Sunday, December 05, 2010

On joyless positions

Most of the time, Colby Cosh stands out as one of the prominent Canadian commentators most willing to be skeptical of questionable conventional wisdom. But his post on new efforts to measure happiness reveals one obvious bit of unquestioning belief in a highly dubious assumption. And it's worth pointing out how that unduly narrow focus figures to lead to the wrong policy prescriptions.

Here's Cosh:
There is a great deal of excitement nowadays, among the gormless, about “happiness” research of this nature. I’ve mentioned before that I think “food miles”/”locavorism” represents one trendy, na├»ve attempt to create a modern-day alterna-Marxism and establish a quasi-religious standard of value not founded in economic exchange. “Gross national happiness”, which is popular with greens and Europeans looking for alternatives to odious “Anglo-Saxon” neoliberalism, is surely an analogous phenomenon. The correct public policies, you see, are really the ones that create the most net happiness, as opposed to necessarily being those that create GDP growth; so isn’t it the most natural thing in the world to just ask people how happy they are and use regression techniques to sniff out the underlying factors?
...
Money won’t make you happy, they say—but they’re not really referring to the whole package of benefits of having money; they’re talking about an artificially isolated, Unca-Scrooge’s-vault kind of enjoyment of money for its own sake. And guess what: money actually still turns out to be pretty damn good at making people happier, even when you do your best to reduce it to nothing but the sight of chains of zeroes in a bankbook or the ability to purchase a nice stereo.

If you don’t think money really makes people happier, try offering five-dollar bills on the street, and see whether your wallet runs out before folks stop taking the cash. The gross-national-happiness proponents will be tempted to reply that the results of such an “experiment” may reflect a delusional, unhealthy, socially cultivated preoccupation with money; in other words, they’re willing to accept self-reports of people saying “I feel about a 2 today”, but totally unwilling to accept the gold standard of revealed preference.
As far as I can tell, Cosh's attempt to dismiss all measures other than GDP as a standard for policy outcomes gives rise to two major questions - and Cosh lands on the wrong side of both.

First, is money indeed the "gold standard of revealed preference"? And even if one takes GDP to be the current "gold standard", does that mean we should deliberately dismiss any attempt to develop better measures?

Since I understand Cosh to be somewhat of a hockey fan, let's consider both questions by analogy to a general manager who makes a comparable assumption in running a team.

Hockey is ultimately about scoring more goals than one's opponent. And while most other measures of player value are based on some element of subjective assessment which is tracked unevenly and only minimally traceable to the outcome of a particular game, information about who has scored the most goals is readily available to assess any particular player or team.

So why not bypass the uncertainty of scouting reports, player projections and advanced metrics, and simply run a team on the basis of the simplest measure which has some theoretical link to the desired outcome - i.e. acquiring players who have the best track record of scoring goals?

Of course, the answer is fairly obvious: the fact that goals are reliably tracked and have some link to winning doesn't make them the be-all and end-all in team development. A general manager would probably find willing trading partners if he decided to build a forward unit around Ilya Kovalchuk, Alexandre Burrows, Matt Moulson and Jussi Jokinen, with Marc-Andre Bergeron and Ian White as his key defencemen and Ron Hextall lured out of retirement to cover all the goal-scoring angles. But that effort might - and only might - succeed even on the one measure being considered. (After all, context does matter in developing a player's track record even for goal-scoring - and that's no less true in analyzing the factors underlying GDP changes than in figuring out why a hockey player has scored goals.)

But it's a virtual certainty that using goal-scoring as a proxy for overall player talent simply because it offers an easy way to evaluate players would result in utter disaster for the team's won-loss record. So any general manager who did decide to convert his team to a form of Borschevskevism wouldn't figure to last in the job for long.

Mind you, that's largely the case in hockey because there are obviously other factors which play a role in the game (i.e. goal prevention), and a broader indicator of success that's widely accepted in the form of wins and losses. But is it accurate to say that both aren't also present in the case of the GDP vs. "other measures of happiness" argument?

Well, let's go back to our first two questions. Does anybody honestly believe that wealth maximization is the goal of such a substantial proportion of human behaviour as to serve as a remotely reasonable substitute for "that which we seek in policy development"? There may not be any easy answer as to how to weight the relative priorities, but I don't see much room for dispute that family, friends, leisure time, positive impact on one's community, and other factors are all part of a balanced life which most people tend to seek.

And indeed, unless Cosh himself has put together a thorough economic analysis as to how he can expect to make the most possible money in his current job (and by his own account obtain more satisfaction by the "gold standard of revealed preference"), I'd be inclined to see his own choice of career paths - involving an apparent tradeoff of money for public influence as compared to, say, investment banking - as a counterargument to his view that wealth maximization should be seen as the lone and central priority for decision-making at either the individual or the societal level.

So it's fairly easy to demonstrate that judging policy based on its GDP impacts alone presents a distorted picture of our ultimate desired results, just like judging hockey players on their goal total alone. But that leaves the second question to be asked: could it be that we should still ignore other possible types of measurement based on the chosen indicator coming closer to the mark?

Here, there's somewhat of a divergence between the two scenarios since hockey involves a built-in greater end result, in the form of team wins and losses.

But I presume Cosh is aware that hockey, like other sports, has undergone more and more analysis in recent years which has given rise to new and better ways of evaluating players than traditional statistics. And a crucial part of finding better indicators is a willingness to research different ideas. Some of those may not prove more accurate than comfortable traditional statistics, but can still both add context to the existing numbers, and point in the right direction toward the development of new ways of evaluating outcomes which come far closer to the mark.

That means that in at least this one case, Cosh is the one making the absurd argument that we should deride and close our eyes to research which may - or may not - result in better ways of thinking about what we're actually seeking to accomplish in developing public policy, simply because he prefers focusing on the more easily-measured GDP instead. Which seems like a sure way to prioritize that measurable indicator over the results that people actually want - and to ensure that in the longer term, we fall far behind those who put some effort into figuring out how best to define and measure success.

(Edit: fixed typos.)

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