Monday, December 29, 2014
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 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.
Tuesday, December 2, 2014
Third Wave Coffees and Maya Farmers in Guatemala
$500 a pound coffee? Yes, the very best coffees these days are selling for astronomical prices. The $500/lb lot (from El Injerto in Guatemala) was a record, but the Wall Street Journal recently reported on the rising auction prices for so-called Third Wave coffees:
Commodity coffee prices are set by the New York C Price (which, today, is around $187 per hundredweight). But market demand is increasing for the highest quality coffees, those scoring in the upper 80s and above 90 on a 100 point cupping chart. And prices for these beans are rising fast.
Yet, The Guardian says of these new craft brews: "it's pricey, but farmers aren't getting rich." Guatemala is ground zero for the Third Wave coffee boom, and while it is true that farmers aren't getting rich, research Bart Victor and I are conducting shows that these mostly Maya small holding farmers have benefited from the market boom--and have high hopes for coffee. In my new book The Good Life, I look at the lives of these coffee farmers
Still the market is imperfect, and small farmers growing quality coffee often have a hard time selling it as such (rather than to middlemen, who mix it with undifferentiated lots). As The Guardian article reports, "those hoping to change these industries are betting on a mix of direct relationships between farmers and manufacturers, and new business models that help to distance specialty products from commodity prices."
Yet, The Guardian says of these new craft brews: "it's pricey, but farmers aren't getting rich." Guatemala is ground zero for the Third Wave coffee boom, and while it is true that farmers aren't getting rich, research Bart Victor and I are conducting shows that these mostly Maya small holding farmers have benefited from the market boom--and have high hopes for coffee. In my new book The Good Life, I look at the lives of these coffee farmers
Still the market is imperfect, and small farmers growing quality coffee often have a hard time selling it as such (rather than to middlemen, who mix it with undifferentiated lots). As The Guardian article reports, "those hoping to change these industries are betting on a mix of direct relationships between farmers and manufacturers, and new business models that help to distance specialty products from commodity prices."
Tuesday, November 25, 2014
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.
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
Tuesday, November 11, 2014
Monday, November 3, 2014
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.
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.
Thursday, October 30, 2014
Merle Hazard on the Fed's Dual Mandate
Merle Hazard's new single, Dual Mandate, entertains and elucidates as he explains the Federal Reserve's core tension: "Rich folks like to see the currency strong / But the average Joe’s not overjoyed if he’s destitute, and unemployed." Check out the PBS report, with cometary from Paul Krugman and Charles Calomiris, and see the full video:
Saturday, October 11, 2014
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.
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.
Saturday, October 4, 2014
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
Tuesday, September 30, 2014
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.
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.
Tuesday, August 12, 2014
German Lessons
Not so long ago Germany served as a cautionary example for the Anglo-American economies. After the success of the post-war economic miracle (the Wirtschaftswunder), by the 1980s Germany was best known for its generous welfare state, chronically high unemployment rates, and slow growth. Donald Rumsfeld's dismissive quip about "Old Europe" was meant to invoke all these ills and an accompanying political malaise.
But following the 2008 financial crisis, Germany emerged as a political-economic role model for the world. Policies to cushion workers from layoffs kept unemployment low and consumer demand steady, and the country's long-standing fiscal austerity allowed it to keep its southern neighbors afloat during the debt crisis. The 12 July Schumpeter column in The Economist reports that businesspeople and government officials from around the world are making the pilgrimage to Germany to learn from its Mittelstand (midsized manufacturers) sector.
In my new book, The Good Life: Aspiration, Dignity, and the Anthropology of Wellbeing, I look at how the Mittelstand system inspires loyalty and promotes a sense of dignity and security among workers.
Tuesday, August 5, 2014
Brazil's Middle Class and the Price of Coffee in New York
It looks like Brazil will surpass the U.S. this year as the world's biggest consumer of coffee. The Wall Street Journal reports that this is driving up global prices. Coffee futures (the "C price" as it is known in the trade) reached $1.95 a pound last Thursday, its highest since the price collapse in 2011. This is good news for the smallholding Maya farmers in Guatemala who produce high-altitude, high-quality coffees. (I have previously discussed high-end coffee and Maya farmers and the research carried out with Bart Victor.)
It also reflects a change in global political and economic relations (as discussed here in more detail)--the rise of Brazil as a foreign aid donor, middle class consumer, and politically self-confident country.No longer just a supplier of the raw materials we need for our consumer goods, but a competitor driving up prices of consumer goods (coffee as well as Miami real estate), an emerging world power whose positions we need to engage and not assume we can dictate.
Saturday, July 26, 2014
The Political Economy of Malnutrition
Almost half of Guatemalan children under five are malnourished, the vast majority rural Maya kids. This is a hidden human tragedy of epic proportions, each of these lives stunted - corporeally and figuratively - just as they are getting started. While we should not reduce this to just economic impact, it is nonetheless significant that the World Bank estimates that chronic malnutrition costs Guatemala hundred of millions of dollars a year in lost GDP. (See this recent PBS Newshour report that features Roger Thurow.)
Yet Guatemala is not a poor country. The GDP per capita of about $4000 may seem low, but worldwide it puts the country at the lower end of "middle income countries." Guatemala does have a very high gini index of inequality, and by any measure rural Maya peoples are the most disadvantaged. Such structural conditions directly affect health and nutrition, what Paul Farmer calls structural violence. Jonathan Metzl advocates for what he terms structural competency in clinical interventions, which calls on an ethnographic sensibility to understand root causes and larger contexts.
In Guatemala, efforts led by Dr. Peter Rohloff through Wuqu' Kawoq have taken a holistic approach to understanding malnutrition. In a new paper in Maternal and Child Nutrition, Rohloff and colleagues find that mothers often lack autonomy in making food decisions and that stunting is not recognized as such when it is the norm for the community. Most surprisingly, they find that land ownership, even among upwardly mobile farmers growing broccoli and other crops for export, is not correlated with a drop in childhood chronic malnutrition. In the vein of Farmer and Metzl, understanding the full context here certainly includes the political economic structures but also, crucially, the dynamic trajectories of cultural change, including the appeal of junk food.
In the Wall Street Journal, Matt Ridley argues that one of the smartest forms of foreign aid is in malnutrition prevention and treatment: for every $1 invested in malnutrition, $59 in societal benefits are produced. One of the best investments in Guatemala, then, is Mani+: see what we are doing about malnutrition through the Mani+ project at www.maniplus.org .
Yet Guatemala is not a poor country. The GDP per capita of about $4000 may seem low, but worldwide it puts the country at the lower end of "middle income countries." Guatemala does have a very high gini index of inequality, and by any measure rural Maya peoples are the most disadvantaged. Such structural conditions directly affect health and nutrition, what Paul Farmer calls structural violence. Jonathan Metzl advocates for what he terms structural competency in clinical interventions, which calls on an ethnographic sensibility to understand root causes and larger contexts.
In Guatemala, efforts led by Dr. Peter Rohloff through Wuqu' Kawoq have taken a holistic approach to understanding malnutrition. In a new paper in Maternal and Child Nutrition, Rohloff and colleagues find that mothers often lack autonomy in making food decisions and that stunting is not recognized as such when it is the norm for the community. Most surprisingly, they find that land ownership, even among upwardly mobile farmers growing broccoli and other crops for export, is not correlated with a drop in childhood chronic malnutrition. In the vein of Farmer and Metzl, understanding the full context here certainly includes the political economic structures but also, crucially, the dynamic trajectories of cultural change, including the appeal of junk food.
In the Wall Street Journal, Matt Ridley argues that one of the smartest forms of foreign aid is in malnutrition prevention and treatment: for every $1 invested in malnutrition, $59 in societal benefits are produced. One of the best investments in Guatemala, then, is Mani+: see what we are doing about malnutrition through the Mani+ project at www.maniplus.org .
Monday, July 21, 2014
The Moral Obligations of Corporate Tax Avoidance
Milton Friedman, the free-market economist whose perspective defined the Chicago School, famously held that managers' absolute ethical obligation is to maximize returns for stockholders. To do otherwise would be tantamount to stealing from them, he argued in an influential 1970 NY Times Magazine piece ("The Social Responsibility of Business is to Increase Its Profits").
Fast forward to 2014. Professor Friedman's ideas have taken hold in boardrooms and policy circles to an extend most academics could never dream of, and they lead to a troubling argument for the current wave of "inversion deals," merging with a smaller foreign firm and moving headquarters abroad to shelter profits from U.S. corporate taxes (among the highest in the world, although with so many loopholes effective rates are often low). Indeed, I heard one analyst remark that it is boards' fiduciary obligation to move a company abroad if it increases shareholder value.
This is an issue not just of business or economics, but of identity, corporate and individual. If a company's future is linked (conceptually and materially) to the collective prosperity of a city, region, or country, then moving operations to avoid taxes would be unwise. But if a company's peer community are other large transnational corporations (and not the people who inhabit a particular place), then share values trump local loyalties.
The trend of inversion deals converges with recent, seemingly serious, debates over the value of public infrastructure in private gain. Here too, short term thinking comes at the expense of long term planning, to all our detriment.
Fast forward to 2014. Professor Friedman's ideas have taken hold in boardrooms and policy circles to an extend most academics could never dream of, and they lead to a troubling argument for the current wave of "inversion deals," merging with a smaller foreign firm and moving headquarters abroad to shelter profits from U.S. corporate taxes (among the highest in the world, although with so many loopholes effective rates are often low). Indeed, I heard one analyst remark that it is boards' fiduciary obligation to move a company abroad if it increases shareholder value.
This is an issue not just of business or economics, but of identity, corporate and individual. If a company's future is linked (conceptually and materially) to the collective prosperity of a city, region, or country, then moving operations to avoid taxes would be unwise. But if a company's peer community are other large transnational corporations (and not the people who inhabit a particular place), then share values trump local loyalties.
The trend of inversion deals converges with recent, seemingly serious, debates over the value of public infrastructure in private gain. Here too, short term thinking comes at the expense of long term planning, to all our detriment.
Thursday, July 10, 2014
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.
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.
Tuesday, July 8, 2014
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.
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.
Saturday, May 3, 2014
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.
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.
Wednesday, April 30, 2014
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.
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.
Thursday, February 27, 2014
Cash on the Table: Markets, Values, and Moral Economies
A great deal is at stake in understanding the moral dimensions of economic behavior and markets. In this volume, we bring together anthropologists, economists, and management scholars to look at the moral implications of markets. Anthropologists tend to focus on the corrosive effects of markets on traditional lifeways and the ways in which global markets disadvantage marginalized peoples. Economists often have difficulty recognizing that markets are embedded in particular social and political power structures and that “free” market transactions are often less free than we might think. If anthropologists could view markets a bit more ecumenically and if economists could view them a bit more politically, then great value—cash on the table—can be found in bringing these perspectives together.
Tuesday, February 18, 2014
German Works Councils, the UAW, and VW's Stakeholding Culture
Workers at VW's Chattanooga, Tennessee, plant rejected UAW unionization by a vote of 712 to 626, the NY Times reports. This was a blow not only to the union, but to VW management as well. In a stance U.S. auto executives found as foreign as month-long holidays, VW leaders not only did not oppose the organization move, they seemed to welcome it as a way to introduce works councils.
By law and corporate culture, VW takes seriously the German model of "co-determination," with labor treated as stakeholders alongside stockholders. And they have exported this system of labor relations from their home in Wolfsburg to factories around the world.
The practice of co-determination is built around "works councils," tiered organizations of employee representatives (blue and white collar) elected by their peers. At the grassroots level, shop-floor works councils help organize employee schedules and make tweaks in the production line. Two years ago, middle management works councils successfully lobbied VW to have its corporate Blackberry server to stop sending message to employee's devices 30 minutes after their work day ends (and begin again 30 minutes before the next shift).
At the upper level, works council representatives hold half of the seats on the company's supervisory board, which introduces new voices and incentives in boardroom deliberations. VW obviously thinks this approach brings value, as they have implemented the system abroad.
So, with VW supporting the union, how did it lose this crucial vote? Union supporters have pointed out that the vote was much closer than other southern auto plant votes in recent years. And Republican politicians and pro-business groups took an aggressive, to the point of hysterical, public stance against the union (even threatening future expansion of the plant if the UAW won).
In fact, in the quotes I have read, workers are very open to works councils, and see VW as a good employer. The vote, then, should be seen as a commentary by basically satisfied workers on the UAW's confrontational model of labor relations, a perceived affinity for striking over stakeholding.
Paradoxically, U.S. labor laws meant to protect worker rights appear to prohibit the works council model in the absence of a union, thwarting the sort of organization that both labor and management prefer.
By law and corporate culture, VW takes seriously the German model of "co-determination," with labor treated as stakeholders alongside stockholders. And they have exported this system of labor relations from their home in Wolfsburg to factories around the world.
The practice of co-determination is built around "works councils," tiered organizations of employee representatives (blue and white collar) elected by their peers. At the grassroots level, shop-floor works councils help organize employee schedules and make tweaks in the production line. Two years ago, middle management works councils successfully lobbied VW to have its corporate Blackberry server to stop sending message to employee's devices 30 minutes after their work day ends (and begin again 30 minutes before the next shift).
At the upper level, works council representatives hold half of the seats on the company's supervisory board, which introduces new voices and incentives in boardroom deliberations. VW obviously thinks this approach brings value, as they have implemented the system abroad.
So, with VW supporting the union, how did it lose this crucial vote? Union supporters have pointed out that the vote was much closer than other southern auto plant votes in recent years. And Republican politicians and pro-business groups took an aggressive, to the point of hysterical, public stance against the union (even threatening future expansion of the plant if the UAW won).
In fact, in the quotes I have read, workers are very open to works councils, and see VW as a good employer. The vote, then, should be seen as a commentary by basically satisfied workers on the UAW's confrontational model of labor relations, a perceived affinity for striking over stakeholding.
Paradoxically, U.S. labor laws meant to protect worker rights appear to prohibit the works council model in the absence of a union, thwarting the sort of organization that both labor and management prefer.
Friday, February 14, 2014
Thursday, February 13, 2014
Romance, Wellbeing, and the Work of Love
For a long time, historians thought that romantic love (as we understand it, in a Hallmark Valentine's kind of way) was a Western invention, constructed by the romantic troubadours in French courts of the thirteenth century (see this piece by Catherine Winter).
Recent years, and the rise of brain scanning technologies and evolutionary psychology, have seen the conventional wisdom shift. Most explanations of romantic love these days focus on serotonin and dopamine levels, blood flow and MRIs; and these biological mechanisms are postulated to have emerged early in human history to promote pair bonding and care of our especially helpless young.
But it does not have to be either social construction or evolutionary mandate. Social and psychological triggers can flip the switch on chemical processes in our brains. This is the argument I make on a new PRI show titled The Really Big Questions, hosted by Dean Olsher. My bit starts at 38:00 into the episode.
In previous posts I have argued that wellbeing requires a lot of not always pleasurable work. Fulfillment is distinct from giddy happiness; and it derives from the hard work of becoming the sort of person you want to be. Likewise, as I claim in the Love episode of The Really Big Question, more than biochemical, and it requires a lot of hard work.
Recent years, and the rise of brain scanning technologies and evolutionary psychology, have seen the conventional wisdom shift. Most explanations of romantic love these days focus on serotonin and dopamine levels, blood flow and MRIs; and these biological mechanisms are postulated to have emerged early in human history to promote pair bonding and care of our especially helpless young.
But it does not have to be either social construction or evolutionary mandate. Social and psychological triggers can flip the switch on chemical processes in our brains. This is the argument I make on a new PRI show titled The Really Big Questions, hosted by Dean Olsher. My bit starts at 38:00 into the episode.
In previous posts I have argued that wellbeing requires a lot of not always pleasurable work. Fulfillment is distinct from giddy happiness; and it derives from the hard work of becoming the sort of person you want to be. Likewise, as I claim in the Love episode of The Really Big Question, more than biochemical, and it requires a lot of hard work.
Monday, February 3, 2014
Economic Lessons from Abroad: Workers, Wages, and Inequality
There are many varieties of capitalism, and, given our current travails, we in the U.S. are starting to realize that we may have a lot to learn from other ways of organizing the economy.
By law, half of the board of directors at German companies are elected by the workers through a system of "works councils." This is a remarkable fact, and introduces all sorts of different incentives into corporate strategy (as compared to a narrow focus on shareholder value).
Adam Davidson, writing in the NY Times Magazine this week, notes the "beneficial constraints" the German system of worker/capital "co-determination" has on manufacturing there. Similarly, Davidson shows how Harley Davidson has worked with his highly paid and skilled workers to turn around their failing production. He wonders if this would have been possible without experienced union workers.
(I write about co-determination in my new book, and have blogged about VW's work's councils and their efforts to institute one at their new Chattanooga facility.)
And it is not just our other OECD countries that have lessons--and cautionary tales--to offer. Levels of income inequality in the U.S. have over the last decades approached the level of developing countries. The Times today reports that middle class consumption is steadily eroding--from hotels to appliances to restaurants, the high-end and the low-end are growing at the expense of the middle. The Harley workers appear to be the exception. This may result in what Alain de Janvry, writing about developing countries, calls a "disarticulated economy," put simply, one in which workers cannot buy what they make, the opposite of the Fordist promise (to pay workers enough to afford the cars they make).
Brazil in recent years has made great strides in re-articulating its economy, pulling millions into the middle class and stimulating domestic consumption. Perhaps, then, we should look to Brazil as well as to Germany for economic policy ideas.
By law, half of the board of directors at German companies are elected by the workers through a system of "works councils." This is a remarkable fact, and introduces all sorts of different incentives into corporate strategy (as compared to a narrow focus on shareholder value).
Adam Davidson, writing in the NY Times Magazine this week, notes the "beneficial constraints" the German system of worker/capital "co-determination" has on manufacturing there. Similarly, Davidson shows how Harley Davidson has worked with his highly paid and skilled workers to turn around their failing production. He wonders if this would have been possible without experienced union workers.
(I write about co-determination in my new book, and have blogged about VW's work's councils and their efforts to institute one at their new Chattanooga facility.)
And it is not just our other OECD countries that have lessons--and cautionary tales--to offer. Levels of income inequality in the U.S. have over the last decades approached the level of developing countries. The Times today reports that middle class consumption is steadily eroding--from hotels to appliances to restaurants, the high-end and the low-end are growing at the expense of the middle. The Harley workers appear to be the exception. This may result in what Alain de Janvry, writing about developing countries, calls a "disarticulated economy," put simply, one in which workers cannot buy what they make, the opposite of the Fordist promise (to pay workers enough to afford the cars they make).
Brazil in recent years has made great strides in re-articulating its economy, pulling millions into the middle class and stimulating domestic consumption. Perhaps, then, we should look to Brazil as well as to Germany for economic policy ideas.
Distribution of Value in Anglo-American and German Firms (based on Vitols
2004:371)
|
|
Anglo-American
(early 1990s)
|
Germany (early
1990s)
|
Germany (late
1990s)
|
|
labor
|
62.2%
|
85.3%
|
78.4%
|
|
credit
|
23.5%
|
5.4%
|
4.3%
|
|
government
|
14.3%
|
5.2%
|
6.8%
|
|
retained earnings
|
3.2%
|
5.2%
|
7.8%
|
|
dividends
|
15.0%
|
2.0%
|
2.8%
|
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