[The Price of Our Values: The Economic Limits of Moral Life by Augustin Landier and David Thesmar. (University of Chicago Press, 2025; 181pp.)]
The authors of this valuable, though flawed, book are distinguished French economists. Landier is professor of finance at HEC Paris and Thesmar is professor of finance at the MIT Sloan School of Management.
The authors address clashes between moral values and economics, arguing that economists are apt to minimize these conflicts by adopting a utilitarian stance toward morality. This, they contend, is a mistake because utilitarianism is only one position we might adopt about moral values, and it is a position that does not fully reflect our moral concerns.
Economists have a toolbox to deal with these moral dilemmas; we wrote this book because we think it is often inadequate. This toolbox goes by the wonky name of “utilitarianism,”... To make things simple, this philosophy defines the common good as the sum of the pleasures of all humans. A decision is good if it increases mankind’s average happiness. It is a universalist moral system: it urges us to take the “point of view of the universe,” to equally weight the happiness of all humans, and possibly animals as well.
(The phrase “the point of view of the universe” comes from Henry Sidgwick, whom the authors mistakenly call “Robert Sidgwick”).
Landier and Thesmar argue that utilitarianism fails to realize that there is more to morality than good consequences for everybody:
People have local attachments, such as a love for their families: Being fully impartial does not feel “right,” because our community holds legitimate moral claims over our actions.
Further, people care about principles:
Economists, when asking themselves if a set of actions is right, focus on the impact of these actions on the common good: They are “consequentialist.” But most people would disagree: principles matter. Sticking to good rules, whatever the consequences, is often the right thing to do.
The authors apply their view of the limits of utilitarianism to a number of contemporary issues, sometimes with illuminating results, as in their discussions of libertarian paternalism and effective altruism, and sometimes less so, as in their analysis of the limits of the free market. In what follows, I’m going to give an example of what they have to say, but first, I think it’s important to note a fundamental failing in their treatment of morality. In essence, they say that utilitarianism fails because most people have non-utilitarian preferences. But to frame matters in this way leaves unanswered an underlying issue. Is morality merely a matter of people’s preferences or is morality objective: is it “truth-apt,” in philosopher’s jargon, where this is to be understood as true in a way that does not depend on people’s opinions about it? If, for example, people have property rights based on Lockean acquisition, is this true regardless of whether people think it’s true?
Landier and Thesmar do not discuss this issue, and indeed there is no evidence it has occurred to them. Instead, they spend a great deal of time and effort devising experimental test situations designed to elicit people’s moral views. And it must be acknowledged that they are highly skilled at doing so. Doing so is a quite different matter, however, from seeking the truth about morality, in the sense just explained. In proceeding in this fashion, they show that they have not broken sufficiently with their colleagues, who for the most part reject moral objectivity. (It is possible to hold that utilitarianism is objectively true, but most economists do not think so). This is not to say that people’s views about morality are irrelevant when one is trying to find out what is objectively true, but they are not the same thing. If, for example, one adopts, as Murray Rothbard did, an Aristotelian account of morality based on what is required for human beings to flourish, this is dependent neither on what people think they need to flourish nor whether they think that flourishing is the basis of morality.
We can see both the strengths and weaknesses of the Landier and Thesmar approach if we look at what they say about freedom. They rightly criticize most economists for taking freedom to be only of instrumental value; it is a means by which we get other things that we want. They praise Amartya Sen for his challenge to this position:
Sen is one of the few contemporary economists to emphasize the insufficient consideration of the value of freedom per se in economics. His famous example is not about powerful computers taking over our lives but about books and teachers. Even if the teacher knows which books we will like, we cherish the act of choosing for ourselves. Reading does not have the same flavor when it is forced upon us.
They use the value of freedom to criticize the libertarian paternalism of Cass Sunstein and Richard Thaler. This view rests on the premise, which we need not challenge here, that people do things that are bad for them, such as smoking or consuming too much sugar. Further, they are prone to various cognitive biases that affect their judgment. To force people to change their bad habits or to abandon their bad habits of thought would be paternalistic, and Sunstein and Thaler reject doing so. They contend, though, that people can be “nudged” to take the objectively desirable course of action while remaining free, by making the bad choice more difficult to make than the good one. For example, people might have to opt out of a savings plan for their retirement; if they do not, part of their salary will be invested in the plan by default. Concerning this Landier and Thesmar say eloquently:
For all its useful insights. . .nudge comes at the cost of restricting our liberties. This cost tends to be ignored by its advocates, who are content with the preservation of formal freedom. But formal freedom is not real freedom…. the nudge is by design an invisible straitjacket, a stealth manipulation based on our impulse or passivity.
That is very well said.
