J.D. Trout, a philosopher of science and epistemologist at Loyola University at Chicago, writes:
"I agree that well-being cannot be preference satisfaction, but I can just hear economists dismissing your examples as mere 'information problems.' In other words, if fully informed, the agent would have known that salmonalla is bad, and that dives are at high risk for hosting salmonella. So your examples are just 'information problems.'
"Orthodox economists may pretend that actors are rational, but they have no serious, subsidiary model to explain the frequent deviations from the ideal. Physics has such models for precisely such occasions (e.g., how to explain departures from the normal consequences of Boyle’s when a gas is under extreme pressures or at high temperatures).
"Sheena Iyengar, at Columbia University’s Business School has done fascinating work on the psychology of consumer choice. Economists typically suppose that having more choices is always better, because it increases the chances of securing utilities. The problem is, there are many cases in which having more choices reduces those chances. Iyengar has shown that people who had fewer rather than more choices when making a purchase were (1) more likely to actually make a purchase, and (2) more likely to be satisfied with the purchase once made.
"Following work in prospect theory, Eric Johnson’s research showed that when faced with actual choices about insurance coverage, people are tyrannized by default options. This hypothesis could be tested because, every now and then serendipity produces a natural experiment. This natural experiment dramatized the human tendency toward cognitive laziness, the inertia produced by the status quo. In the early 1990s, insurance providers gave drivers in Pennsylvania and New Jersey a choice between two coverage options regarding the right to sue. Drivers in both states were given the choice of a reduced right to sue in exchange for lower insurance rates. But the default option was different for each state. In Pennsylvania, the default option was the full right to sue. That is, if they did nothing, they had the full right to sue. New Jersey drivers had to take action, by selecting the alternate option, in order to acquire this right at an additional cost.
"Now, the two states are demographically similar, so we should expect that the two states have the same percentages selecting the same options. But not so. In fact, the results are startling. Motorists’ choices followed the default options in each state. In NJ, where you have to take action for full rights to sue, 20% of the drivers acquired the full right to sue. In PA, where the full right to sue was the default option, 75% of the drivers retained the full right to sue. If New Jerseyans and Pennsylvanians are demographically similar, then either Pennsylvanians paid 200 million more than they needed to or New Jerseyans paid 200 million less than they should have. And this embarrassment is not the result of a choice, but of a norm dictating that a box be checked or not. (The same problem with default options probably explains why the U.S. has a much lower organ donation rate than Europe.)
"Now, an economist might say that this is just another 'information problem,' and that people should make their decisions based upon careful study of all of the available information. But this is not only ineffective normative advice, it is not even good advice to implement since this stance on all relevant issues would crowd out the activities most crucial to happiness, and likely well-being too. If you had to ferret out the health code violations of all of the Mexican restaurants you might eat at, check the information for insurance coverage, identify the ingredients of cans of beans at the grocery, and so on, you wouldn’t be able to drink with friends, spend leisure with your spouse, read to your children at bedtime, etc. Never mind that making the necessary calculations (even if it were advisable) is, for practical purposes, an intractable problem.
"This suggests another reason that well-being isn’t preference satisfaction: Preferences are often complex and ill-formed, and so they are not especially transparent to the agent. We are pretty bad at predicting which courses of actions will satisfy us. Work on affective forecasting by people like Gilbert and by Kahneman displays people chasing instruments to satisfy a preference that, in the end only frustrates them, and alienates them from the activities that makes for satisfied, even happy, people."
"Researchers like Ed Diener, Martin Seligman, and Daniel Kahneman actually study the natural conditions of well-being in a scientifically rigorous way, and not surprisingly it doesn’t look like preference satisfaction (on any of the familiar construals of that notion) is the route to it. In fact, Kahneman and his colleagues have an article in press at American Economic Review on this topic and related ones.
"It should be noted that, with a few exceptions, this voluminous literature on the nature and requirements of happiness and well-being has been largely ignored by philosophers. Does this mean that economists are in good or bad company?
"On the other hand, many of the problems in economic decision-making (such as intergenerational discounting to mention just one) are already widely discussed by a mixture of psychologists, economists, and legal scholars like Kahneman, Thaler, Sunstein, Hastie, Loewenstein, Dasgupta, Hanson and Kysar, Rachlinski, and so on. This work is readily accessible to economists and, if naturalistic work in moral psychology takes root, perhaps it will have an audience in philosophy as well."
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