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Wednesday, January 26, 2011

"The Moral Heart of Economics"

Ed Glaeser:

The Moral Heart of Economics, by Edward Glaeser, NY Times: ...Today, I focus on ... the complaint that economics is a discipline without a moral core. ...
Because our teaching is so mathematical and formal, it’s easy to miss that we start by making a huge leap, that is basically moral, not mathematical.
Teachers of first-year graduate courses in economic theory ... often begin by discussing the assumption that individuals can rank their preferred outcomes. We then propose a ... ranking mechanism called a utility function ... This “utility function” has nothing to do with happiness or self-satisfaction; it’s just a mathematical convenience for ranking people’s choices.
But then we turn to welfare, and that’s where we make our great leap.
Improvements in welfare occur when there are improvements in utility, and those occur only when an individual gets an option that wasn’t previously available. We typically prove that someone’s welfare has increased when the person has an increased set of choices.
When we make that assumption (which is hotly contested by some people, especially psychologists), we essentially assume that the fundamental objective of public policy is to increase freedom of choice.
Our opponents have every right to contend that economists are unwisely idolizing liberty, but they err by saying we sail without a moral North Star. ...

    Posted by on Wednesday, January 26, 2011 at 12:34 AM in Economics, Links | Permalink  Comments (52)


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