Something Not Unlike Research

Paul A. Samuelson on "You Didn't Build That"

post by Paul Kelleher

Economist Paul A. Samuelson (Economics, p. 484):

Many ingenious ways have been suggested for measuring this consumer's surplus, but they are of no particular significance. The important thing is to see how lucky the citizens of modern efficient communities really are. The privilege of being able to buy a vast array of goods at low prices cannot be overestimated.

This is a humbling thought. If ever a person becomes arrogantly proud of his economic productivity and his level of real earnings, let him pause and reflect. If he were transported with all his skills and energies intact to a primitive desert island, how much would his money earnings buy? Indeed, without capital machinery, without rich resources, without other labor, and above all without the technical knowledge which each generation inherits from society's past, how much could he produce? It is only too clear that all of us are reaping the benefits of an economic world we never made.

This basic fact is well stated in the following quotation:

The organizer of industry who thinks that he has "made" himself and his business has found a whole social system ready to his hand in skilled workers, machinery, a market, peace and order---a vast apparatus and a pervasive atmosphere, the joint creation of millions of men and scores of generations. Take away the whole social factor and we have not Robinson Crusoe, with this salvage from the wreck and his acquired knowledge, but the naked savage living on roots, berries, and vermin.[1]

[1] L. T. Hobhouse, "The Elements of Social Justice," pp. 162-163, Henry Holt and Company, Incorporated, New York, 1922.

Beyond the ACA, Beyond the USA

post by Paul Kelleher

UPDATE: A mistaken citation has been corrected.

Despite having been ruled (mostly) constitutional by the Supreme Court, neither the Affordable Care nor the cause of universal insurance coverage in America is a sure thing. So much depends on the outcome of the November election, both at the national level and at the state level. And it's possible that many largely Republican states will drag their feet and find other ways to delay or derail implementation of the law.

Given how much supporters of the Affordable Care Act have poured into the fight to pass and implement it, it is completely reasonable that they would want to keep fighting, to see it through to the end. But other options are also available. After all, the world is a large place, and the suffering faced outside our borders is horrendous and of a scale few Americans can really imagine. Some ACA supporters will wonder, therefore, what obligations they have to poor foreigners, and whether those obligations are consistent with expending so much time and effort (and so much additional time and effort) bettering the lives of comparatively well-off Americans.

What we owe to foreigners depends of course on the reasons we have to turn our attention to them. It's possible that our duties to poor Americans are stronger than our duties to poor foreigners, but this should not be taken as a given. Political philosopher Charles Beitz breaks down the sorts of reasons we may have to turn our attention outside or borders:

The possibilities begin with two limiting cases. One is autarky; here, by hypothesis, there are no reasons other than those of beneficence in play. The other is benign interdependence, in which poor and non-poor societies cooperate as equals. The most important reasons in this case have to do with the fairness of individual transactions and of whatever cooperative practices and institutions there are. These polar cases are, however, unlikely. There are several intermediate and, on the whole, more likely possibilities which I hope can be suggested with descriptive labels: for example, harmful interaction, historical injustice, non-harmful exploitation, political dependence. Each pattern evokes a different kind of reason for action: for example, not to cause harm, to compensate for the results of harm done earlier, not to exploit one’s bargaining advantage, to respect the interest in collective self-determination. This does not exhaust the possibilities but it will illustrate the point. The relationships that characterize the various dyads of interacting poor and affluent societies are diverse, not only in the patterns of interaction they instantiate but also in the reasons why these patterns are morally salient.  p. 171)

The duty "not to exploit one's bargaining advantage" is particularly salient in the context of Chief Justice Roberts's majority opinion in the ACA case. Roberts declared a provision in the ACA unconstitutional because, in his words, it put a "gun to the head" of states by forcing them to choose between expanding their Medicaid programs or losing all federal Medicaid assistance. While the Chief Justice was unwilling to “'fix the outermost line' where persuasion gives way to coercion," he nevertheless declared that "wherever that line may be, this statute is surely beyond it." Compare this to the way the United States has dealt in the past with reluctant trading partners over whom it wields significant bargaining power:

This trade and investment framework [negotiated in the Uruguay Round, and administered by the WTO] has been shaped by threats of exclusion or discrimination, through which major developed countries take advantage of the especially urgent need of developing countries for access to developed countries' markets. In the Uruguay Round negotiations, from 1981 to 1994, the United States frequently used threats of devastating trade discrimination---for example, U.S. Trade Representative Carla Hills' flamboyant warning that if others held out the U.S. would start "trade wars over all sorts of silly things," or Secretary of State James Baker's more measured but no less ominous intimation, "we hope that this follow-up liberalization will occur in the Uruguay Round. If not, we might be willing to explore a 'market liberalization club' approach, through minilateral arrangements or a series of bilateral agreements." The resulting regime has been sustained by similar bullying. For example, after a coalition of developing countries united in insistence on an end to rich-country farm subsidies in the Cancun WTO conference of 2003, Robert Zoellick, the U.S. Trade Representative (who was to become President of the World Bank four years later), noted that "the transformation of the WTO into a forum for the politics of protest ... dismayed" the United States, and announced an American commitment "in our hemisphere, and with sub-regions or individual countries ... to move towards free trade with can-do countries" excluding the "won't do" countries that had held out for an end to the subsidies. As intended, the threat led countries such as Costa Rica, highly dependent on access to U.S. markets and without good alternatives, to cave in and leave the [protesting] coalition. (Richard W. Miller, Globalizing Justice, p. 70)

Is this behavior by the U.S. morally wrong? It's certainly hard to say with a straight face that it amounts to persuasion rather than bullying and coercion. But in any case, exploitive bullying is just one reason Americans may have to feel morally bound to promote well-being abroad. All possible reasons should be given serious consideration in a full analysis of what we might owe others in the world.

If we do find that we have compelling reason to help others abroad, what is a conscientious American to do? After all, it is hard enough to get fellow Americans on board with helping other Americans. How in the world are we going to get them on board with helping others in the world? This is not a question that moral and political philosophy can answer on its own. Perhaps, when all the psychological facts are in, the best we can hope for is to make small improvements at home, since those are the only projects we can get Americans to embrace and/or abide. It is also possible that whatever we try to do, we will just make matters worse (as William Easterley has argued is the case with foreign aid.) Political philosopher Thomas Pogge has thought a lot about this question, and here are his tips for selecting morally worthy projects and reforms that are, in his words, "realistically feasible" while still being of benefit to poor folks abroad, to whom he believes we owe very strong duties (these are rough quotations, from about the 33min mark of this lecture):

1. These projects/reforms must benefit also at least some segment of the global elite (which includes normal Americans who are vastly better off than poor people abroad).

2. These projects/reforms must be scaleable, so that they can start small and then be expanded in light of what worked and what did not.

3. The projects should empower those whom we wish to protect, so that they can find their own voice and fend for their own intersts.  

4. The projects should be the first steps in a path of reform that can ultimately reverse the relevant spiral of injustice and neglect. 

I know it may sound silly to some, but in light of the recent weather across the US, I can't help but wonder whether the cause of greenhouse gas mitigation can become the sort of project that could satisfy Pogge's first condition. It is certainly an issue that has tremendous bearing on health worldwide, especially for the world's poorest countries who are most dependent on stable weather patterns and least prepared to adapt to new ones. It is also an issue that affects middle-income countries like China, as China's economic growth would not be what it is today if not for policies that are pretty bad for the environment. In short, climate change will affect everyone, and the world's worse off individuals have a serious interest in overall mitigation while retaining a serious interest in being able to do things that contribute to the problem.

Climate change is going to hit poor countries hard, and the negative impact on health worldwide will probably dwarf the positive impact that something like the ACA has in the US. As I have indicated, it is a very hard question whether (and to what extent) we are justified in continuing to spend so much time and effort on health care for Americans. (And---just so there is no confusion---by "a very hard question" I mean one that I do not have the answer to.) But despite appearances, tackling the problem of climate change may end up being exactly the world-enhancing project we can get Americans to sign onto---not necessarily today, of course, but perhaps soon. However, we may know whether it is only after some of us turn our attention away from health care for Americans and toward this other pressing issue. A fateful choice awaits.

I'm for raising taxes on the affluent. Am I a hypocrite?

post by Bill Gardner

I support an increase in the taxes paid by the wealthiest and highest income Americans. I want this to happen to reduce the deficit and to fund some essential services to benefit the poor. This is not retribution. I don't think incomes are or could be based on what people 'deserve.' Finally, I am not motivated by envy, because I am in the group that should be taxed.

At this point, you may respond, "If you believe in increased taxes on persons like yourself, take the option to give the government more." And if I do not take that option -- which I do not -- I am a hypocrite.

So, there is no question that I am not nearly as generous or charitable a person as I should be. But that is a separate issue. I want the US to be a society where every child gets essential health care and education. Charities have never achieved these goals. Governments funded by progressive taxation get closer, in many developed societies. 

The epigenetic lottery

post by Bill Gardner

Tyler Cowen discusses the (possibly diminished) US social mobility, and asks

How much of [social] immobility is due to “inherited talent plus diminishing role for random circumstance”?  Is not this cause of immobility very different — both practically and morally — from such factors as discrimination, bad schools, occupational licensing, etc.?  What are you supposed to get when you combine genetics with meritocracy?  I do not know how much of current American (or other) immobility is due to this factor, but I find it discomforting that complaints about mobility are so infrequently accompanied by an analysis of this topic.

So, the idea is that nature roles the dice and gives each child a set of genetic endowments. Families will also invest their resources in cultivating the children's talents. Then, as we become adults, 'society' (meaning the schools, job markets, etc.) places each of us in the social hierarchies of wealth, income, and power (the figure to the right is from Catherine Mulbrandon [@visualecon], and shows the 2005 income distribution among the bottom 98% -- adding the next 2% takes you way off the page). If societies are increasingly meritocratic, those outcomes will mirror the individual distribution of genetic talent and family resources to an increasing degree. So it could be that reduced mobility and increasing social inequality of outcomes reflects increasingly accurate meritocratic selection processes. And many would argue that such processes are not inherently unjust, so maybe we should just get over being upset about the worsening inequality of outcomes. If you add the ideas that genetic endowments are exogenous, and that trying to compensate for the inequality of family resources is either wrong or futile, then you have even stronger justifications for current inequality.

I don't buy these conclusions, for lots of reasons, but this post is not the place to provide the discussion that Cowen is calling for.

I want to raise just one objection here: The story about the genetic lottery is too simple. Our biology is less exogenous than most theorists believe. Michael Rutter explains that genes do not give us talents:

...although the DNA is what a person inherits, the effects of that DNA are dependent on a chain reaction that ends up with the expression of the products of the DNA in the structure and function of individual cells that is how environments alter genes (emphasis added).

Referring to this account of the interaction of nature and nurture, James Heckman writes

The field of epigenetics surveyed in Rutter (2006) demonstrates how genetic expression is strongly influenced by environmental influences and that environmental effects on gene expression can be inherited (emphasis added).

He then argues that there is evidence

that high quality early childhood interventions foster abilities and that inequality can be attacked at its source.  

and we are therefore not absolved from responsibility for the inequitable distribution of adult talent visible in infancy and early childhood.

The problem I'm pointing to in the meritocratic argument is that there isn't really a genetic lottery  in the way we imagine: and to the degree there is, the dice are loaded in the womb. If Heckman is right, there is much more we can do about inequality than most of us are willing to acknowledge.

However, if Heckman is right, it is also the case that much if not most of what we can do is equalize the epigenetic and child developmental lotteries that will govern inequality among future generations. And we have to decide whether we are motivated to struggle for equality in that future, a promised land that we will not see.

Prohibiting Anti-Smoker Hiring Policies is Not "Leveling Down"

post by Paul Kelleher

Bill responds today to my view that anti-smoker hiring policies are unfair to those who smoke. I have argued that many smokers are victims of social arrangements that confine them to highly constrained socioeconomic situations. These situations are highly correlated with smoking uptake, and since smoking (and/or just feeding an addiction) relieves stress, many smokers are doing nothing irrational or particularly worthy of condemnation. I have made the point that anti-smoker hiring practices promise to make many already disadvantaged smokers even worse off by erecting further barriers to scarce employment opportunities. I would rather see a more compassionate approach that actively helps smokers quit without making them worse off economically. (I do not doubt that Bill also wants to put compassion at the fore, although his last paragraph here does sound a bit harsh to me given that smoking is an addiction that most smokers acquire before they are considered wise enough to vote).

Against my view, Bill claims that the policies I favor amount to "leveling down": my preferred policy is said to sacrifice improvements in average and overall economic well-being for the sake of a narrower variance in social outcomes (assuming, that is, that non-smokers are more productive). Indeed, Bill argues that I favor less variance in social outcomes at the cost of both fewer economic and fewer health improvements, since an increasingly anti-smoker society would contribute to less smoking overall. Bill concedes that less inequality can sometimes justify a loss in aggregate or average outcomes, but not in this case. 

Bill hasn't got the dynamics of my argument quite right. I am not in favor of leveling down. I am not, for instance, in favor of intentionally harming the better off in order to reduce the inequality between them and those worse off. Nor am I arguing here for policies that harm the better off as a side-effect of improving the situation of those worse off (although I am in favor of other policies fitting this mold, as I assume Bill is). Each of these sorts of policy would bring the top down and would thereby decrease inequality. But I am advocating for neither. Rather, I am arguing that it is unjust to make the worst off even worse off than they already are. I do concede that this might lead to lower overall health or welfare, at least in the short to medium term. How much lower aggregate health of welfare? Who knows.

My argument type is, then, the third on this list:

1. Worsen the better off in order to reduce inequality.

2. Worsen the better off as a side-effect of policies designed to improve the worst off. 

3. Prevent worsening the worst off, even if that interferes with potential improvements for the better off.

In my view, (1) is the hardest to justify and (3) the easiest; I think most would agree with me on at least that. If the worst off referred to in (3) are indeed absolutely badly off for reasons of injustice, then we see that the issue is not as clear cut as simply "mean vs. variance." Mine isn't an aesthetic thesis about the virtue of flat distributions. Nor am I wholly insensitive to foregone improvements for the better off. Instead, I am focusing on a third factor: what we owe to those who already experience the brunt of injustice.

I am therefore against anti-smoker hiring policies for both reasons of compassion and reasons of justice. That does not mean that I think smoking should be "a lifestyle choice that we want to protect" (to quote Bill). I am fine with less draconian attempts to turn people off smoking, such as higher cigarette taxes (used in turn to fund smoking cessation programs) and even greater health care cost sharing for smokers. Erecting greater barriers to employment is, however, going too far in my opinion.

May Employers Ethically Refuse to Hire Smokers?

post by Paul Kelleher

From USA Today:

More job-seekers are facing an added requirement: no smoking — at work or anytime.

As bans on smoking sweep the USA, an increasing number of employers — primarily hospitals — are also imposing bans on smokers. They won't hire applicants whose urine tests positive for nicotine use, whether cigarettes, smokeless tobacco or even patches.

Such tobacco-free hiring policies, designed to promote health and reduce insurance premiums, took effect this month at the Baylor Health Care System in Texas and will apply at the Hollywood Casino in Toledo, Ohio, when it opens this year.

"We have to walk the walk if we talk the talk," says Dave Fotsch of Idaho's Central District Health Department, which voted last month to stop hiring smokers.

When I read a story like this, I always think first of the following passage from Michael Marmot's The Status Syndrome (pp. 68-9):

Here is a more contemporary picture of poverty. In an American city a young woman, let's call her Patty, sits and contemplates her life. She recalls that a researcher, doing a health survey, came to the local grocery store, where Patty works as a cashier, and asked her how much exercise she did. She laughed. Most of the day is spent sitting or standing behind the till. What about exercise at home? She lives in a crowded inner-city tenement building. She won't let the children play on the strip of asphalt nearby. Apart from broken glass, she is worried about the violence in this part of town.

Patty's reverie continues. The children come home from school and ask if they can go swimming. It would certainly relieve the long oppressive hours from Friday night to Monday morning that is the lot of a Single mother with two children. But joining a fitness club had been out of the question. They might as easily have a vacation on the moon. There is the Y. But it is an hour on the bus. With the bus, entry, snacks, and sodas for the kids, the trip would cost $30. A king's ransom, but it would fill a couple of hours at least. Then what? She and the children sit cooped up in their two bedroom apartment going quietly stir-crazy. Not so quietly. The children yell at each other and start to fight again. Patty lights another cigarette.

As she contemplates the week ahead, she thinks that the boy needs new sneakers. Why they have to be the ones with special laces, when he never does them up, is beyond her. Something about all the other kids having them. The girl has been to three different friends for dinner and a sleepover in the last month. She wants friends home to her place. Four children, pizzas all round ... Where is that money going to come from? Patty lights another cigarette. She remembers when she splurged and bought herself a pair of designer jeans. It was Mother's Day before last. Gallows humor of the Single mother to buy herself clothes that she could not afford on Mother's Day.

As she thinks about it, she realizes that the only money she spends on herself is the cigarettes. When she took the children to the clinic the other day, the nurse told her, for the umpteenth time, that she shouldn't be smoking: bad for her health and a bad example for the children. The hell with that, thought Patty, take the cigarettes away and what am I left with? That clinic nurse should try leading my life, and see if she's still worried about lung cancer in thirty years' time. I have enough trouble getting through next week.

Lots of "lifestyle choices" have effects on health care costs. A provocative example I cite in the classroom is a employee's choice to have a child. I don't know how the added costs of this choice stack up to the added costs of smoking; I need to look into that further. But putting the examples side by side makes for a useful thought experiment: do we have the same intuitions in each case about whether it's OK to refuse to hire the potentially health-costly applicant? If not, why not? If it is because having children is a "respectable" choice while smoking is not, then I would urge that we spend more time thinking about passages like Marmot's, as well as all the information we have about how people become smokers and what makes it so hard for them to stop.

I don't insist that these Marmot-inspired thoughts are dispositive. There's of course a lot more to say on this issue. As always, I'd welcome your thoughts and a continued discussion in the comments section.

Private Charity as a Public Good?

post by Paul Kelleher

Milton Friedman (Capitalism and Freedom, ch. 12):

The heart of the [classical] liberal philosophy is a belief in the dignity of the individual, in his freedom to make the most of his capacities and opportunities according to his own lights, subject only to the proviso that he not interfere with the freedom of other individuals to do the same. [...]

[The classical liberal] will regard private charity directed at helping the less fortunate as an example of the proper use of freedom. And he may approve state action toward ameliorating poverty as a more effective way in which the great bulk of the community can achieve a common objective. He will do so with regret, however, at having to subsitute compulsory for voluntary action.

The egalitarian will go this far, too. But he will want to go further. He will defend taking from some to give to others, not as a more effective means whereby the "some" can acheive an objective they want to achieve, but on grounds of "justice." At this point, equality comes sharply into conflict with freedom; one must choose. One cannot be both an egalitarian, in this sense, and a liberal.

Friedman never explains why, on his classical liberal view, I am permitted to take your money if that is required to make my pursuit of private charity "more effective." Nor does he explain why I am permitted to do this if I and others are coercively promoting charity, but not if we are coercively promoting "justice." All we are told is that once the goal becomes justice rather than charity, then "at this point, equality comes sharply into conflict with freedom." Huh?

The same questions arise for someone who believes (1) that the market gives people what they deserve and are entitled to keep, but (2) some "altruistic well-to-do" are too weak-willed to give to charity on their own, so they need to call in goverment to make them give, even if the non-altruistic well-to-do are thereby forced to give up some of their "just deserts." Like Friedman, Greg Mankiw never explains why this is a stable position to hold. 

Reihan Salam, Paul Ryan, the Safety Net, and Public Sector Profiteers

post by Bill Gardner

Reihan Salam recommends two lines of argument that he attributes to Rep. Paul Ryan:

• "[C]onservatives shouldn’t attack the safety net."
• Rather, they should "Attack Public Sector Profiteers... and the lack of spending restraint that actually exacerbates cost growth in health, education, and other domains."

I agree that conservatives should not attack the safety net, so a good first step would be to just stop doing it. Ryan's proposal would leave the safety with a gaping hole. There are more than 45 million Americans without health insurance. This number will decresease because of the expansion of Medicaid under the Affordable Care Act, but Ryan would repeal that. Among the uninsured, there are healthy Americans who could afford health insurance but elect not to purchase it, and some of them would likely be induced to purchase it through Ryan's tax credit scheme. However, the majority of the uninsured are at less the 200% of the Federal poverty level, and cannot realistically afford private health insurance under Ryan's plan. We do not yet have a real safety net if large numbers of poor families fall through it.

OK, how about "Attack public sector profiteers"? Umm... let's see, which side is promoting class warfare here?  (And how well did that work out?) 

First, what could "public sector profiteers" mean? I think public sector would include not just government employees, but also private sector workers whose income depends on government programs. In Canada this would include nearly all doctors and nurses; both are unionized, even the residents have a union. It includes many health care providers in the states. What does it mean to call them profiteers? I doubt that Reihan Salam is challenging the right of teachers or health care providers to better themselves. "Profiteering" comes from war time, when military suppliers exploit an emergency to get enrich themselves by unethical means.

So what is unethical about how public sector workers pursue their interests? I will stipulate to the following:

1. Public sector demands for income or restructured work conditions sometimes harm the populations they are employed to serve.
2. By voting as a bloc, by making political contributions, by gaining great influence in left political parties, and by cloaking their self-interests under the needs of their vulnerable clients, public sector health care providers achieve considerable leverage over government. When they use that leverage to raise taxes, they are raising their incomes by taking money from taxpayers. 

These are tendentious arguments, but that does not mean they are wrong. On point 1, medical guilds and unions often structure care in ways that increase guild members' incomes but harm patients. If this seems implausible to you, read Atul Gawande's famous article about health care in McAllen, TX. Point 2 is just, I think, a fact.

So why won't I join in an attack on public sector privateers? I think there are cases where teachers unions or health care workers unions take the wrong side of an issue, and there I side with management in the interests of students or patients. But I wouldn't single them out as profiteers. Pharmaceutical and device manufacturers, hospital owners, insurers all pursue policies in their self-interest that compromise the best interests of patients (point 1). And they have vastly greater resources to influence the political process (point 2). So unless we want to routinely refer to all stakeholders as profiteers, it is not clear to me that the word has much application.

Moreover, our views about the motives and moral integrity of stakeholders give us zero useful information about how to reform health care. Consider this argument:  

1. Defense manufacturers and contractors sometimes produce weapons that earn them huge profits, but actually diminish national security and the safety of armed services members. 
2. By making political contributions, by gaining great influence in right political parties, and by cloaking their self-interests under the banner of patriotism, defense manufacturers achieve considerable leverage over government. When they use that leverage to raise taxes, they are raising their incomes by taking money from taxpayers. 

These points are both true, but they do not tell us what weapons we need to purchase, or how high to set the defense budget. "Attack the Defense Profiteers" is not a plan to make America more secure, and a plan to "Attack the Public Sector Profiteers" will not make it healthier.

The morality of health-care priority-setting

post by Paul Kelleher

I'd bet a tidy sum that the most cited thought experiment in contemporary moral and political philosophy--aside from Rawls's Original Position, perhaps--is T.M. Scanlon's Pious Aid Recipient example. Google Scholar says the source paper has only 310 citations, which I believe raises pressing questions about the reliability of Google Scholar. In any case, here it is:

The strength of a stranger's claim on us for aid in the fulfillment of some interest depends upon what that interest is and need not be proportional to the importance he attaches to it. The fact that someone would be willing to forego a decent diet in order to build a monument to his god does not mean that his claim on others for aid in his project has the same strength as a claim for aid in obtaining enough to eat (even assuming that the sacrifices required of others would be the same).

Scanlon states his point succinctly, but let me repeat it: to determine which duties we have to others, we should look at the claims they have on us, and not merely at the strengths of their preferences. Someone may want help building their religious monument more than they want to be adequately nourished, but my main duty is to respond to their claims, not to their preferences. This does not mean that there are no claims to have one's preferences satisfied, but note that this would still give priority to the underlying claims and not to the preference themselves.

Scanlon's thought experiment came to mind when reading this post by Leo Katz. Katz asks us to imagine Al, a pianist, who has a finger badly injured in a traffic accident. The only doctor around must choose between helping Al, or helping Bea, who faces paralysis in one of her legs if not helped immediately. Many would say that Bea should receive priority, since losing the use of a leg is in general worse than losing the use of a finger. Of course, to Al, this isn't so. But the doctor's question is who has the stronger claim on the doctor's help, and many would say that Bea does. (If you doubt this, ask yourself: should the doctor interrogate Bea to determine whether her leg is as important to her as Al's finger is to him?)

But there is one more piece to Katz's story. Just before making his decision about whom to help, the doctor sees that Al has another injury that will lead to paralysis in both his legs if not addressed immediately. Now the doctor must choose between three courses of action: (1) save Al's finger; (2) save Al's legs; or (3) save Bea's leg. Here is Katz:

How can he [the doctor] treat Al’s finger when Bea’s more serious leg injury needs attention? How can he treat Bea’s leg injury when Al’s far more serious leg injury isn’t getting treated? How can he treat Al’s leg injury when Al clamors to have his finger treated instead? We are in a sort of cycle.

How is it to be broken? At least one plausible way of breaking it, my own guess is that it is the most plausible, is to not let Al opt for getting his finger treated. He retains his priority over Bea only if he has is leg injury treated, not otherwise. But that means that we are rejecting a win-win transaction. For that is what the doctor’s treating Al’s finger rather than his legs surely is...The reason, in brief, is that Al has a strong claim on the doctor’s attention for his serious injury and a much weaker claim for his less serious injury.

I think Katz is correct to invoke the Scanlonian notion of claims here. I am less sure, however, that treating Al's finger really should be considered a "win-win" that creates the problematic "cycle" Katz describes. Fixing Al's finger is a win-win only if Bea is no longer in the picture. For if Al is the only relevant patient, then it might well be true that the doctor should help Al in whatever way Al prefers (unless fixing his finger is much more costly than fixing his legs). But Bea is never "out of the picture." It is Al's legs, and not Al or Al's preferences, that generate the claim that overrides Bea's claim. If Al's legs-based claim is ignored, then Bea's leg-based claim is the strongest claim remaining. Within the Scanlonian framework of claims, fixing Al's finger while Bea suffers paralysis in her legs is in no sense a "win-win."

The morality of claims and claims-adjudication is essential to the morality of priority-setting in the health care setting. And things can get philosophically hairy very quickly. I will be posting a good deal on these issues in the coming weeks.

Mankiw vs. Nozick on Just Deserts

post by Paul Kelleher

The short version: Greg Mankiw believes people should get what they deserve, and that what people deserve is based on the economic value of what they contribute to social production. Mankiw attributes this view to libertarian philosopher Robert Nozick. But Nozick explicitly rejects the view, noting a problem with it that Mankiw never addresses.

Students of economics learn that, under a certain set of assumptions, a competitive market economy leads to an efficient allocation of resources. However, since economic efficiency may not the only thing we care about, many economists are careful to note that there may be equity-based reasons to condemn otherwise efficient arrangements. Harvard economist Greg Mankiw thinks this is a mistake. In "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber", Mankiw argues that when competitive markets promote efficiency, they do so by rewarding factors of production (including labor) in proportion to their productive contribution. Mankiw thus extols "the inherent equity of the competitive market": the market ensures that factors of production are paid what they deserve.

Mankiw claims that this "Just Deserts Theory" can be found in the work of the libertarian philosopher Robert Nozick (among others). But in fact, Nozick believed the area of economics that Mankiw draws on--Marginal Productivity Theory (MPT)--cannot reliably be used to assess individuals' productive contributions. Nozick did think that MPT could explain why individuals get what they get in market distribution, but this was not because Nozick thought the market does or should reward people in accordance with their contribution. Rather, Nozick's view is that people are entitled only to what others are willing to give them (either as gifts or in economic exchange). MPT helps us understand who will be willing to give what to whom, but that is it. So Nozick would say Mankiw is wrong on two counts: (1) people are not in fact entitled to their "Just Deserts"; (2) even if people were entitled to their just deserts, MPT cannot be used to identify what it is people deserve in Mankiw's sense.

Let me explain Nozick's argument for this second point. Nozick agrees with Mankiw that (at least under a set of "idealized circumstances") MPT can be used to predict the wage that rational firms will be willing to pay to a worker for performing a specific job. To illustrate, consider the following graphic*:

For economic reasons that Mankiw and Nozick agree upon, a rational firm will pay all laborers a wage equal to the value of the output generated by adding the last laborer, depicted here as laborer #10. To use some economic jargon, firms will pay a wage equal to the marginal value product of labor. Where Nozick and Mankiw disagree is on how this economic jargon should be interpreted. According to Mankiw, when wages are set in this way, it ensures that "each person's income reflects the value of what he contributed to society's production of goods and services...[E]ach person receives his just deserts" (emphasis added). Nozick claims that this is not an accurate characterization. Here is why: all we know from the graphic is that after adding the 10th laborer, the total product went up by 6 bushels of corn; but we don't know exactly how that outcome arose. For example, it might have been achieved by the 10th laborer simply producing 6 extra bushels all by himself. Or, those 6 extra bushels might have resulted from the 10th laborer producing 16 bushels while some other laborers simultaneously reduced their collective output by 10 (perhaps because they reduced their effort when the 10th man was added). In this case, the marginal value product of labor will still be defined by MTP as 6 bushels, and all the workers will still be paid a wage equal to the value of 6 bushels. But it will nonetheless be false to say (as Mankiw does) that "each person's income reflects the value of what he contributed." While it is true that adding the 10th laborer resulted in a net increase of 6 bushels, we cannot deduce any worker's actual contribution from this fact. 

Nozick summarizes this point in a footnote to p. 187 of Anarchy, State, and Utopia:

Thus marginal productivity theory is not best thought of as a theory of actual produced product...but rather as a theory of the difference (subjunctively defined) made by the presence of a factor.

Paul Samuelson makes the same point here:

In our example, output increases from ten bushels to eighteen bushels when one adds the second man not because the second man only adds eight, but rather because his presence on the field makes the situation such that the total output of both men is eighteen...[W]hat we wish to note is that by adding the second man, output was increased by eight. Thus, the marginal product of the second man is eight. But his actual contribution may be very different than this.

If Mankiw is right that each person's income should reflect the value of what s/he contributed, it does not seem that marginal productivity theory can tells us what we need to know. Importantly, this worry arises even if we grant the many unrealistic assumptions MPT seems to require for its validity. Of course there may be even more problems with using MPT as part of a theory of just income distribution. Amartya Sen discusses several of these in a very nice 1985 paper called "The Moral Standing of the Market" (which Mankiw doesn't cite).

 

*This figure comes from p. 28 of David Schweickart's After Capitalism.