Don Ross

Writing in the Business Day on 2 October 2007, economics journalist Hilary Joffe notes that “it was not long ago that there was a famine of infrastructure investment [in South Africa]; now there’s a feast, with each new week bringing reports of new projects and new, much higher estimates of the totals to be spent in years to come.” Joffe expresses enthusiasm about this, for reasons with which we agree: The infrastructure feast has already helped to raise SA’s investment ratio to nearly 21% of gross domestic product, from a low of below 15% just five years ago. We are already seeing the beginnings of a shift from consumptiondriven to investment-driven growth that the economy needs if it is to grow on a sustainable basis. And of course much of that infrastructure is already urgently needed; and the need will grow as economic growth takes place. However, she is immediately led to ask two pressing questions. First, “even if these are all good and necessary projects, can SA’s economy afford them … all at the same time?” And second, “is anyone counting the total cost to the economy and puzzling out which projects should take priority, and whether some should wait (or be dropped altogether)?”.

Critics of mainstream economics typically rest important weight on the differences between people and the 'agents' that populate economic theory and economic models. Hollis and Nell (1975) is both representative of and ancestral to many more recent variations on the theme. Lately, the upgraded status of behavioral economics (BE) within the discipline's mainstream has encouraged a number of writers to use revolutionary rhetoric in promotion of a 'paradigm shift' that includes the rejection of 'rational economic man' (Ormerod 1994, Heilbroner and Milburg 1995, Fullbrook 2003). The current leading developers of BE are generally more circumspect, claiming that their approach complements standard theory rather than promising to supplant it (Camerer and Loewenstein 2004, Angner and Loewenstein this volume). However, they generally join the more florid critics in supposing that microeconomics is bound to improve its empirical relevance to the extent that it substitutes the study of people for that of abstract economic agents. Another body of thought that promotes this view stems from Sen's (1977) attack on standard economic agents as 'rational fools', amplified in Davis's (2003) argument that since economic agents lack some essential properties of human individuals, economic theory requires fundamental reform if it is to make progress in explaining human behavior.

This paper critically discusses Amartya Sen’s case for broadening the basket of wellbeing indicators in development policy beyond income and consumption expenditure. I first argue that, contrary to what Sen has suggested, the theoretical and practical motivations that he gives for this do not form a mutually complementary set. In the second, policy-focused, part of the paper I present problems Sen’s approach to measurement raises in the context of a case study from rural South Africa. I conclude by suggesting that development indicators should be regarded as narrower – in particular, that we should give privileged attention to women’s incomes – rather than broader. Keywords: development policy; well-being proxies; welfare; Amartya Sen Word count: 11,315..

Three recent book-length studies in the philosophy of economics (Mirowski 2002, Davis 2003, Ross 2005) have drawn attention to the fact that mainstream economic theory has consistently avoided commitment to any particular model of the person. This is the most significant respect in which economics has kept aloof from part of psychology. The widespread belief, on the other hand, that economists’ attentiveness to the psychology of choice and decision had to wait for the Allais challenge and then for Kahneman and Tversky is a myth. It is true that for a brief period after World War II economists led by Samuelson tried to operationalize choice as analytically derivative from observed consumer demand. This was a minor episode in the history of theory. Ross (2005) argues that, if anything, mainstream microeconomics has been more sensitive to theoretical fashions in the psychology of choice than has been good for it.

‘Naturalism’ about the ontology of society can most blandly be characterized as the belief that social phenomena are among the class of natural phenomena. Contemporary scholars are apt to regard this thesis as bland because its denial seems quaint at best, if not outright unhinged, after a century and a half of development in the social sciences. There has, however, been a powerful tradition in (at least) Western culture that has understood the ‘artificial’ as a primary contrast class with the ‘natural’, and which has interpreted the social as a creation of human beings that stands over and against the natural realm. Often..

I discuss the role of economics in the study of social cognition. A currently popular view is that microeconomics should collapse into psychology partly because cognitive science has shown that valuation is constitutively social, whereas non-psychological economics insists that it is not. In the paper I resist this view, partly by reference to the relevant history of economic theory, and partly by reference to an alternative model of the way in which that theory complements, without reducing to, psychological accounts of social cognition.

Economics is the only established discipline that is regularly charged not just with including ideologically motivated research programs and hypotheses, but with actually being (at least in its institutionalized mainstream form) an ideology. As Coleman (2002) documents, this charge has followed economics since its modern inception as ‘political economy’ in the eighteenth century. There is a veritable tradition of what Coleman calls ‘anti-economics’, most famously populated by people such as Ruskin and Carlyle, and extending in the contemporary environment to include philosophers John Gray[1] and John Dupré,[2] numerous popular agitators associated with environmentalism and the self-styled ‘anti-capitalist’ and ‘anti-globalization’ movements, and no small number of disillusioned economists.[3] Of course all disciplinary establishments rightly attract critical literature; but as far as I know no one has ever published a book called ‘The Death of Geology’ featuring a hangman’s noose on the cover.[4] Coleman’s compendium of evidence shows conclusively, in case anyone hasn’t been keeping their eyes and ears open, that economics is actively hated by a substantial number of people. There is no other discipline of which this is true, except insofar as some people hate all actual and would-be scientific disciplines from religious, green, or aesthetic motivations.

Addiction may or may not be a highly prevalent condition, but the concept of addiction is undeniably ubiquitous. From the people who cheerfully and publicly announce their addiction to coffee, or chocolate, or shopping, to those who ruefully and perhaps only in very special settings admit their addiction to alcohol or drugs, ‘‘addiction” is an oft-invoked explanatory frame for the presentation and characterization of individual behavior. Lately, it has even been applied to the behavior of super-personal entities, as in America’s ‘‘addiction” to oil. Although the ubiquity of the concept is surely a sign of its usefulness, it also gives one pause; can a term of such broad application really have precise meaning (compare the word ‘‘thing”)? And if not—if there is nothing that all the ‘‘addicted” entities above have in common—then why is the concept so apparently useful, and what is it useful for? Such questions may seem tailor made for Ivory Tower semantic analysis, but in fact the matter is much more urgent than that. For we live in a world where involuntary commitments and other coercive measures are sometimes considered justified in the course of dealing with addicted persons. Why is this so? What could be wrong with addicted persons that would justify such treatment? And why is the word extended to apply to persons for whom such treatment would presumably not be justified? These are some of the several questions asked by the authors of Midbrain Mutiny, and they have not just scientific, but also political and philosophical motivations for wanting to answer them. So what is an addict? One possible definition—one that would seem to accord with the widespread use of the term—is an agent with abnormal preferences, in the sense that the addict is willing to pay far more, and to pay for far higher quantities of a good than is the average consumer. Here we should think not just of the novelist maniacally devoted to the twin pleasures of writing and alcohol, but also of the late Steve Irwin ‘‘addicted” to contact with dangerous animals, or of the infinitely more prosaic CEO who devotes all of her time to work..