New course for Autumn 2018 @UChicago: Character and Commerce: Practical Wisdom in Economic Life

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On the schedule for Autumn 2018 at the University of Chicago is a new course for undergraduate and graduate students by our co-Principal Investigator Candace Vogler.

Annette Pierdziwol and Tim Smartt, two doctoral students who work with the Institute for Ethics and Society from Notre Dame University Australia, will join Vogler to observe the course with an eye toward implementing it in the new Business School at Notre Dame Australia.

 

PHIL24098/34098. Character and Commerce: Practical Wisdom in Economic Life. The operations of the global economy set the terms that most people live with every day of their lives.  In the face of the vastness, movement, and variety of economic life, it can be hard to see how moral philosophy can intersect meaningfully with economic concerns.  It is one thing to be worried about economic growth and development, sustainability, regulation, taxation, and the like—concerns with large-scale policy matters.  It is quite another to reflect on individual conduct.  In this course, we will look at one small aspect of the place of individual conduct in an economic landscape frequently dominated by large firms.  As anyone who has spent time reading work by Immanuel Kant, say, or Thomas Aquinas, or a newspaper will know, human beings can act against their own better judgment.  My better judgment can be better in any of the following senses: it can track what will be more advantageous for me, it can target more effective and efficient solutions to problems that I am charged with solving or helping to solve, or it can direct my actions and responses ethically.  The ‘or’ is inclusive. Practical judgment brings a host of general considerations to bear on my circumstances.  Practical wisdom is excellence in practical judgement.  In this course, we will read empirical work on the systematic ways in which people fail to live up to their own ideals alongside philosophical work on practical wisdom, with an eye toward exploring ways of cultivating practical wisdom.  Our cases and examples will be drawn from studies of corporate life and economic decision-making.  But the lessons we will hope to learn are more generally applicable.

Thinking about Christmas like an economist

This post first appeared on the Stockholm University’s online 2016 Advent Calendar. For the original post and link to others in the series, click here.

 

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What is Christmas? A time for communion with family and friends, perhaps, or a period of quiet reflection? If that’s what you think, it’s because you’re not a hard-nosed economist.

 

Ever since A. C. Pigou – the “father of welfare economics” – economists have measured welfare by subtracting what you did pay for something from what you would pay (at most). If you would pay as much as SEK 50 for a cup of coffee but the campus cafeteria only charges SEK 20, then the welfare effect of buying a cup is SEK 30, which is a good thing.

 

In 1993, the economist Joel Waldfogel asked his students to report, first, the retail price of the presents they had received at Christmas, and second, what they would be willing to pay for those things. He found that students would only pay two-thirds to nine-tenths of the cost of their gifts – meaning that one-third to one-tenth of all money spent of gifts for them was lost, which is a bad thing.

 

People Christmas shop to the tune of SEK 70 billion (USD 7.6 billion) in Sweden alone. Even if only a tenth of the value evaporates, the total “deadweight loss” would still equal SEK 7 billion (USD 760 million), which is an enormous amount of money.

 

If you think like an economist, the sure way to avoid deadweight losses is not to give presents. Perhaps you can invite the family to sit down by the Christmas tree and order something they were going to buy for themselves anyway from their preferred online retailer.

 

If you think like an economist, but still feel compelled to give presents, you can minimize losses by giving cash. Perhaps you can invite the family to sit down by the Christmas tree and exchange gift-wrapped SEK 100 bills – or just transfer money to each other using some mobile app.

 

Or, you know, you can not think like an economist.

 


Erik Angner is a  scholar with Virtue, Happiness, & the Meaning of Life, and Associate Professor of Philosophy at Stockholm University.

Does Money Buy Happiness?

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One of the most intense debates in the science of happiness – the effort to study who’s happy and why in a scientific manner – concerns the relationship between money and happiness. “Money can’t buy happiness,” people say. But those who disagree believe the science backs them up. “Money Buys Happiness and You Can Never Have Too Much, New Research Says” announces Derek Thompson at The Atlantic. Over at Vox, Dylan Matthews adds: “Work by economists Betsey Stevenson and Justin Wolfers … has found that there’s no satiation point” – meaning a point where more money does not translate into more happiness.

A minor point first. Normally, scientists say that they have established some claim when they’ve shown that the other possibility can confidently be rejected. Showing that money buys happiness therefore requires rejecting the hypothesis that it doesn’t. But this is not what Stevenson and Wolfers do. Instead, they show that you cannot reject the hypothesis that money buys happiness. From this fact – if it is one – you still can’t infer that money buys happiness. If you did, you’d be guilty of the sort of thing your Psych 101 professor would call a fallacy. This is why Stevenson and Wolfers in their actual work only conclude that they “find no evidence of a satiation point” – not that “there’s no satiation point,” as Matthews claims.

But this sort of concern is probably of greater interest to intro-to-psych professors than to anybody else. The issue I figure Thompson, Matthews, and their readers are most interested in is whether they’ll be happier if they become lawyers, take the high-flying jobs, accept the promotions, work longer hours, and do whatever else is required to bring in more cash.

Suppose it is true that there is no satiation point, and that happiness is always increasing in money. Does this mean that you should try to make more of it?

Well, it doesn’t, and the reason is (or should be) familiar to all students of economics. Whenever you take some action to make more money, there is always another course of action you do not take. When you become a full-time lawyer, you can’t also become a full-time writer; when you work longer hours, you have less time to spend with your kids; and so on.

And it’s always possible that the other course of action will give you even more happiness. Even if the extra money you make as a hard-working lawyer would make you happier, it is certainly possible that writing or hanging out with your kids would make you even happier.

Ignoring this fact amounts to ignoring the opportunity cost of pursuing more money, and that’s also a fallacy.

On the question of money and happiness, in spite of it all, the science is far from conclusive.


Erik Angner is Associate Professor of Philosophy, Economics, and Public Policy at George Mason University and a Scholar with Virtue, Happiness, & the Meaning of Life.