Free exchange: Joy to the world | The Economist - 0 views
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economics social science goals values GDP quality of life capabilities happiness income maximization bias
shared by Javier E on 30 Dec 14
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WHAT is the point of economics? It often seems that the objective is to make the world richer.
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Yet this is the season when, for devout Christians at least, the ineffable supplants the material (and the other way around for most folk). That makes it a good time to ponder whether maximising income should really be the be-all and end-all of economic policy.
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people in the ten richest countries in the world have a life expectancy 25 years higher than people in the ten poorest. People with more cash can afford better education, more varied leisure activities and healthier food, all of which improve the quality of life.
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A survey of 43 countries, published on October 30th, found that people in emerging markets are within a whisker of expressing the same level of satisfaction with their lives as people in rich countries.
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While Scrooge found it easy to count his riches, happiness is harder to pin down. People are prone to what philosophers call “adaptive preferences”, meaning that they may fail to report their “true” happiness
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If measuring happiness is so difficult, what else could economists look at? Amartya Sen, of Harvard University, argues that “capabilities” are the way to go. The definition of a capability is a bit fuzzy: at its simplest, a capability is something that people have reason to value. The list of potential capabilities is endless: the opportunity to live a long and healthy life, the freedom to take part in political life or to be well nourished.
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Capabilities, says Mr Sen, are ends that economists should strive to maximise: income is just one of the many means by which we get there.
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That begs the question of which capabilities a society should maximise. Some worry that the capability approach is deeply paternalistic
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Ms Nussbaum goes so far as to recommend “ten central capabilities” that are essential for a good life. For economists, who tend to be lovers of freedom, this is controversial stuff.
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But the capability approach may be less illiberal than it seems. Insisting that GDP is the true measure of economic progress is itself a value-judgment. What is more, according to Mr Sen and Ms Nussbaum, people must have the freedom to select which capabilities they ultimately pursue.
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Measuring capabilities may be even more difficult than measuring GDP or happiness. There are, though, decent proxies. A country with a high life expectancy probably offers its citizens things like good health care and helps to shield them from pollution, which makes it easier for them to live a long, healthy life.
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Some measures of economic success use such data. The Human Development Index (HDI), which Mr Sen helped to devise in 1990, considers not only income, but also life expectancy and schooling, as elements of development
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the capability approach has spawned so many measures, each more complicated than the last, that GDP starts to look appealing again. What other single number can give a decent approximation of quality of life?