Max Borders on Subjective Value
By David Henderson
The May Econlib article went up yesterday. It’s titled “The Relentless Subjectivity of Value” and is written by Max Borders. My favorite paragraph is on Nudge by Thaler and Sunstein. Borders writes:
Furthermore, nudgers are usually establishing choice architectures for aggregates, not individuals. That is, they’re setting policy. So it’s not exactly like offering to pay your 15-year-old son not to tattoo his girlfriend’s name on his behind. The woulda-shoulda-coulda considerations will always differ from one person to the next, at different times and in different contexts. Government policy almost never does a good job of addressing particular circumstances. Nor does government policy tease out the degree to which a particular person possesses cognitive ability or information–dimensions that are facets of subjective valuation. Worse still, nudgers are seldom any smarter, more attentive or better-informed than the rest of us. They can be. But more often than not, even old-fashioned good advice requires local knowledge that bureaucrats simply aren’t privy to–even if values were objective. Before making our lives better, the choice architectures they dream up in their marbled rotundas end up in perverse dead ends. Weren’t Americans effectively nudged towards home ownership via the tax code and loose qualifying standards for mortgages? How’s that working out for us?
Consider Waits and Weil. Waits is a musician who has lived much of his 61 years on bourbon, loose women and cigarettes. Weil, a 67-year-old holistic physician, thrives on organic food and yoga. Each, from his own perspective, leads more or less the kind of life he wants to. Both can be fulfilled. Without actually being them, how can we tell? Waits sings bitter-sweetly of his ‘misspent’ life. Weil writes, in self-help books, about healthy living. We could observe their behavior or ask them to take an MRI. Otherwise, we have to trust each man’s report to determine whether or not they are well or fulfilled. When the government embraces some idea about how people ought to live (value), the instinct might be to tax Waits and subsidize Weil. But why?
When I was editing the piece, I playfully imagined adding, after, “Waits is a musician who has lived much of his 61 years on bourbon, loose women and cigarettes,” the sentence, “The rest of his life he wasted.”