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Saturday, September 02, 2006

Envy and Public Policy

Chris Dillow at Stumbling and Mumbling, on envy:

Envy: two questions By chris Dillow: In response to this post, Greg Mankiw says:

I am uncomfortable making envy a basis for public policy.

His discomfort needs unbundling.

The first question is an empirical one: is the unhappiness the poor feel about the consumption of the rich really just envy? Maybe not. There are two other hypotheses. One is that there are genuine consumption externalities. For example, if the rich drive hummers and big SUVs, they make roads more dangerous for the rest of us. Or perhaps their demand raises the prices of positional goods, such as houses in nice areas.

The other possibility is that "envy" is, in fact, a sense of injustice. Most people don't much begrudge a lottery winner or top sportsman his fortune. Instead, what looks like "envy" is instead a discomfort that some people's wealth is unjust. When people look at the wealth of David Lesar or Paris Hilton, is it really just envy they feel?

The second question is: why should we disqualify envy from influencing policy? The obvious possibility is that it's an other-regarding preference. But why should these be ignored in policy-making? In simple-minded utilitarianism, they're preferences just like any other, and not fulfilling them makes their owners unhappier. There is of course a powerful liberal case for ignoring other-regarding preferences. But if we do this, it's not just envy that might get disqualified. So too (arguably) must distaste of homosexuals and drug-takers, and - of course - racist preferences. If other-regarding preferences such as envy are to be discounted, American politics would look rather different.

    Posted by on Saturday, September 2, 2006 at 10:28 AM in Economics, Income Distribution, Politics | Permalink  TrackBack (1)  Comments (6)

          

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    » In Defense of Conspicuous Consumption from Economic Investigations

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