Wednesday, March 3, 2010

What Do Americans Want?

. Wednesday, March 3, 2010

Will Wilkinson argues that Americans don't value the type of government spending that we get:

My sense is that, despite the U.S.’s historically relatively modest level of government spending, the composition of U.S. spending is such that U.S. taxpayers get less of value in return for their tax dollars than do taxpayers in many places with higher taxes and higher levels of government spending. Which is to say that when using GDP per capita as a proxy for welfare, the U.S. comes off better than it should relative to, say, Canada or Sweden. ...

The U.S. is an notable anomaly in the happiness data. Average self-reported life satisfaction rose with GDP per capita over the last several decades in almost all wealthy liberal democracies, but not so much in the U.S. The idea that the unusual composition of U.S. government spending gives Americans unusually poor value for their tax dollars might help explain this.

I think this is exactly wrong. Americans constantly complain about nebulous government waste, true, but they complain even more loudly whenever anyone proposes cutting anything. Wilkinson cites military spending, airport security, and education as examples of wasteful spending that make Americans unhappy. Does he think that a politician could be elected running on a platform of decreasing American military spending, cutting education, and slashing airport security? Of course not. If Americans truly didn't value those things, then this should not be so.

How this compares cross-nationally I don't know. I don't think it's implausible that different polities demand different types of government spending from their governments, but that to me that backs up my point: in democracies, the level of and composition of public expenditure is roughly what the media voter prefers. Is there any reason to expect the median voter in Canada to demand the same things as the median voter in America? Is there any reason to expect the median voter in America to be happier if the US government changed its budget to reflect Canadian preferences? Why does Wilkinson think that the French get what they want out of government spending but that Americans do not? What sort of model of politics is he using? These are not things that Wilkinson wants, of course, but his very next post is about how democracy means never getting everything you want.

I think a better explanation is that Americans do value security, military predominance, and public education very highly, and the reason why self-reported happiness is lower is because the country has had a very rough decade pretty much across the board. Terrorist attacks, two wars, a lost decade economically, increasing income inequality, rapidly deteriorating public and private finances... the naughties were hard on America, especially after the post-Cold War euphoria and economic boom of the 1990s.


Will Wilkinson said...
This comment has been removed by the author.
Will Wilkinson said...

What model of people are you using? The one that says getting what the median voter wants makes people happy?! Having one's policy preferences satisfied and feeling good or satisfied with life are completely different things. I enthusiastically agree with the idea that Americans LOVE having a monstrously huge military. Also, having a monstrously huge military has pretty much no impact whatsoever on how people feel day to day or evaluate their lives. Generally, people have very little idea about how various policies will make them feel, so it's pretty silly to think that the status quo must make people feel good just because the median voter voted for it.

Kindred Winecoff said...

Thanks for the comment, Will.

"What model of people are you using? The one that says getting what the median voter wants makes people happy?!"

Well... yeah! I think that's definitionally a true statement if MVT is true. It may not be, but stick with me: if MVT is true, then the median voter's preferences maximizes social utility. If MVT is approximately true, then the status quo is a first approximation of the aggregated preferences of society. Right?

This may not hold if people are irrational or if information is scarce. But that wasn't your original point, as I read it. You admit that people love having a huge military, probably because it makes them think that "America #1!!!!" which makes them feel that they are a part of the winning team, which makes them happier. (Americans seem to be pretty emotionally invested in the relative status of America in the world.) If you want to argue that Americans don't want what they *should* want, well that's a pretty different argument and somewhat out of character for you.

"Having one's policy preferences satisfied and feeling good or satisfied with life are completely different things."

Perhaps, but it does not follow that people would be happier if their policy preferences were *not* satisfied. If cutting military spending made Americans feel less secure, then that should have an impact on happiness/satisfaction, yes?

"Generally, people have very little idea about how various policies will make them feel"

I don't get this. "Generally" or only in America? What, precisely, is the dynamic that separates US democracy from other rich democracies? *Why* does America get worse "happiness" outcomes from social policy? What's the separating equilibrium? Single-member districts?

Isn't your argument that Canadians are happier because they choose universal health care over a bigger military? Well, presumably that's because they value universal health care over military. Americans value the opposite bundle, as you admit. Ergo, Canadians would be less happy with a bigger military, and Americans would be less happy with a smaller one.

What am I missing?

Will Wilkinson said...

Hi Kindred,

I think you're making two main errors.

First, you're confusing preference satisfaction & utility in the economist's model of choice with happiness or life satisfaction in real people. Preference satisfaction and utility in the microeconomic/rational choice sense are formal, semantic notions logically unrelated to substantive psychological states like pleasure, happiness, or a positive assessment of life as a whole. It's just a sloppy, bad habit of economists and rat choice political scientists to confuse these very different things. This confusion is why some economists think there is something "paradoxical" about the fact that rising income, which guarantees rising utility according to the model, does not guarantee rising happiness or life satisfaction.

Second, setting the first confusion aside, it's just not true that MVT implies that the satisfaction of the median voter's preferences maximizes social utility (whatever that is). As you know, voters are spectacularly ignorant about policy. They don't know what policies will be good for their happiness. The median voter often prefers policies that will, in fact, leave them worse off than some alternative. They just don't know this.

Another way of putting the point is that people have lots of preferences, and there is no guarantee that they are consistent. Having one's political preferences satisfied might entail that other, weightier preferences are frustrated.

For example, protectionist trade policy is often very popular democratically. But it generally leaves people poorer than they would otherwise be. The upside of having policy reflect your preferences can be more than offset by the negative causal effects of the policy on your standard of living. You didn't think the policy would have this effect. You don't know that it does have this effect. But it does. You may be glad to live under a regime that reflects your values, but that doesn't make up for the loss in welfare your favored policies (unbeknownst) to you) cause.

Kindred Winecoff said...

Will -

1. I don't think I am confusing anything. I think I'm approximating. If you have some more precise metric by which you can determine that Americans would be happier with less military spending and more _____ spending, then please share it with me. Certainly some would be, but others would not be. In aggregate, it's just not clear overall happiness would go up.

2. More problematic is the fact that so far you haven't identified the mechanism by which this outcome occurs. It can't just be that preferences aren't perfectly ordered and transitive, because even if that were true it isn't clear that there's a different policy mix out in the ether that would make people happier in aggregate. And you still can't explain why this outcome occurs in the US but not in other places, which is what is really baffling me. So I really have no idea what you're really saying.

That's why I asked what your model of politics was. I still don't know. So far all I can tell is that you think people are confused and irrational, but that's not a model. If that were true, then politics would be much more stochastic than it actually is.

People are somewhat ignorant of policy, but that doesn't tell us anything about whether or not the status quo policy bundle produces more or less subjective happy feelings than some other bundle would. I still think that MVT works as a reasonable first approximation of aggregate happiness with bounded rationality. I would be willing to bet quite a lot of money that happiness would not go up if policymakers started ignoring policy preferences.

And your trade model is, I think, wrong. Attitudes on trade generally track income, which supports an interests-based model of trade politics pretty well. Esp since the patterns of protection we see are narrow and targeted at specific, concentrated groups. If people were irrational or ignorant we should see quite different patterns of protection.

What Do Americans Want?
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