I'm not sure where this thread is going. It's easy enough to point out the absurdity of the notion that income is exogenous to tastes, let alone relations of production and more generally social pressures. However this is not a sufficient reason to simply discard utility theory. I think it might be better to ask ourselves a few questions: o If, as the article below suggests, variance in material well-being accounts for so little of the varianse in hapiness, why do we get so upset tat things like falling wages or cuts in welfare benefits? Is it merely that we believe people will become unhappy from having to change to unhabitual consumption bundles, or is there generally something _worse_ about having lower income? If so, what is it? o The quote from Schumpeter suggested that people's tastes are determined by their habits or local production. Does this amount to suggesting that differences in utility can be reduced to discourse? Is there an underlying "base" of universal human need outside of the context of a particular discourse, and do human wants determine prices, or merely the other way around? o Endogeneity of income to tastes need not disqualify the existence of an equilibrium that maximizes the utility of individuals. As long as preferences form a complete preorder, even one that varies among cultures and income levels, a utility function will still exist, and an individual with a previously determined income and culture can still choose an optimal consumption bundle. Therefore, general equilibrium can still exist. The trouble is that the "utility" function no longer has the interpretation of measuring welfare, since it is, in sim eq lingo, a reduced form estimator. Does this make it worthless? Might it be interesting to try constructing utility functions that can be "bought" by adevertising and see what happens? If the former, what should be used in place of utility? I anticipate that some people will say "labor values," and if so, then what determines, in place of a utility function, whether labor is being efficiently exploited? I'm going camping for the weekend on Cape Cod, so I won't be around to hear answers until Monday. Sigh.... Cheers, Tavis On Wed, 3 Jul 1996, Richardson_D wrote: > > The recent discussions of MU here have led me once again to consider some of > my long-standing doubts about the foundations of our field. The basic > psychological underpinning of economics is materialistic hedonism: the goal > of life is pleasure and pleasure is obtained through commodities. > > While there may have been a general consensus for this in the time of Marx > and Mill, we are much less willing to subscribe to it today. In this light > I would like to share excerpts from the Washington Post, June 16, 1996, p. > C5. Author Richard Morin writes a weekly column in the Sunday Outlook > section subtitled *New facts and hot stats from the social sciences.* > > > The Social Anatomy of Happiness > In studies conducted over the past five decades, most people > consistently say they*re happy--including the poorest of the poor, the > disabled and victims of serious accident, people who you*d think have good > reason to be feeling a bit disconsolate. > In fact, researchers now suspect that human beings are genetically > hard-wired to be happy. How else to explain why people are so relentlessly > rosy about their personal well-being--and why new studies show that money, > romance, kids , fancy homes, cars, boats et. al. have surprisingly little to > do with personal happiness? > Psychologist Ed Diener of the U. of Illinois ... has given beepers to > students and had them record whether were feeling happy or not immediately > before they were buzzed. (Eighty percent of the time, they said they were.) > One major study asked random samples of people to rate themselves on a > 10-point scale that ranges from *most happy* to *most unhappy.* The average > rating for Americans was 7.3 in 1989, the last year data was available, > Diener reported in the latest issue of Psychological Science. > Overall, he said, studies done in 43 countries found that nine out of > 10 people were generally happy, including some folks who would seem to have > less to be happy about. One study found that 68 percent of disabled adults > reported they were somewhat to very satisfied with their lives. *People > with chronic mental problems also report positive levels of well being,* as > to the poor, victims of bad accidents, the unemployed and under-educated, > Diener wrote. > So much joy is apparently tough for some somber academics to take. > *Indeed, it is so amazing to some people that quadriplegics and other > people with severe disabilities could be happy that their self-reports are > dismissed as unbelievable,* he said. > ... *The disadvantaged are not quite as happy as the advantaged--but > they are still in the positive zone.* Why? People probably adapt their > goals to their new situation, and then gain pleasure from making progress > toward the new set of goals.* > Diener also suspects happiness is in our genes. *It makes evolutionary > sense that people are built to be slightly happy because then negative > events and emotions can stand out more and grab our attention. ... Also the > positive bias gives us a slight preference toward risk and expansion.* ... > David Lykken and Auke Tellegen and the U. of Minnesota studied > differences in relative happiness among 2,310 twins. They believe that > about 80 percent of a person*s individual happiness is inherited ... > Remarkably, differences in income, education, marital status, or religion > *could account for no more than about 3 percent of the variance in well > being,* they found. >
