Showing posts with label utility. Show all posts
Showing posts with label utility. Show all posts

Wednesday, March 2, 2016

Doing The Right Thing - Part 1

As conversations about The Value Crisis proliferate and mature, there is still a desire to find ways of applying the book's principles in some useful manner.  In this post, I present two common and easily recognized ethical dilemmas.  Then I share a argument for how not to resolve them, along with some hints as to how you could, by recognizing the difference between number-based and human values.

Both topics arose in everyday conversations in the last month.




Conversation #1:  A colleague was telling me about his friend who is a fanatical watcher of Freecycle lists.  These are community initiatives where people who no longer want a household item can post it on a list so that anyone who needs that item can come by and pick it up for free.  Part of the intent is obviously to keep potentially useful things out of the landfill.  However, this friend has turned the service into a business for himself, racing to the donor before anyone else, picking up the free items, and then turning around and selling them.  Is this ethical?  The owner was giving the stuff away for free anyway, and anyone else could do the same, so what's the harm?

Conversation #2:  Canada is in the midst of bringing in 25,000 Syrian refugees to become fully-fledged Canadians.  At the same time, the Canadian government wants to cut back on their military presence in Syria, potentially reducing their role in taking out the regimes that are responsible for there being refugees in the first place.  The cost of transporting, housing, and feeding all these refugees is enormous.  Is it really ethical to fast-track this particular class of immigrant and spend so much on them when there are already plenty of citizens in just as a great a need for housing and food?

A common way to think about such dilemmas is to consider who benefits and who is harmed by such actions.  The basic principle is that an ethical choice would be the action that provides the greatest good for the greatest number.  This philosophy, known as utilitarianism, seems quite reasonable, and most would accept the concept in theory.  One attraction is that it has the potential to provide a clear-cut, rational decision based on a rational and objective calculation.

Let's consider the dilemmas I presented in light of utilitarianism.  In the first example, the person giving away the object has presumably decided that they can't be bothered to sell it - their benefit is simply getting rid of it, while knowing that it's going to a good home, not the landfill.  It is likely that more than one person may desire the free object, but only one person can own the item.  If the recipient gets it for free, then a second person derives benefit.  However, if my colleague's friend gets there first and goes to the bother of selling the object, then he gets some cash (second benefit) and a third person gets a good deal on a used object.  In terms of assessing harm, no-one loses anything that they already had, so it's win-win-win, right?

In the second example, it is true that taking thousands of people from their homeland and livelihoods, flying them to a foreign country, providing them with all of the basic necessities at no cost to them (but significant cost to the host citizens), teaching them a new language, and then trying to find them affordable housing and employment - all makes no economic sense.  Nor is it fair to many of the host country's own people who are already struggling with the same challenges, or to immigrants from other countries who have to wait years to be accepted.  Many people are harmed compared to benefit for a relative few.

My difficulty with utilitarianism is that it is essentially a number-based value system.  It attempts to maximize a supposedly quantifiable measure of happiness (or more accurately, "utility").  Even assuming that most people can find a common consensus of what constitutes good, and that they can predict outcomes with sufficient accuracy, there are problems with the philosophy.  Critics of utilitarianism say that under such a value set, it is easy to start arguing that the ends justify the means.  In other words, we stop considering the ethics of the means because a utility-maximizing value system is teleological - meaning its morality is determined by the end result.  When put in this light, it is quite easy to come up with examples of where the ends do not justify the means.  Many thousands of consumers might derive significant benefit from the work of a relatively small number of children enslaved in a foreign factory making cheap goods, but that's not the kind of calculation we should be performing to determine ethical practices.

A common alternative to a results-based ethical system is a rule-based one, such as can be found in most religions.  We measure our actions (the "means") against a predetermined set of rules.  Of course, such systems have there own distinct pitfalls.  Rules are inflexible, they don't respond well to exceptions, and they can easily do more harm than good.  Democracy - a numbers-based value system studied extensively in Chapter 9 of The Value Crisis - defends ethics by its means:  A decision is justified if the majority vote that way.  Note the inevitability of the minorities suffering under both utilitarianism and democracy.

Still, in the end, most people rely on some combination of the above to guide their actions (or to justify choices that might be questionable!).  At other times, we struggle to know what is the right thing to do.  So here are some observations, based on our original ethical dilemmas.

When I was told about the Freecycle 'entrepreneur' who grabs free stuff and sells it, I was immediately repulsed by this.  Clearly it was contrary to my own value system, so I wondered what it was that I had instinctively found abhorrent.  It is by no means obvious.  For example, had the reseller paid the original owner even a tiny sum instead of taking it for nothing, I wouldn't have the same reaction - and that's the critical clue.  It is not the profit that irked me.  Rather, I believe it to be the transformation of the gesture from one value system to another that rubbed me the wrong way.

When someone takes an item of potential monetary value and gives it away, they are expressing a different kind of value.  It's not quantifiable.  As noted above, they are freeing themselves of an item they no longer need; they can relax knowing they're not adding to the community's trash pile; and they can rejoice in the fact that it is going to someone who needs it at no cost to the recipient.  That conveys considerable benefit in human values: simplification, environmental responsibility, and generosity.  By participating in the established Freecycle system, they put the item out there with an understanding and trust that it will go to a fellow citizen for free.

'Entrepreneurs' who crassly take advantage of this system, abuse the understanding and trust, and profit monetarily from the expression of those human values are twisting and diminishing them.  It doesn't matter whether the donor is aware of this or not (and almost certainly they are not aware that this is happening).  In my books, it is simply wrong.  Integrity means doing the right thing, even when no-one is looking.

So how would anyone know that this is the wrong thing, if the feeling in their gut is either absent or ignored?  The key, and the point of this post, is to note the value system transformation.  The initial act was an expression of human values.  Turning it into a number-based transaction disrespectfully negates those human values, and once you've done that, you can't go back. The 'creation' of monetary value from nothing was not, in fact, from nothing at all - it came at a cost to human values.  (Chapter 8 of The Value Crisis talks more about what happens when we attempt to use value systems interchangeably - with some dramatic examples of the harm that can be done.)

Monetary values, in my opinion, do not have the right to trump unquantifiable values.  That kind of thinking leads to huge global challenges, of the sort we are only now beginning to acknowledge.  And fixing those huge issues starts with each and every one of us being able to recognize the right thing to do.

Perhaps that's enough to chew on for now.  I'll talk about the refugee conundrum in "Doing The Right Thing - Part 2".





Tuesday, May 6, 2014

The Gift of the Economist


This post is inspired by Michael Sandel’s What Money Can’t Buy: The Moral Limits of Markets.  Let me begin by saying that Sandel teaches "Justice", Harvard University's most popular course ever, and if you watch one of his lectures (which is easy to do), you will immediately know why.

In What Money Can't Buy, Sandel provokes some important questions about how we have moved from a market economy to a market society, where anything and everything is for sale.   Today we look at "The Case Against Gifts" and "Monetizing Gifts" (pp 98-107).

The economist's case against gifts is simple: it is not a rational social practice.  Sandel (who I should point out is not promoting this idea) outlines it in this way:

From the standpoint of market reasoning, it is almost always better to give cash rather than a gift.  If you assume that people generally know their own preferences best, and that the point of giving a gift is to make your friend or loved one happy, then it's hard to beat a monetary payment. [...] Your friend or lover can either spend the cash on the item you would have bought, or (more likely) on something that brings even greater pleasure.

A great champion of this view is Joel Waldfogel, an economist at the University of Pennsylvania.  I started my review of Waldfogel's work with his 1993 article The Deadweight Loss of Christmas.  The essential message is that gifts are a poor way to maximize utility for the recipient (econo-speak for "make them happiest").  Assuming that the greatest result is achieved by purchasing exactly what the recipient would buy for themselves, anything less represents money spent that does not return full value.  He estimates that this typically ranges between a 10% to 35% drop in value.  In 2009, he presented his case in a more popularly accessible book: Scroogenomics: Why You Shouldn't Buy Presents for the Holidays.

Reading over the book's Table of Contents, I thought I might personally find his arguments very appealing.  In the interests of full disclosure, I hate Christmas gift-giving.  But if you expect Waldfogel to condemn the rampant consumerism of this multi-billion dollar holiday, you might be disappointed.  His take is still that of an economist, trying to maximize utility.  More on that in a moment.

Back to the original book, Sandel points out that a contributing factor to cash not being a popular gift is the stigma attached to simply giving money. It has a lazy, uncaring connotation.  Alas, the recent and fast-growing trend of gift card giving seems to be blurring that distinction.  The recipient knows exactly how much money was spent on the gift, but now it seems slightly more personalized - that single step from cash makes it more socially acceptable.  And if the recipient really doesn't like the retailer featured, there are websites that allow you to cash them in - at a discount that presumably reflects Waldfogel's value drop (as well as the profit margin of the middle-man).

And yet, imagine the perfect economist's world of the utility maximization through giving cash.  Christmas rolls around and I give my good friend a $100 bill, and my friend gives me a $100 bill.  So what?  And what is the message when the amounts are different?  The kiss of death for this practice, for me, is the attachment of a number to the exchange.  When the value of gift-giving is expressed and measured as a number, you introduce all of the awkward baggage that comes along with number-based values - baggage that is derived from the unique properties of numbers themselves.

Numbers are linear, consistent, and universal.   Ten is always greater than five, and always by the same amount.  If the value of a ten-dollar gift is measured by number alone, then a ten-dollar gift will always be worth twice as much as a five-dollar gift.  When the gift is cash, there can be no other value than a numeric one.  So far, Waldfogel would not only be in complete agreement - he wouldn't see the problem.

I believe the fallacy of this entire line of inquiry is in the primary objective of utility maximization.  I propose that, at its most important level, that is NOT what gift-giving is about.  The giving of a gift is a communication between two people. The message conveyed is derived from many factors, only one of which may or may not be the monetary cost of the gift.  No matter how much your girlfriend wants to lose weight but can't afford the fees of her favourite weight loss program, I don't recommend picking up the tab for her with a gift card to a weight loss clinic.  When was the last time you received a hand-made birthday card and bemoaned the fact that the giver may not have spent a dime of money on it?

I contend that when I give a gift, I am not trying to maximize utility by giving the recipient something that I know they would have spent the money on anyway, given the cash.  Think about the most 'successful' gifts you have ever received.  How many are measured by their monetary value?  Are they things you would have bought for yourself anyway?  Or are they instead powerful expressions of love and thoughtfulness based on what went into their creation or selection?  Many great gifts are 'luxuries' that the recipient might never have spent their own money on, or they might lead to discoveries of new interests and pleasures.

One of Waldfogel's areas of research was the correlation between the closeness of the relationship between giver and receiver, and the resulting value drop.  Not surprisingly, the more remote the relationship, the less likely that the value of the gift to the recipient will match the money spent.  If Aunt Gloria doesn't know you very well, her selection of the dollar-store crockery and butterfly cardigan might not be a hit on Christmas morning.  In such cases, it might be more appropriate to give the gift card or cash.  I would agree with this, because it is also a more accurate reflection of the real message behind gift: "I feel I should give you something, but I don't know you well, so I'm not going to pretend that I do."  Personally, my preference in such cases is to either give a tasteful consumable, such as the ubiquitous bottle of wine, or to not give anything at all - which to me seems more honest.

Fans of "The Big Bang" TV series may recall the episode where super-geek Sheldon Cooper goes out and purchases several gift baskets at varying prices so that when he receives a Christmas gift he can reciprocate with a matching monetary value.  When Penny from next door gives him a signed paper napkin used by Star Trek icon Leonard Nimoy, Sheldon is overwhelmed and gives her every basket in his possession - and it still isn't enough.

The old adage is that it's the thought that counts.  I hope this gives you something to think about.