The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [14]
On the contrary, economics recognizes that social welfare will certainly depend on more than money and the things money can buy. For example, it will depend on physical security and the rule of law, on the quality of the environment, and on the civility of everyday life. These aspects of society and many others entirely unrelated to income and wealth contribute to each individual member’s welfare and therefore the aggregate. What’s more, economics also explicitly recognizes the importance of different preferences and even moral choices. The preferences of each person are equally valid, whether they’re material or spiritual, ascetic or consumerist. Whatever the preferences of the society and its members, the central question for economists is then how to allocate resources in order to achieve them as efficiently as possible. “Social welfare” should be maximized, but it can be a multidimensional and capacious concept.
However, this standard economics approach to social welfare as depending on a wide variety of aims and emotions has recently been overshadowed by the emergence of “happiness” as the main or only candidate for assessing social welfare. A number of prominent scholars (including economists) argue that we should only use that lens to assess how societies are organized, and therefore what they should make their top economic and political priorities.10 The “happiness” approach seeks to sum up the many aspects of welfare considered in conventional economics in a single idea or measure. Governments are then urged to aim to maximize the sum total of happiness.
This approach is a descendant of utilitarian philosophy, first set out in the nineteenth century by thinkers such as Jeremy Bentham and John Stuart Mill. Their recipe for social welfare is usually described in shorthand as the greatest happiness for the greatest number. Some modern happiness theorists such as Richard Layard work explicitly in the utilitarian tradition. It is a distinguished philosophical tradition that was most notably continued in the twentieth century by John Rawls in his landmark Theory of Justice. It is also a controversial approach, because in its own way emphasizing happiness (or “utility” or “well-being”) as the sole measure of welfare is just as reductionist and inadequate as saying only the pursuit of income matters. Indeed, almost all other approaches to ethical rules for the good life would say that social welfare—the good society—has several dimensions, and sometimes other principles should outweigh happiness.
In fact, the psychological state of happiness has not until quite recent times featured prominently in the centuries-long debate about the meaning of life. Aristotle, who set the framework for all subsequent discussions of ethics, emphasized the living of a virtuous life and the development of character. It was not until the late eighteenth century that individual psychological well-being became more prominent as an issue. America’s Founding Fathers of course enshrined the right to life, liberty, and the pursuit of happiness. And as already noted, the nineteenth-century utilitarian philosophers wove happiness effectively into the debate about what makes for a just society. The concept of utility also became a central analytical tool in economics. Individuals are assumed to try to maximize their utility, which will depend on their preferences and be constrained by their income, talents, and effort. Individual welfare does depend on utility. But even among the utilitarians there was a vigorous debate about whether utility could be boiled down to individual happiness.
Indeed, John Stuart Mill, one of the first and certainly the best of the utilitarian philosophers, acknowledged that the pursuit of happiness was an inadequate principle for either personal or social welfare—better Socrates than a happy pig, as famously