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The Economist’s Long Farewell
Robert E. Lane (Yale
University, USA) “Farewell! A long farewell to all my
greatness.” Cardinal
Wolsey, Henry
VIII (III, ii) Introduction Adam (an
economist named after Adam Smith [1723-1790]) and Desiderius
(a humanist-social scientist named after Desiderius
Erasmus [1466-1536]) are having lunch in a local restaurant while discussing
the merits and social costs of materialism. They are friends, of a sort. We
find them in the midst of an argument. Of course, Adam calls Desiderius “Dessie” and we
shall do the same. “So what
is wrong with materialism?” asked Adam, wiping his material lips with a
material napkin -- or at least a modestly material paper napkin. Dessie knocked
on wood to invoke the gods of chance to protect him from violating the laws
of nature. “I want to talk about
materialism as a set of beliefs and values, the source of economic man's
alleged behavior, not the metaphysical or
historical variants.” “Please
get on with it,” said Adam as though he were asking an executioner not to
delay any further. “Good
economists,” said Dessie, “have always believed
that the bundle of goods people demand changes as their income levels rise:
e.g., a smaller proportion of their income is spent on food and shelter and a
larger proportion on travel and entertainment and education -- and saving.
The only thing that economists, except for Tibor Scitovsky,i have not already noticed is that
the goods people in a rich society want are those that are not to be
purchased in the market like family felicity and friendship. “So”
asked Adam, “why is your dinner less important than family felicity and
friendships?” “We can't
compare them until we know whether or not you have had your dinner. Your
namesake, Adam Smith assumed it was dinner time when he talked about the
dominance of material self-interest,ii
and for many people in the 18th century
dinner time came more often than did dinner. I am only reciting
economists' theory of declining marginal utility. In capsule form, if you are
hungry, dinner has a higher priority; if (after dinner), you are lonely,
friendships are more desirable.” By
comparison, he thought, explaining why two and two make four would be a deep
exercise. “All
right,” said Adam somewhat mortified, “but you are not talking simply about a
change in the goods people prefer; you are talking about a systematic shift
in values; what do you call your new system? ‘The New Humanism’? And you want
to contrast this new system with an old one, one that economists call a
‘market economy’ and that you call, much less precisely, ‘materialism’. Aside
from substituting a preference for people over commodities, as you might say,
what is the difference between the two systems?” “You
brush aside the crucial point -- but one thing at a time,” said Dessie. “You chaps are always talking about margins, so
now I propose a marginal decline in materialism with the slack taken up by a
marginal increase in the humanistic motives and activities such as friendship
and an intrinsic interest in work. Because the data suggest that further
increases in GDP per capita in rich countries do not contribute much to happiness,iii a strict utilitarian analysis
suggests this marginal change from pursuit of money to pursuit of
companionship or other intrinsic goals. But note that this marginal change is
utility-efficient only after that point where the utility of one more dollar
is the same as, say, one more friend. We have passed that point in the US:
number of friends is a better predictor of happiness than is number of
dollars possessed.”iv “If
materialism is necessary for growth,” Adam said, “then the lack of materialism
implies a static economy and more poverty. It is you who seem to favor a loss of well-being.” “The
set of meanings I want to explore,” said Dessie
ignoring the criticism, “lie in a measure of materialist attitudes in a
consumer society. We are not pioneers creating our own maps of unexplored
terrain. Others have been here before us. For example, Marsha Richins and Scott Dawson have developed a measure of
materialism that deals with three aspects of the concept: (1) ‘acquisition
centrality,’ meaning that ‘materialists place possessions and their
acquisition at the center of their lives.’ (2)
acquisition and possession of things as the central route to happiness, that
is, materialists ‘see possessions and acquisition as essential to their satisfaction
and well-being;’ and (3) success is defined in terms of material things:
‘Materialists tend to judge their own and others' success by the number and
quality of possessions accumulated.’ Technically, these three elements
represent three independent factors in their factor analysis of a broad range
of eighteen questions. To measure the first factor, they ask, inter alia,
whether the following is generally true for the respondent: ‘Buying things
gives me a lot of pleasure.’ To measure the happiness dimension they invite
responses to: ‘It sometimes bothers me quite a bit that I can't afford to buy
all the things I'd like.’ And to test the third dimension dealing with
success they ask agreement or disagreement with the proposition: ‘Some of the
most important achievements in life include acquiring material possessions.’v “You're
stacking the deck by your definitions -- a formal rhetorical error,” said
Adam. “Here is young Albert starting out in life; he is married and has two
small children; he has to pay for shelter, food, clothing and medical care
for his family; he should save something lest his job fail and, in any event,
for his children's education. Because he cares a lot about money, you call
him a materialist and put him down. It isn't fair.” Adam seemed to suffer
vicariously for Albert. “We are
not talking about the priority of needs,”vi
said Dessie. “I agree with you and, as it happens
with Marx who said someplace: ‘We must eat before we think.’ But that is true
of people with a variety of motives and points of view. It will be more
fruitful if we focus on Richins and Dawson's conceptualization of materialist
beliefs and motives.” “All
right,” said Adam, “but I still don't see what's wrong with emphasizing
material acquisitions. Albert, our young father just starting out, did. And
what is wrong with agreeing with the vast majority of Americans: those who
‘make it’ financially have, indeed, succeeded?” “As a
matter of fact,” said Dessie wearing his social
science hat, “what Americans think of when they think of materialism is:
‘status display,’ seeking ‘wealth for its own sake;’ and people who are
‘predisposed toward money, wealth, innovations, and the possessions of others’.vii So Albert and the rest of us
working stiffs may or may not be a materialist, but an interest in earning a
living is neither here nor there.” Dessie felt
things were going better. “So now
you have a definition and a measure; how does this help us understand the
costs of the materialism that makes us rich?” asked Adam weary of
distinctions in what had always seemed like a straightforward natural
preference for a fungible currency that bought so many pleasures. But Dessie was off on another tack. The Dark Side of Materialism
“First,
materialists are less generous than others,” said Dessie
counting on his fingers. Richins and Dawson offered
their subjects a hypothetical $20,000 windfall and asked them how they would
spend it. As it turned out: ‘materialists would spend three times as much on
themselves, would contribute less to charity or church, give less than half
as much to friends and family.’ Materialism scores were negatively correlated
with support for a specific environmental charity. Compared to others,
materialists also reported that they
do not like to lend things to their friends and that they do not like to have
guests in their homes.viii “Second,
materialists are more invidious than others, especially but not exclusively
when they compare themselves with those who are richer than they are.ix ‘Materialists tend to judge their own
and others' success by the number and quality of possessions accumulated.’
They value these things more than they value their relationships to other people.x This may be because of lack of
interest in people, a matter of taste -- or because of the lack of social
skills that haunts these thing-minded people.” “Third,
materialists seem to be more difficult to satisfy; they report that they need
higher incomes than those low in materialism.xi
More than others, they are dissatisfied with their lives. As Durkheim prophesied, empirical studies find that:
“Although materialists expect acquisition to make them happy, ... the lust
for goods can be insatiable: the pleasures of a new acquisition are quickly
forgotten and replaced with a desire for more.”xii
“The
consequence of all this,” said Dessie, using his
hands to wield his fork instead of for counting the points he was making, “is
that materialists are significantly less happy than are nonmaterialists:
in the Richins and Dawson study, materialism was
negatively related “to satisfaction in all the aspects of life measured:”
amount of fun you are having (note they are not hedonists), income and
standard of living, friends, and even (modestly) with satisfaction with
family life.”xiii These findings are not
idiosyncratic; another study including young people drawn from outside
college life found the same thing.xiv “The
invisible hand is thumbing its nose at you, Dessie,”
said Adam in a jocular tone. As you might have guessed, it isn't the fact that
people want money but why they want
it that influences their happiness. From a study of 260 business students, we
know that economic motives include security in old age, current family
support, charity (sic!), and personal motives such as relieving self-doubt.
Those who sought money for its own sake or because of pride and vanity were,
at you might expect, unhappier than others. Those who sought money for such
purposes as family support and charity were as happy as anybody else,
normally happy.xv I just can't believe”
he continued, “that the hard working people that brought us this wealth (he
looked around at the restaurant's imitation leather and Coca Cola clock --
and looked away) can have created so much prosperity while suffering the
pains of the materialism you describe.” “Remember,”
said Dessie, that we are not talking about Frank
Knight's ‘most noble and sensitive characters,’ who are condemned ‘to lead
unhappy and futile lives’xvi because
they are nonmaterialists; we are talking about the unhappiness
of perfect fits: materialists in a material civilization. Moreover, ‘placing
money high in the rank ordering [of personal goals] was associated with less
vitality, more depression and more anxiety.’ For adolescents, ‘high ratings
of the importance of financial success was related to lower global
functioning, lower social productivity, and more behavior
problems.’xvii “Are you sure you are not letting your distaste for economic man (or is it economist men?) bias your account of materialism?” asked Adam who was used to criticisms of the market on ethical ground but never on hedonic grounds. “ If it is the materialists who have brought prosperity to the world, why do people think it is an amoral set of attitudes and beliefs?” Does Materialism Crowd Out Moral and Intrinsic Motives? “I always
thought materialism was the butt of criticisms by moralizers,” Adam
continued, “not hedonists. But I should remind you that moral economics in
its incarnation as Christian economics did not rescue the developing
countries of Europe from their poverty and, well, their ‘backwardness’ in the
Middle Ages.” “OK,”
said Dessie, “will you agree that if people's
material self-interest dominates choices in the presence of monetary appeals
and wanes when community service or other ‘intrinsic’ appeals are made
salient, that materialism can be said to ‘crowd out’ non-material, often
moral appeals? “We are
back to Stigler's proposition that in any test, material self-interest will
win over non-material appeals,”xviii said
Adam. “Ah ha,
but this time the research is by economists!” said Dessie,
triumphantly. “Consider why people pay taxes under circumstances where the
chance of being caught cheating is trivial. Will you agree that the only
plausible explanation is that they are responsive to community ethical norms,
that is, that ethical norms dominate material self-interest in these circumstances?”xix “Economists
never claimed that material self-interest dominates all other interests, such
as maternal love, under all circumstances. They are talking about market
situations,” said Adam, slightly annoyed. “OK,
then,“ said Dessie, “consider the case of attitudes
toward depositing nuclear waste in a person's own commune in Switzerland:
When not offered a collective payment, a majority
supported it as a civic duty even though they knew the hazards in such waste
in their own backyards, but when offered a subsidy, far fewer people accepted
the risk. This was not because the offer of money changed the perception of
the risk.xx Incidentally,” he continued,
“this redefinition of the situation has been found to occur in individual
cases in the United States, as well. Experiments find that people are more
likely to volunteer to give blood if they are not paid than if a payment
is offered.”xxi “OK, so
ethics and identification with community may sometimes crowd out material
motives and material motives can crown out ethical and intrinsic motives,”
said Adam, hoping to limit the damage to a few extraordinary situations.
“What does that prove?” “Well,“
said Dessie, “this Zurich crowding out research
certainty suggests that as a dominant gestalt,
materialism shapes motives and values and crowds out competing one's wherever
the competition is less forceful. If you will allow me to personify and
dramatize, I see an eternal struggle between THE MATERIALIST seeking
gratification of various acquisitive wants, and THE HUMANIST seeking
competing gratification of a different set of wants. In a relatively
unrelieved materialist culture it is not surprising that MATERIALISM wins. We
stack the cards in its favor.” Dessie
hardly noticed the mixed metaphors. Adam was
tempted to say that nature stacked the cards and that this was what Darwin
was saying in different terms, but the Darwinist defense
of the market was not one he wanted to try against Dessie.
He could see that he was not making any progress on this theme of competing
material and nonmaterial motives. He knew that the next step was an inquiry
into how much economists had to be paid to publish in the better journalsxii or, worse, whether economic
students were more selfish than others (he was familiar with the Marwell and Ames study showing that they were),xiii
and decided it was time to leave this topic. He remembered that wicked little
verse aimed at an English professor by Hicks -- not John, but Granville -- at
Harvard so long ago: When
some men achieve a mild success They
think of spirit more, and matter less. And
as they wiser grow, wiser and fatter, They
scold the common herd who worship matter. “I have
satisfied my material needs,” he said looking at his empty soup bowl, “and my
friendship needs.” He paused as he put his jacket on. “But intellectually, I
need more nourishment.” Notes
i
Tibor Scitovsky. 1977.
The Joyless Economy: An Inquiry into Human Satisfaction and Consumer
Dissatisfaction. New York: Oxford
University Press. vii
Susan Fournier and Marsha L. Richins. 1991. “Some
Theoretical and Popular Notions Concerning Materialism,” Journal of Social Behavior &
Personality. 6: 403-414 at p. 403. viii
Richins and Dawson, “A Consumer Values Orientation
for Materialism,” pp. 312-313. ix
Russell W. Belk. 1985. “Materialism: Trait Aspects of Living in a Material
World,” Journal of Consumer Research, 12: 265-280. x
Richins and Dawson, “A Consumer Values Orientation
for Materialism,” pp. 304, 308. xi Ibid., p. 311. xii
Ibid., p. 308. xiii
Ibid., p. 313. xiv
Tim Kasser and Richard
Ryan. 1996. “Further Examining the American Dream: Differential Correlates of Intrinsic and Extrinsic Goals,” Personality and Social Psychology
Bulletin, 22: 280-287 at p.
280. xv
Abhishek
Srivastava, Edwin A. Locke, and Kathryn A. Bartol. 2001. “Money and Subjective Well-Being: It's not
the Money, It's the Motive,” Journal of
Personality and Social Psychology,
80: 959-971 xvi
Frank Knight. 1935. The Ethics of Competition and other Essays. New York: Augustus M. Kelley, p. 66 xvii
Tim Kasser and Richard
M. Ryan. 1993. “A Dark Side of the American Dream: Correlates of Financial
Success as a Central Life Aspiration,” Journal
of Personality and Social Psychology,
65: 410-422 at pp. 417, 419. xviii
George J. Stigler. 1981. "Economics or
Ethics?" In S. McMurrin, ed., Tanner Lectures on Human Values, vol. II. Cambridge: Cambridge University
Press, p. 176. xix
Bruno S. Frey. 1998. “Institutions and Morale:
The Crowding Out Effect.” In Avner Ben-Ner and Louis Putterman, eds., Economics, Values, and Organization. New York: Cambridge University Press,
437-460. xx
Ibid., pp. 448-454. xxi
W. Upton, Altruism,
Attribution, and Intrinsic Motivation in the Recruitment of Blood Donors (Doctoral dissertation, Cornell University,
1973). Reported in John Condry and James Chambers,
“Intrinsic Motivation and the Process of Learning.” In Mark R. Lepper and David Greene, eds. 1978. The Hidden Costs of Rewards: New Perspectives on the Psychology of
Human Motivation. Hillsdale,NJ: Wiley/ Erlbaum, p. 71 xxii
Stigler does not report the effect of payment on
economists' behavior but he does say that they
cultivate ideas which find a market (pp. 32-33), producing what people desire
(p. 63), and preach what society wants to hear (p.33). See George J. Stigler.
1982. The Economist as Preacher and
Other Essays. Chicago: University
of Chicago Press. xxiiiGerald
Marwell and Ruth Ames. 1981. “Economists Free Ride.
Does anyone Else?" Journal of
Public Economics, 15: 259-310.
Apparently Adam was not familiar with further contrary evidence in T. D.
Stanley and Ume Tran. 1998. “Economics Students
Need not be Greedy: Fairness and the Ultimatum Game,” Journal of Socio-Economics,
27: 657-664; Amanda Bennett. 1995. “Economics Students Aren't Selfish;
They're Just Not Entirely Honest.” Wall
Street Journal, January 18, 1995,
B1. Prof.
Lane’s most recent book is The
Loss of Happiness in Market Democracies. For contacting, please
use: Robert E. Lane, 558 Chapel Street, New Haven, CT 06511, USA or robert.lane@yale.edu ____________________________ SUGGESTED CITATION: Robert E. Lane, “The Economist’s Long Farewell”, post-autistic economics review,
issue no. 15, September 4, 2002, article 6. . http://www.paecon.net/PAEReview/issue15/Lane15.htm |