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"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner"
– Adam Smith

"Narratives compete with imperatives (general moral rules or precepts)…to persuade agents to behave in desirable ways."
– Jean Tirolehttps://t.co/YdVGjsh84U

— Noah Smith (@Noahpinion) September 22, 2018

Make of this what you will.  I think reading it as Smith underplaying morality is unfair – but reading it as economic language/narratives being used to underplay important moral arguments that may be necessary for important coordination games is fair.

When I was recently asked who my favourite economist was I named my partner, but pointed out Tirole was a close second.  I also discovered my third fav, Dixon, is on twitter.  Both Tirole and Dixon use standard economics models to explain things we observe while focusing on the types of assumptions we make and their credibility – they use models for clarity of exposition, and I love it.

My 5-year old just warned me that if I don't behave myself the consequence will be “No economics for a week.” I'm cleaning up my act.

— Justin Wolfers (@JustinWolfers) March 3, 2015

Every political editor loves it and all the economics editors are unimpressed.

What does this mean?  What does this imply about politics and economics?  I’ll leave it up to you to discuss that – I’ll just giggle

It’s nearly impossible to overstate the value that economists ascribe to cleverness. (Like most obsessions, this one is not altogether healthy.)

All the links focused on how the article made the case for a tax on sugar.  That is fine and all, it was an externality case that we can discuss, appeal to evidence and value judgments on, and then decide whether we agree or not.  In fact, I get the impression that is the exact point that the authors are raising after setting up the pro-argument.

However, I didn’t get the impression that many people made it to the second half of the article (given the way it was used) – and the second half was absolutely glorious.

The second half starts with this:

But a major focus of the calls from many “health” campaigners is the impact that taxing these drinks might have on the contested term “obesity”.

The focus on obesity reveals the other public health fantasy: socially engineering perfect bodies.

This is true – a focus on obesity rather than externalities stemming from consumption is a different argument.  And seems to crawl towards rhetoric used by those who want others to take on some ideal form.

Then there is this:

If, for instance, we decided to tax sugar-sweetened beverages and had a subsequent reduction in diabetes and improvement in dental health, would the tax be judged unsuccessful if BMI didn’t change?

In fact, diabetes and poor dental health affect people of all body sizes, who can all be healthier, regardless of BMI. But if a sugary drink tax collected enough healthcare funding to pay for diabetes and dental care, would public health campaigners still demand more just to make people slimmer?

These are important questions.  If we are actually thinking about the externality, an “output target” in terms of rates of obesity and the average BMI makes very little sense.  Instead, the focus should be on the link between consumption and disease – the change in BMI’s or obesity rates is symptomatic here.

This leads to the question:

What we must ponder is why public health campaigners and researchers feel the need to complicate a very simple relationship by dropping in the term obesity whenever possible, despite its longstanding logical and ideological problems.

Or, put differently: why are they so determined to define and control body mass when they could just target disease?

I also struggle with this question – why does it often feel that the “costs” are ex-post justifications for targeting something that a group of people just don’t like?

The entire idea of determining social policy on the basis of an idealised form for how individuals should be is an incredibly strong normative assumption.  The same argument holds for other target based measures, such as GDP targets.  And the use of economic language to “justify” and obsfucate this  violates the fact economics is supposed to make these value judgments, regarding individuals, transparent.

This IS NOT an argument against active policy based on improving individual well-being and based on clear knowledge of the value judgments involved – in fact I am a huge fan of the introduction of mechanism design in this area, as there is a lot of self-reporting by individuals that obesity is something they are very unhappy with in their own lives.

But the reason I keep reiterating this is that:

1. Many of the underlying justifications for targeting obesity are being based on the authors normative belief’s about whether others should be obese – same arguments hold with alcohol, tobacco, and other “sin goods”.  Yes there are significant issues of choice and reasonable knowledge, but it is a long bow for this to lead us to an oversimplistic tax argument.
2. As an individual I strongly, and totally, disagree with this inherent value judgment.  A willingness to justify social action to punish individual difference is something I find morally abhorrent.  Banning and constraining individual choice because it doesn’t fit our view of what a sensible individual would do is something that is ethically wrong, prior to any consideration of outcomes.  I know that is a pretty deontological view of policy, but if we are going to consider things normatively without just thinking our view of societies social welfare function is totally an utterly right it is necessary.

From the start of his book “Equality of Opportunity” comes the following quote from John Roemer.  Note that the two poles, non-discrimination and leveling the playing field, are described earlier in the book.  Also, equality of opportunity isn’t necessarily the only principle of distributive justice.  However, taking these as given we have:

Among citizens of any advanced democracy, we find individuals who hold a spectrum of views with respect to what is required for equal opportunity, from the nondiscrimination view at one pole to pervasive social provision to correct for all manner of disadvantage at the other.

Common to all these views, however, is the precept that the equal-opportunity principle, at some point, holds the individual accountable for the achievement of the advantage in question, whether that advantage be a level of educational achievement, health, employment status, income, or the economist’s utility or welfare.

Thus there is, in the notion of equality of opportunity, a “before” and an “after”: before the competition starts opportunities must be equalized, by social intervention if need be, but after it begins, individuals are on their own.  The different views of equality of opportunity can be categorized according to where they place the starting gate which separates “before” from “after”.

Given both NZ’s left and right discuss equality of opportunity a lot, the true difference between them is likely about where they place this “starting gate”.  This is a relevant conversation to have, and implies neither side is trying to restrict opportunities (something we often hear about the “other” party), but instead has a different conception about what needs intervention/equalization in order to create equal opportunities in the game of life!

It also helps to indicate the difference between targeting opportunity, and targeting outcomes.  Outcomes are a noisy signal of the opportunities people may have had before making choices.  The aggregates, and distributions, of data we observe don’t tell us whether people had opportunities unless we also apply a theory to them (note, there will be multiple theories that fit a single set of data – that is part of the issue).  It this way, targeting “outputs” as if they provide a direct correspondence to individual wellbeing is fraught – whether those outputs involve GDP, productivity, inequality of income, obesity, or employment.  In truth, we need to consider a multidimensional view of policy (eg one based on trade-offs) defined on a clear conception of what the drivers (theory) are and the value judgments (ethics) involved in the policy.

In this book Roemer’s aim is to make opportunity itself an operationalizable – a noble aim.  Once I finally get around to reading the book, I’ll tell you whether he’s persuaded me that his specific target offers a better framework for policy making than the current arbitrary tying together of economic aggregates that policy makers generally rely upon

Many people consider the reduction of economic inequalites as a basic aim of society. Such ideas are, however, largely nonoperational, sterile, and even meaningless, as long as what is called inequality is not stated with precision. This is so because, as well appear below, different measures of inequality give widely different, and even opposite, results. Such policy which diminishes some apparently reasonable measure increases other ones.

This is no small point.  While it is nice for us to bang on about “reducing inequalities”, it is nothing more than empty platitudes if we aren’t willing to discuss the trade-offs associated with individual policies.

Also, let’s not forget this quote:

Few concepts are as meaninglessly used as that of inequality.

But this is not because he thinks analysing issues of social justice don’t matter – in fact it is the complete opposite!  He believes that multi-dimensional ethical issues deserve careful and specific analysis, rather than being thrown into one broad, and close to meaningless, term.

Like exchange rates, productivity, GDP, and inflation, inequality is a broad macro(social/economic) term that can be used as a touch stone to go on to think about other real issues.  But it should not be allowed to become more important than these issues, and an understanding of the trade-offs that do exist when we go to make policy choices.

I didn’t get to my position by being overly precise when I didn’t need to be.

Yet bloggers spend much of their time proffering opinions on questions nobody is asking.

The focus on real GDP growth and its possible–or likely–slowing is a setup to panic us into making policy decisions we really do not want to make. The “great stagnation” literature as it is currently constituted seems to me at least to guide our attention in the wrong direction–and to quite possibly stampede us into making policy decisions we really would not want to make if we thought more deeply and calmly. The chain of logic is that measures to reduce inequality have a cost in terms of reducing the growth rate of the economy–that the bucket of redistribution is, in the terms of Arthur Okun’s Equality and Efficiency: The Big Tradeoff, a leaky bucket–and that when growth is slower we can no longer afford to engage in redistribution. This seems to me to be the wrong way to conceptualize it: the evidence that the bucket is leaky is weak–or, rather, there are many buckets, some very leaky, some not leaky at all, some anti-leaky–and in any event whether we should tradeoff potential growth for other objectives is not something the depends on how fast growth is. Policies that make sense if underlying GDP per worker growth is 3% probably still make sense if underlying GDP per worker growth is 1%. Policies that don’t make sense if underlying GDP per worker growth is 1% probably still don’t make sense if underlying GDP per worker growth is 3%.

But my aim here is simply to lay down a marker as far as point is concerned: to enjoin you not to get stampeded into going someplace you really do not want to go.