one kind of serious and systematic inquiry from another.  McCloskey 2010: 38-39

 

McCloskey is writing of economic science and the ways that economists have fetishized a particular kind of hard science.  What she says, however, also applies to recent controversies among anthropologists about the scientific aspect of their discipline.

At last year’s annual meeting, the AAA voted to take out the word “science” from a long-range plan (although it remains in the statement of purpose, as long as we are splitting hairs).  

The New York Times reported: “The decision has reopened a long-simmering tension between researchers in science-based anthropological disciplines — including archaeologists, physical anthropologists and some cultural anthropologists — and members of the profession who study race, ethnicity and gender and see themselves as advocates for native peoples or human rights.” (Nicholas Wade in the NYT 12/9/2010; Anthropology a Science? Statement Deepens a Rift: http://www.nytimes.com/2010/12/10/science/10anthropology.html )

This is a broad stroke description, and many of us anthropologists would resist such easy categorization, but it is revealing.  Anthropologists are often well positioned to advocate for native peoples or decry human rights abuses—it is the nature of where we tend to work and with whom we tend to study.  

But ethnography and cultural anthropology is not about reifying a priori political positions but rather the dialectical construction of knowledge through engagement with the field.  It is as much inductive as deductive. 

What we cultural anthropologists do is certainly serious and systematic inquiry—science in this common sense of the word.  And what could be more appropriate for the discipline than to embrace this folk terminology.          

Happiness and Income

Would you rather be rich or happy?  You might think the one naturally brings the other, but it turns out not to be so simple.

One important factor is how we frame the alternatives.  Would you rather make $80,000 a year or $140,000?  It’s a no brainer.  But if framed, as Daniel Benjamin, Ori Heffetz, Alex Reese-Jones, and Miles Kimball did in a recent study: would you prefer to earn $80,00 a year and sleep 7.5 hours a night or $140,000 and sleep 6 hours?  When framed this way, 70% of folks said that would prefer more sleep. (see http://www.economist.com/node/17578888)

 

Or, as my colleague Bob Frank has present it, would you prefer to live in a 4000 sq. ft. house with a 45 minute commute or a 2500 sq. ft. house with a 10 minute commute?  Or what about if the smaller house were closer to friends and family?  Often, what seems at first blush to be an obvious choice (bigger is better) becomes much more complicated considering all of the (often social) implications.  And lots of research shows that investment in social relations has a big impact on long-term happiness.

In the mid 1970s, economist Richard Easterlin made a remarkable observation that seriously challenged the simple equation of money=happiness.  The Easterlin Paradox holds that overall hedonic happiness within countries does not correlate with higher GNP per head between counties (above a certain level, often cited by Richard Layard as $15,000). 

But a lot rests on what “happy” means.  Folks who try and measure such things distinguish between an immediate here-and-now happiness (“hedonic” happiness: how happy are you right now?) and longer term life-satisfaction (wellbeing: how satisfied are you with your life as a whole these days?).

For hedonic happiness, the immediate evaluation of one’s present state does not dramatically increase with income (below a certain level).  Daniel Kahneman and Angus Deaton (2010) argue that this is due to the psychological phenomenon of adaptation: we are adapted to our social contexts and measure of day-to-day ups and downs in terms of the norms of our lives and social worlds.  

But, it is a different story for overall life satisfaction.  This longer term view, assessing the full sweep of one’s life, tends to be correlated with income.  As Kahneman and Deaton observe, “high income buys life satisfaction but not happiness.” 

The geography of life satisfaction:

From: Wikipedia entry on Happiness Economics