Daniel Hausman

This is a response to criticisms by Alexander Rosenberg, Nadia Ruiz, and Margaret Schabas of the second edition of The Inexact and Separate Science of Economics. The principal criticisms to which I respond concern the conception of an economic model and the relationship between equilibrium theory – that is the fundamental assumptions of mainstream economics (rationality, non-satiation, diminishing marginal rates of substitution, diminishing returns, constant returns to scale, and profit maximization) and applied theory, especially in macroeconomics.

This essay begins by offering a general argument that health inequalities are not themselves typically injustices and that, with the exception of incompensable health conditions, health inequalities do not imply the overall inequalities that raise questions of justice. It then turns to detailed criticisms of two arguments for the contrary thesis that health inequalities are _prima facie_ unjust: Shlomi Segall’s recent luck egalitarian account and Norman Daniels’s better known relational egalitarian case.

Those who are responsible for health policy want to know how seriously diseases, injuries, and risk factors diminish health and how significantly different policies improve health. To provide this information, health economists have attempted to measure generic—that is “overall”—health, whose value they take to be its contribution to well-being, which they measure by eliciting preferences. This book provides a philosophically sophisticated overview of generic health measurement that suggests improvements in standard methods and proposes a radical alternative. It shows how to avoid relying on surveys and offers an account of fundamental evaluation that does not presuppose the assignment of values to the properties and consequences of alternatives. The book defends a naturalistic concept of health and its relations to measures such as quality-adjusted life years (QALYs) and disability-adjusted life years (DALYs). In examining current health-measurement systems, the book clarifies their value commitments and the objections to relying on preference surveys to assign values to health states. Relying on an interpretation of liberal political philosophy, it argues that the public value of health states should be understood in terms of the activity limits and suffering that health states impose. The book also addresses the moral conundrums that arise when policymakers attempt to employ the values of health states to estimate the health benefits of alternative policies and to adopt the most cost-effective. It concludes with a general discussion of the difficulties of combining consequentialist and nonconsequentialist moral considerations in policymaking.

Is economics a science? What distinguishes it from other sciences, both natural and social? Like many of the natural sciences, its theories are mathematically complex. Yet, like the social sciences, its 'laws' are largely everyday generalizations. Can such generalizations, which are far from universal truths, constitute a science? Does economics have a distinctive method? The first edition answered these and other questions about the scientific status of economics and its underlying methodology. In this fully updated new edition, Dan Hausman reflects on developments in both economics and the philosophy of economics over the last thirty years. It includes a new chapter on the methodology of macroeconomics, an updated discussion on the use of models, and new discussions causal inference and behavioural economics and their implications for theory appraisal. It is the perfect choice for a new generation of students studying the methodology of modern economics.

According to Derek Parfit, “telic” egalitarians accept “The Principle of Equality,” which says, “It is in itself bad if some people are worse off than others” (1991, p. 4). This essay argues that there is no good reason to believe this principle and considerable reason to doubt it. Either egalitarianism is groundless, or this principle misconstrues egalitarianism. The latter is my view. The essay criticizes the main arguments in defense of this principle of equality and offers an explanation why so many mistakenly believe that distributional inequalities are bad.

Health is valuable both instrumentally, in terms of its consequences for autonomy, opportunity, and well-being, and intrinsically, at least with respect to the mental states it encompasses. Quantifying the value of health is problematic, because there are many different ways in which people may suffer diminished health. Because of this multidimensionality, the “healthier than” relation is incomplete, and health has no quantity or magnitude. Health must be measured by its value. But it has different values, and the same token health states will have different values in different environments or for people who have different goals and activities. The value of types of health states must thus be some sort of average of the varying values of tokens. Assigning those average values is challenging, and actual techniques, which rely on preference surveys, are problematic.

Most methodological writing on economics is by economists. Although the bulk is produced by lesser members of the profession, almost all leading economists have at one time or another tried their hand at methodological reflection. The results are usually poor. If one read only their methodology, one would have a hard time understanding how Milton Friedman or Paul Samuelson could possibly win Nobel Prizes. It thus is less surprising that the economics profession professes such scorn for philosophizing than that its members spend so much of their time doing it.Methodological reflections on economics pose other puzzles, too. Although this literature is heavily influenced by philosophy—both current and, especially, out-dated—, it is cut off from philosophical discourse. This quasi-autonomy is puzzling, since this literature is concerned with questions that appear to be instances of, if not the same as the questions with which philosophers of science are concerned.

This essay argues for two conclusions. First, clinical decision-making is not best thought of as analogous to the purchase of other services, such as car repair. Health-care decision-making is far more difficult, collaborative, emotionally fraught, and subject to cognitive distortions. Second, the provision of health care should not be delegated to unregulated markets. Unlike other markets, there is no reason to expect health-care market outcomes to be efficient or fair or to promote individual freedom, properly conceived. Markets may play an important role in implementing an allocation of healthcare, but they are not an ethically acceptable alternative to determining what that allocation should be.

La cobertura universal de salud está en el centro de la acción actual para fortalecer los sistemas de salud y mejorar el nivel y la distribución de la salud y los servicios de salud. Este documento es el informe fi nal del Grupo Consultivo de la OMS sobre la Equidad y Cobertura Universal de Salud. Aquí se abordan los temas clave de la justicia (fairness) y la equidad que surgen en el camino hacia la cobertura universal de salud. Por lo tanto, el informe es pertinente para cada agente que infl uye en ese camino y en particular para los gobiernos, ya que se encargan de supervisar y guiar el progreso hacia la cobertura universal de salud.

This book shows through argument and numerous policy-related examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy. Part I explores the idea of rationality and its connections to ethics, arguing that when they defend their formal model of rationality, most economists implicitly espouse contestable moral principles. Part II addresses the nature and measurement of welfare, utilitarianism and cost-benefit analysis. Part III discusses freedom, rights, equality, and justice - moral notions that are relevant to evaluating policies, but which have played little if any role in conventional welfare economics. Finally, Part IV explores work in social choice theory and game theory that is relevant to moral decision making. Each chapter includes recommended reading and discussion questions.