Back to the Drawing Board : Justice, Equality

On Desert and the Glass Ceiling

Donny with an A — Thu, 18 Sep 2008 03:03:00 GMT

So I've been thinking a little about Hayek's point that there's nothing about an overall state of affairs which arises from the decentralized actions of individuals in a market economy which could coherently be an "injustice." As I had said, I agree with Hayek, and I've been accordingly trying to think of a way to understand the concept of distributive justice in other terms. But on page 49 of his book, Elements of Justice, David Schmidtz raises an interesting point in discussing the idea of "desert":

...there is something slightly misleading, or at best incomplete, in assessing a society by asking whether people get what they deserve. If desert matters, then often a better question is, do people do something to deserve what they get? Do opportunities go to people who will do something to be worthy of them?

It seems to me that while there's something very intuitive about this point, there's a tension to be acknowledged. To flesh out Schmidtz's point, he offers on page 46 that "A person who receives opportunity X at t1 can be deserving at t2 because of what she did when given a chance." The idea here, then, seems to be that if a person does justice to the opportunity that she's given in the period between t1 and t2, then she proves that she deserved it at t1.

But while I think that the above may be a necessary condition for desert, I'm not sure if it's sufficient. What I have in mind is the interview where a man and a woman are being considered for a job. We might imagine that both would, if given the chance, do justice to the opportunity they were given: both are fully competent to do the job, and both would work hard at it. We might further say that both would likely succeed. But let's say that the woman candidate was better qualified for the job than the man, and it was simply a matter of prejudice on the part of the prospective employer which led him to choose the man. Even though the man would end up doing justice to the opportunity, I still think there's a sense in which we can say that he didn't really deserve the job, and that the woman did.

I wouldn't want to say that the man in the above example is entirely undeserving of the job. For his part, he did everything that we would have wanted him to do. But there is, I think, a sense in which he will have gotten something that he didn't deserve, even if he did everything he could to do justice to the opportunity he got. I definitely need to think about this some more, but it's a start.

Update:

Incidentally, Schmidtz makes more or less the same point in the next chapter in discussing whether a person who does not deserve an opportunity can still do justice to it. Sorry, Dr. Schmidtz! This seems to be a common theme...

The one thing that I think can be preserved from this post is the idea that something needs to be said about the person who is deprived of an opportunity that she did deserve because someone else got an opportunity he didn't deserve, even though the latter did justice to the opportunity once he got it, and therefore has "done all anyone could ask," to put it as Schmidtz does on page 52. Something...but I'm not sure what.

Away From Distributive Justice, Towards Collective Responsibility

Donny with an A — Sat, 30 Aug 2008 06:52:00 GMT

Here's another cool Hayek quote, from chapter 5 of his New Studies in Philosophy, Politics, Economics and the History of Ideas, entitled "The Atavism of Social Justice":

"...there can be no distributive justice where no one distributes. Justice has meaning only as a rule of human conduct, and no conceivable rules for the conduct of individuals supplying each other with goods and services in a market economy would produce a distribution which could be meaningfully described as just or unjust. Individuals might conduct themselves as justly as possible, but as the results for separate individuals would be neither intended nor foreseeable by others, the resulting state of affairs could neither be called just nor unjust" (58).

I've been arguing basically that point of view for a while, and this is far from the first time I've heard it articulated by someone else, but I really like the way Hayek put it here. But it also got me thinking. Hayek does use as support for his argument the fact that the results of the market process are not foreseeable. And it does seem to me that a great many people see certain regrettable outcomes of the market process as quite foreseeable enough to dodge this argument.

"Perhaps the precise outcomes of the process are not foreseeable," someone might argue, "but we can easily foresee that certain things will likely occur, like the occasional occurrence of instances of extreme need. Even if, as a society, we think ourselves justified in 'playing the game' of catallaxy (as Hayek puts it on page 60 and later throughout the essay), we nevertheless might be able to point to certain predictable and regrettable outcomes of that game and demand that they be 'cleaned up.' It's on those grounds that I claim that we have some sort of obligation to ensure that no one is left behind 'by' our playing the game of catallaxy. I cannot articulate, necessarily, exactly what that obligation entails, or what is its nature, but to deny the existence of any such obligation seems simply wrong."

I think that would be a pretty fair line of attack, and I think it deserves an answer. I'm not sure what I'll find, but the question seems to become one which is perfectly tractable within my notion of rights and duties. So I pose for myself the following questions: Do we have a duty to help those in desperate need, either collective or individual? How might we understand such a duty, and what would it entail?

I'll be working on an answer to those questions over the coming months.

Respecting the Rich Victim: Boundary Crossings and Critical Opportunities

Donny with an A — Sat, 01 Mar 2008 00:49:00 GMT

[Cross-posted on the parent blog]

I wrote this paper last semester for my Political Philosophy class, and I figured I should probably post it here, since it's relevant to the kinds of things I talk about on this site. Without further ado:

----------------------------

Introduction

In Anarchy, State, and Utopia, Robert Nozick sets out to build a framework for an ideal social order. His approach is somewhat unusual for Utopian literature. As Ludwig von Mises famously pointed out, Utopians typically explain how “…in the cloud-cuckoo lands of their fancy, roast pigeons will in some way fly into the mouths of the comrades, but they omit to show how this miracle is to take place.”[1] So rather than dwelling on prophecies of a specific Utopian paradise, Nozick avoids Mises’ criticism by setting his sights lower, focusing on how people could live together harmoniously, striving for personal goals while respecting each other as dignified individuals.[2] Such a world, Nozick believed, would be a Utopia. And for what it’s worth, I think so to.

As a libertarian myself, I agree with the basic thrust behind his argument. Nozick’s framework is built upon the notion of respect for others. He wholeheartedly accepts the Kantian characterization of people as ends-in-themselves, and bases his entire argument on the inherent correctness of treating people the way that they ought to be treated. To Nozick, this means that people are not to be used or sacrificed in order to achieve other ends, and that limits must be honored on the range of acceptable interactions that one can have with other individuals without their consent.[3] At first glance, these principles seem obviously right.

However, in this paper, I will probe Nozick’s conception of appropriate respect, in order to better understand its application to a particular sort of situation, which I will call the “Rich Victim Problem.” It is my contention that the Rich Victim Problem creates real problems for Nozick’s conception of appropriate respect. But before tackling the problem, I want to outline Nozick’s views concerning compensation and boundary crossing in ordinary circumstances.

Compensation in the Absence of Consent

In many situations, individuals want to perform actions that they know will infringe upon the rights of others. Nozick allows that in some situations, going forward with the action might be justifiable, provided that compensation is paid later. He explains, “The reason one sometimes would wish to allow boundary crossings with compensation…is presumably the great benefits of the act; it is worthwhile, ought to be done, and can pay its way.”[4] In other words, if in full knowledge of the fact that she would have to compensate her victim for the damage she caused to him, an individual still wanted to proceed with her course of action, then it would mean that causing the damage was more valuable to her than the compensating value which she would lose. And because her victim would be compensated for his losses, no one would end up being made worse off by the action.

But Nozick is quick to acknowledge that this idea applies only when it is consistent with having full respect for others. He writes, “…a system permitting boundary crossing, provided compensation is paid, embodies the use of persons as means…”[5] The reasoning behind this is somewhat difficult to understand. The most intuitive argument is illustrated in a claim by Gerald Sauer that “We all choose goals and purse them. And in pursuing our ends, we want our persons and our activities to be physically respected by others. We do not want others to injure us or to disrupt our activities without a compelling justification.” But if people were truly being compensated completely for all of the damage they undergo, then it is puzzling why they should object; they would be made no worse off than they would have been had their boundaries remained uncross.

Nozick’s own explanation is subject to the same objection. He claims that “…knowing they are being so used, and that their plans and expectations are liable to being thwarted arbitrarily, is a cost to people…”[7] But if people knew that they would be completely compensated for any damage caused to them, it might seem irrational for them to fear. Nozick seems to think that whether or not this is the case, people do nevertheless fear harms for which they will be compensated, and it would be disrespectful to create conditions in which such fear would be prevalent. For the sake of discussion, I will grant Nozick this point.

Getting prior consent before crossing any boundaries would seem to be in order, then. But Nozick recognizes that sometimes obtaining this permission is very difficult, or even impossible. Further, the actor might have very good reason to believe that she would be able to come to a prior agreement the victim if only she could properly negotiate with him. In these sorts of situations, Nozick points out that prohibition would be inefficient, as it would prevent the implementation of an entire group of actions which would produce a net benefit. Accordingly, he acknowledges that boundary crossings might be justifiable in some instances where it is difficult or impossible to obtain prior consent, provided that victims are completely compensated.

The Story of the Rich Victim

Having outlined Nozick’s views concerning boundary crossing and compensation, we can move onto the Rich Victim Problem. I will illustrate the Problem through the story of a fellow named Jerry who has just applied for a new job working at an architecture firm. Jerry is extremely poor, though he is not starving, and does not technically need the job to survive. But the job would be intellectually stimulating, and would completely change Jerry’s life, giving him a sense of purpose and value.

Jerry’s friend Sally works at the architecture firm, and has informed Jerry that the head architect wants to hire him over all of the other candidates. But the architect values enthusiasm very highly, and expects Jerry to follow up on his interview by noon. After noon, the architect will give the job to another applicant. So all Jerry needs to do is call by noon, and he will get the job.

But when he picks up the phone at 11:00 to call the head architect, Jerry discovers that the line is dead. He looks out his window, and sees that a branch has fallen from a tree, snapping the telephone wire running to his home. Jerry bolts out the door and across the street to his neighbor Lucy’s house. Lucy is a very wealthy woman who, for some reason, lives in an extravagant home in the middle of nowhere; Lucy’s and Jerry’s are the only houses for miles. Unfortunately, when Jerry arrives at Lucy’s door, he discovers that she is not home. He remembers suddenly that she has gone on a vacation, and will certainly not be returning within the hour.

As Jerry contemplates his horrible fate, he considers whether or not it would be justifiable for him to break into Lucy’s house to use her phone. He knows that the only way to get in would be to smash in one of her ostentatious windows, and even with his new job, he would never be able to come close to completely compensating her for the damage. At best, he could afford to pay a negligibly small fraction of the total.

But Jerry knows that Lucy’s wealth is so vast that she could easily replace whatever he broke; she would barely even notice the small decrease in her net worth. Jerry acknowledges that Lucy has a right to not have her window smashed in, but wonders if the importance of his phone call would justify him in smashing it anyway.

To Smash or Not to Smash?

To help us make sense of Jerry’s situation, it will help to introduce a bit of terminology. In her essay, “Self-Defense and Rights,” Judith Thomson writes:

“Suppose a man has a right that something or other shall be the case; let us say he has a right that p, where p is some statement or other, and now suppose that we make p false. So, for example, if his right is the right that he is not punched in the nose, we make that false, that is, we bring it about that he is punched in the nose. Then, as I shall say, we infringe his right. But I shall say that we violate his right if and only if we do not merely infringe his right, but more, are acting wrongly, unjustly in doing so.”[9]

Accordingly, we will seek to answer the following question: If Jerry smashed Lucy’s window despite being unable to compensate her for the damage, would he be infringing upon her rights, or would he be violating them?

Thomson notes that an individual must be compensated for infringements upon her rights,[10] and Nozick seems to agree. Further, it appears that if compensation were not paid, then both would say that the victim’s rights would have been violated. To this end, Nozick writes, “…some injuries may not be compensable; and for those that are compensable, how can the agent know that the actual compensation won’t be beyond his means?”[11] In the Rich Victim Problem, we have supposed that the agent knows for a fact that the actual compensation will be beyond his means. So on the face of it, it would seem like Nozick would clearly insist that Jerry not smash Lucy’s window.

But this seems curious in light of the reasons that Nozick wants to allow boundary crossings in the first place. He seems to justify them on the basis of net benefits; in fact, he specifically asserts that “The most efficient policy forgoes the fewest net beneficial acts…”[12] And in our story, it is clear that Jerry’s smashing Lucy’s window would produce a net benefit. Recall that Jerry’s life would be changed as a result of being hired, while the damage to Lucy’s window would barely produce a scratch in her enormous wealth. It may be true that there is no good way to compare utility between individuals, but it seems clear that in the Rich Victim Problem, we can fairly say that the magnitude of Jerry’s utility gain would far exceed that of Lucy’s loss.

The difficulty in Nozick’s thinking seems to be the result of treating compensation as being capable of accomplishing two different tasks at the same time. Nozick is clearly thinking that compensation makes up for the damage experienced by the victim, ensuring that her interests have not been harmed as a result of the invasion. In this regard his foundation is sturdy. But Nozick is also talking as if the act of compensation represented a direct transfer of gain from the boundary crosser to the victim. Otherwise, it would be unclear how he would expect a system of compensation to forego the fewest net beneficial acts. This is where he runs into trouble.

Suppose for a moment that we could somehow measure utility objectively, and compare it between Jerry and Lucy. If Jerry smashed Lucy’s window, he would gain a tremendous amount of utility, and Lucy would lose some utility. We might imagine that by smashing Lucy’s window, Jerry made Lucy worse off by some quantity of utility, X. We might also imagine that taking some quantity of money from Jerry, say $100, would cause a loss of the same amount of utility, X, for Jerry. But if we were to give the $100 to Lucy, the amount of utility she would gain would be far smaller than X. Perhaps the amount of money necessary to bring Lucy back to her original level of utility would be $50,000 (it was a really expensive window). In light of the disparity between the $100 and the $50,000, it becomes clear that when a victim and boundary crosser value the medium of compensation differently, the act of compensating the victim can not simultaneously accomplish both of the roles that Nozick implies that it can.

As a result, when Nozick characterizes boundary crossing without compensation as a violation of a victim’s rights, and thereby deems it worthy of prohibition, he creates the potential for an entire class of net beneficial actions to be foregone. And by Nozick’s own admission, this could mean that his would fail to be the most efficient policy. So when push comes to shove, what is most important? Should we prohibit the net beneficial actions in order to avoid sacrificing the interests of the victims for the sake of the boundary crossers?

We need a way to decide. In his essay, “Does Reason Tell Us What Moral Code to Follow and, Indeed, to Follow Any Moral Code at All?,” John Harsanyi poses a question that could help us with our choice: “Taking an impartial point of view, that is, disregarding what your own social position would be in either society, would you prefer to live in a society governed by the first moral code or in a society governed by the second?”[13]

It seems as though in answering this question, Nozick would want to err on the side of respect for individuals, and therefore take the side of the victims. And Nozick’s position appears defensible. Harsanyi points out that “No doubt, most of us would very much prefer to live in a society whose moral code requires people to respect individual rights and personal obligations, except in some very special situations…”[14] And so even if people in Jerry’s position were forced to forego net beneficial actions, we might still prefer to live in a society based on respect for victims’ rights.

This conclusion is strengthened by one of Nozick’s central arguments, which is that social benefits can never be an excuse to violate the rights of an individual. He argues:

“…there is no social entity with a good that undergoes a sacrifice for its own good. There are only individual people, with their own individual lives. Using one of these people for the benefit of others, uses him and benefits the others. Nothing more. What happens is something is done to him for the sake of others. Talk of an overall social good covers this up…To use a person in this way does not sufficiently respect and take account of the fact that he is a separate person, that his is the only life he has. He does not get some overbalancing good for his sacrifice, and no one is entitled to force this upon him…”[15]

It is clear that with regard to Lucy’s situation, Nozick’s argument describes things perfectly. To allow Jerry to smash Lucy’s window would be to do something to her for the sake of Jerry. Indeed, she would not get any overbalancing good for her sacrifice. And yet, I can not help but feel like Jerry is getting a poor deal. I feel badly for Jerry in a way that I usually don’t with regard to people who want to violate the rights of others. Is there anything that can be said on Jerry’s behalf, to support his smashing Lucy’s window?

Critically Important Opportunities

I believe there is. In her essay, “Some Ruminations on Rights,” Judith Thomson tells the following story:

“There is a child who will die if he is not given some drugs in the future. The only bit of that drug which can be obtained for him in the near future is yours. You are out of town, so we telephone you to ask. You refuse consent. You keep your supply of the drug in a locked box on your back porch.”[16]

Confronted with this scenario, Thomson wonders if it would be permissible to break into the locked box to take the drug, even though you had refused to consent to our doing so. She points out that the morality of this action would seem to have something to do with how much you valued the drug. If you valued the drug very highly, it would be difficult to say how we ought to proceed. But if you valued the drug very little, the proper course of action would be clear: we ought to take the drug. Thomson justifies her conclusion by pointing out that if you value the drug very little, and giving it away would save someone’s life, “…it is indecent for you to refuse to consent…”[17]

Thomson’s account raises an interesting possibility. Could it be that by insisting that your right to your drugs were respected, you were somehow disrespecting the child? It seems to me that this is exactly what Thomson is implying. But how does this view compare to Nozick’s?

It is clear that within Nozick’s framework, your refusal does not cross any boundary. By refusing consent, in effect what you are doing is depriving the child of an opportunity. Specifically, you are depriving the child of the opportunity to do something which can only be done by crossing one of your boundaries. Because in Nozick’s framework, boundaries are indicative of the respect to which one is entitled, he would need to say that it would be disrespectful for the child to cross your boundaries when you had specifically refused consent.

But Thomson is suggesting the opposite: it is disrespectful for you to refuse consent. The basis for this claim seems to be twofold. First, the child requires your drug in order to live. Second, you value the drug very little. An obvious principle can be drawn from these observations: It is disrespectful to refuse to allow a person to cross your boundaries if doing so is absolutely necessary to her, and allowing her to do so would harm you very little.

It seems to me that this principle is very much on the track to being correct. But some difficulties immediately present themselves. First, we have said nothing of compensation. For our purposes, we need not address the question of whether one would be entitled to compensation for a necessary boundary crossing in a case where the boundary crosser could afford to pay the compensation. I suspect that compelling arguments could be made on both sides, and I do not wish to attempt an adequate discussion of this issue here.

The question that concerns this essay is whether it would be disrespectful to refuse to allow a necessary boundary crossing in a case where the boundary crosser could not afford to compensate you for the minor inconvenience of her action. And to answer this question, I propose the following thought experiment. Imagine if you saw someone refusing to give the drug for the child, even though you knew it would be little bother if he gave the drug up. Would you not consider the owner of the drug to be repellent and monstrous? I certainly would. And if the child stole the drug, would you feel disdain for her blatant disregard for the man? I think not. Though I can provide no more substantive argument than that, I will suggest that the boundary crossing would be fully consistent with the child according all due respect to the owner of the drug, and that the refusal of consent displayed a clear lack of respect for the fact that child’s life was the only one she has.

Accepting this, we are one step closer to assenting to Jerry’s smashing Lucy’s window, but an obvious hurdle remains. In Thomson’s example, the child needs the drug to live; in Jerry’s case, he will survive whether or not he smashes Lucy’s window. Further, while the child would have died as a result of failing to take the drug, Jerry would only be left disappointed. And his disappointment, it seems, would only reflect his inability to sacrifice Lucy’s rights for his own interests. Typically, this is not the sort of disappointment which demands sympathy.

And yet, it seems like Jerry does deserve sympathy. His lost opportunity would not kill him, but it still seems that it would be awful for Jerry to lose out on it. Getting the job, we might say, is critically important to Jerry. Could it be fair to say that even critically important opportunities would justify crossing boundaries, regardless of whether compensation could be paid? Again, without offering a substantive argument in my favor, I will suggest that when the damage caused by the boundary crossing is very small, such an act would be justified. Appealing to intuition alone, then, I will adopt the principle that it is disrespectful to refuse consent to a boundary crossing which would do little harm to you, but would deprive the boundary crosser of a critically important opportunity, even if the boundary crosser would not be able to compensate you for the damage she caused.

If we agree to this principle, then it becomes clear that Jerry would be justified in smashing Lucy’s window. This would be true not because Jerry strongly desires to smash Lucy’s window, or because Jerry’s benefits would outweigh Lucy’s costs. Reasons like these would immediately fall prey to Nozick’s demand that we properly respect Lucy’s individuality. Rather, Jerry would be justified in smashing Lucy’s window because it is critically important to Jerry that he do so, and because it would harm Lucy very little. Or to put it another way, we could say that Jerry would be justified in smashing Lucy’s window because it would be disrespectful to not allow him to smash it.

By saying this, am I implying that Lucy does not have the right to not have her window smashed by Jerry? I do not believe so. It seems to me that it is because of Lucy’s right to not have her window smashed that we must have this conversation in the first place. Lucy does have the right to not have her window smashed, and violating it would be disrespectful of her right. What we are saying here is that by smashing Lucy’s window, Jerry infringes upon Lucy’s right, but does not violate it, because he is not acting wrongly. If the harm to Lucy were greater, or Jerry’s opportunity less critical, we might come to the opposite conclusion.

Operationalization

Thus it should be noticed that I have left two central terms undefined in my account so far. I have said nothing about what constitutes a critically important opportunity, and equally little about what constitutes a small harm to the victim. This has been by design, as I hope to avoid objections based on my definitions of those terms. I can only appeal to intuition in saying that however we define a critically important opportunity, Jerry’s circumstances represent one, and similarly, Lucy’s losses seem small enough to justify Jerry’s smashing the window.

This will not be a sufficient answer for someone seeking to put this principle into action. And it will not do to suggest that in the common law, vague guidelines such as these are rather common. My opponents might argue that “The beauty of the property rights approach…is that it need not become mired in…subjective quicksands. It assigns property to its rightful owners, and places the burden of purchase on those who would alter these allocations.”[18] If I seek to convince them, I would need to be able to avoid appeals to vague, subjective notions of comparative valuation.

There are two ways to proceed from here. The first is to suggest that perhaps there is no way to put my principle into action. Nozick himself points out, “Because great transaction costs may make the fairest alternative impracticable, one may search for other alternatives…These alternatives will involve constant minor unfairness and classes of major ones.”[19] It may be that we would prefer to live in a society which prohibited Jerry’s actions in order to avoid allowing objectionable rights violations in cases where our principle were not applicable, but where it would be impossible to determine that this were the case. It does not then harm my argument to say that Jerry would be justified in smashing Lucy’s window, but that we might never be able to form an adequate policy to allow this, and therefore we might simply end up punishing Jerry unfairly.

The other way to proceed would be to argue that there are ways to put my principle into action that would not be objectionable because of unfair comparisons of utility between individuals. It seems to me that this could obviously work in extreme cases. And because my principle is designed specifically for extreme cases, it may be that we would never feel the need to apply it in a situation where its applicability would be questioned.

But what of the possibility that an adjudicator would declare a harm to be insignificant, even though the victim subjectively felt it was severe, or that an individual would feel that an opportunity was critically important, though others could not understand why? Putting my principle into action likely would result in the potential for major unfairness in these sorts of scenarios. And to this possibility I have no response; if as a society, we would rather err on the side of the victim, then I can provide no objective argument in opposition.

Implications

I recognize that I have attempted here is nothing short of audacious. I also believe that what I have said makes a lot of sense. The implications of accepting my principle, however, might be too much for many people to stomach. Specifically, it seems like we could justify certain redistributive policies by applying it, where providing some critically important value to the needy would come at a comparatively insignificant cost to the victims.

I do not want to defend such an incendiary suggestion here. I will only suggest that we consider the possibility that this would be fair. As Nozick writes:

“…the term “redistributive” applies to types of reasons for an arrangement, rather than to an arrangement itself. We might elliptically call an arrangement “redistributive” if its major (only possible) supporting reasons are themselves redistributive…Finding compelling nonredistributive reasons would cause us to drop this label.”[20]

Perhaps what we have accomplished here is to provide such reasons. But I do not wish to get ahead of myself. For now, I will be satisfied if we agree that Jerry would be justified in smashing Lucy’s window, and that to say this does not imply any disrespect for Lucy whatsoever.

[1] Mises, L. von, 1990 (1920), Economic Calculation in the Socialist Commonwealth, page 2. Available online at http://www.mises.org/econcalc/econcalc.pdf.

[2] Nozick, R., 1974, Anarchy, State, and Utopia, Cambridge: Better Books, Inc., pages 333-334.

[3] Nozick, R., op cit., pages 30-31.

[4] Nozick, R., op cit., page 72.

[5] Nozick, R., op cit., page 71.

Sauer, G. L., 1982, “Imposed Risk Controversies: A Critical Analysis,” Cato Journal, Vol. 2, No. 1, page 234.

[7] Nozick, R., op cit., page 71.

Nozick, R., op cit., page 70.

[9] Thomson, J. J., 1986a, “Self-Defense and Rights,” in Rights, Restitution, & Risk, Cambridge: Harvard University Press, page 40.

[10] Thomson, J. J., 1986a, op cit., pages 40-41.

[11] Nozick, R., op cit., page 71.

[12] Nozick, R., op cit., page 73.

[13] Harsanyi, J. C., 1985, “Does Reason Tell Us What Moral Code to Follow and, Indeed, to Follow Any Moral Code at All?” Ethics, Vol. 96, No. 1, page 45.

[14] Harsanyi, J. C., op cit., page 47.

[15] Nozick, R., op cit., pages 32-33.

[16] Thomson, J. J., 1986b, “Some Ruminations on Rights,” in Rights, Restitution, & Risk, Cambridge: Harvard University Press, page 57.

[17] Thomson, J. J., 1986b, op cit., page 58.

[18] McGee, R. W., and Block, W. E., 1994, “Pollution Trading Permits as a Form of Market Socialism and the Search for a Real Market Solution to Environmental Pollution,” Fordham Environmental Law Journal, Vol. 6, No. 1, page 76.

[19] Nozick, op cit., page 77.

[20] Nozick, op cit., 27.

Does the Fact that Individuals Discount Entail the Existence of a Social Discount Rate?

Donny with an A — Fri, 15 Feb 2008 22:09:00 GMT

[Cross-posted on the parent blog]

In my last post, I discussed the idea of discounting as it relates to cost-benefit analysis. I reached the conclusion that discounting treats future people's interests as if they were less significant than our own, and that if cost-benefit analysis aims to make people the best off, then this seems like a bad practice. I received a reply from a fellow with the handle of TokyoTom, which said the following:

Donny, I don't think that you've at all demonstrated that we don't discount - viz., that we try to make decisions on the basis that the preferences of people who do not exist today should weigh as much as our own.

I would disagree with that conclusion myself. Clearly individuals act on the basis of their own preferences, which preferences may take into consideration the supposed preferences of others, including future generations. These others simply don't have a vote on what my preferences are - and is the collective actions of billions of individuals alive today that similarly make decisions that bring about tomorrow.

Tom (at least I assume his name is Tom) is absolutely right to say that individuals clearly act as though value in the future is worth less than the equivalent value today. If I were trying to argue that people actually do make decisions as if future people matter just as much as they do, I would be easily refuted. In fact, I would be hard pressed to believe even that people behave as though future people matter very much at all, never mind as though their interests were equal to their own.

But I never argued that individuals don't discount (in fact, I specifically acknowledged that they do), or that individuals consider future individuals to be just as important as themselves. Rather, I argued that discounting future damage in cost-benefit analysis is unjust. What's the difference? I'll try to illustrate with a series of examples.

Let's say that we're trying to decide whether to put a garbage dump in a neighborhood populated exclusively by an ethnic minority (say, Hmong folks). We perform a cost-benefit analysis to see what we should do. In the first scenario, let's say the Hmong folks in the neighborhood would prefer not to have the garbage dump in their neighborhood, and the folks who live outside of the neighborhood would prefer to have it there (not because of any malice, but rather because they would gain use from it). If (once we equalize for different valuation of money and all that) the cost-benefit analysis shows that the outsiders would be willing to pay more to have the dump than the Hmong folks would to not have it, then we'd say that there's a net benefit to putting the dump in; it's worth doing. And as far as we ignore all the problems with cost-benefit analysis (that is, we don't care what we do to the Hmong people as long as it represents a net gain, and we're okay with treating a single metric as properly representing the wellbeing of these people), then that's all there is to it. The cost-benefit analysis has worked exactly as advertised.

But now let's say that the outsiders didn't want the garbage dump because they would benefit from it, but rather because they're evil hillbillies and they despise the Hmong people. The benefit to them is not a self-interested benefit, but rather a benefit derived from the cost to others. Perhaps if we give this kind of benefit equal standing, the garbage dump goes in. But that seems like the wrong conclusion. We might say the same if the garbage dump doesn't go in because the Hmong people don't want the outsiders to get any benefit, even though they wouldn't really mind the dump being there. That's why most people who advocate cost-benefit analysis try really hard to ensure that the costs and benefits they're measuring reflect only the costs and benefits to the individuals they're surveying.

Accordingly, we wouldn't want to say that the importance of future individuals' wellbeing can be accounted for in cost-benefit analysis by seeing how present people value their wellbeing. What matters is how much they value their wellbeing. Once we recognize this, then it becomes clear what we do when we discount their costs and benefits compared to current people's costs and benefits. What we do is to say that their costs and benefits are less significant than those of present people. And it is this practice which I claim to be unjust.

Cost-Benefit Analysis, Discounting, and Climate Change

Donny with an A — Fri, 15 Feb 2008 04:29:00 GMT

[Cross-posted on the parent blog]

I wrote a paper last semester on the notion of discounting future damage (I'll explain what this means below), and I wanted to revisit the issue now that I've done a little more research, to see if I still agree with what I wrote then. Basically, my paper examined how our views of the proper role of discounting are dependent on our views about what social policy is trying to achieve, and what kind of problem climate change poses. Rather than putting my whole paper online and critiquing it, I'm going to split it up into pieces and post each separately. In my paper I examined four paradigms: (1) The goal of social policy should be to allocate resources to their most efficient uses, and climate change represents a challenge to accomplish this task in a changing world; (2) The goal of social policy should be to maximize the overall good, and climate change represents an obstacle in the way of achieving this goal; (3) Climate change represents an externality, and the goal of a climate policy should be to internalize the externalized costs; (4) Climate change represents an overenclosure of the commons, and the goal of a climate policy should be to remedy this injustice. In this post, I will first go over what I mean by "discounting future damage," and then I will address the first paradigm listed above.

So how does discounting play into discussions about climate change? The most significant impacts of climate change will not occur for a significant amount of time: we're talking decades or even centuries. The issue is how important that damage is compared to the equivalent amount of damage today. In his essay, "Global Climate Change: A Challenge to Policy," Kenneth Arrow wrote that the dispute "...surrounds the appropriate value for the social rate of time preference. This...allows for discounting the future simply because it is the future, even if future generations were no better off than we are. The Stern Review [a report released by economist Nicholas Stern discussing the effects of global climate change on the world economy] follows a considerable tradition among British economists and many philosophers against discounting for pure futurity. Most economists take pure time preference as obvious." So when we talk about discounting future damage, what we're concerned with is whether or not it's acceptable to treat future damage as being less important, just because it's going to occur in the future.

So with that in mind, let's look at the paradigm of cost-benefit analysis: policy should allocate social resources in the most efficient manner, and climate change just represents a challenge for doing that. In its most rudimentary form, cost-benefit analysis is a tool which allows decision makers to allocate resources in the way that best matches some relevant set of preferences. For social decision makers, the relevant set of preferences would clearly be those of society as a whole. Since groups are composed of individuals, advocates of the cost-benefit approach feel that it is reasonable to extrapolate society's preferences from the preferences of individuals. This view is implicit in the position taken by economist Jerry Taylor, who favors discounting future damage at a rate of 5% per year, because it "...matches the return on Treasury bills - or, put another way, [it is] the figure people apply themselves when considering the value of money today versus the value of money tomorrow."

Because the simple cost-benefit perspective considers society as if it were a single decision maker, needing only to allocate its own resources according to its preferences, it is immediately clear why discounting would seem obvious. The existence of a preference for value sooner rather than later is a basic economic assumption which is rooted in cold empirical fact. From this mindset, the question is not whether to use a discount rate, rather what discount rate to use. Some, like Jerry Taylor, use the discounting practices of the current marketplace. Others, like economists Richard Newell and William Pizer, try to predict how market discounting practices will vary over the discounting period, suggesting a plausible range of 2-7%. But to debate the validity of using discounting practices at all would be like asking a banker whether she thought she should charge interest on a loan, or asking an investor whether he cared about getting a return on his money.

So if we accept the view sketched above, it's clear that discounting is not only acceptable, but almost obvious. But what should we think of this view? I want to offer a few objections. First, cost-benefit analysis doesn't properly account for the individuality of its subjects, and does not take into consideration the idea that individuals should not be sacrificed for the sake of others. Second, cost-benefit analysis supposes that all harms can be quantified according to a single metric, which doesn't seem right. Third, even if we ignore the first two problems, it seems like discounting is problematic when you consider the goals of cost-benefit analysis. Let me flesh these out a little.

The first objection is basically taken from Anarchy, State, and Utopia, where Nozick writes, "...there is no social entity with a good that undergoes a sacrifice for its own good. There are only individual people, with their own individual lives. Using one for the the benefit of others, uses him and benefits the others. Nothing more. What happens is something is done to him for the sake of others. Talk of an overall social good covers this up...To use a person in this way does not sufficiently respect and take account of the fact that he is a separate person, that his is the only life he has. He does not get some overbalancing good for his sacrifice, and no one is entitled to force this upon him..." I think Nozick is absolutely right here; we can't weigh future people's interests and current people's interests as if they were all held by the same person. Some notion of proper respect for each group as ends in themselves seems necessary, and the paradigm discussed here clearly lacks that.

The second objection, that a single metric is a suspicious way to evaluate wellbeing, is taken from an essay, "Values in the Economics of Climate Change," where Michael Toman wrote, "One other critique of climate change economics as a guide to policy involves the use of a single-dimension new benefit measure for evaluating different outcomes. This reflects the standard assumption in economics that all costs and benefits are commensurable and interchangeable once expressed in a common metric (a monetary metric as a representation of unobservable utility). There may be serious measurement problems in implementing such a reductionist metric, but as a concept the notion of full tradeoffs and thus full potential compensability of losses from climate change is ubiquitous in the economic model. This view differs from alternatives that see different kinds of values as less commensurable, e.g., some losses of natural beauty or function simply cannot be compensated by other welfare gains." Personally, I tend to think that these latter kinds of views are probably closer to being right. For example, if the Hindus of India are forced to abandon the Ganges as a result of climate change, what kind of compensation could we reasonably expect them to be satisfied with?

But even if we ignored the fact that the cost-benefit model is ethically suspect, and that comparing every harm according to the same metric is methodologically suspect (never mind the fact that we could probably never conduct the kind of calculation necessary), there would still be another problem. The third objection arises from the fact that calculations of "costs and benefits" are supposed to reflect utility, and therefore social preferences. The problem is that, as we discussed earlier, the cost-benefit model is perfectly comfortable with the idea of discounting. In his essay, "Environmental Risk, Uncertainty and Intergenerational Ethics," Kristian Skagen Ekeli pointed out that "To discount the future implies that current interests and preferences count for more than those of future generations." When we say that future damage should be discounted, what we're basically saying is that "society," which is supposedly neutral between its individual members, prefers current people to be happy over future people, simply because they live earlier. How this makes sense is beyond me. It seems that if we were trying to allocate resources to impartially reflect their most efficient uses, we would need to weigh people's interests as being equally significant.

So hopefully those objections demonstrate two things. The first is that cost-benefit analysis is a really crappy way to deal with the issue of climate change. But if we use it anyway (which I suspect people will do, because that's how economics is done nowadays), then we shouldn't discount future damage. To do so would treat future people as if they mattered less than present people, and that seems obviously unacceptable. I am, of course, conspicuously ignoring the Non-Identity Problem completely, and I want to deal with that issue, but I guess I'll leave that for later.