Bringing Joy into Economics

1. Bringing Joy into Economics Roberto Martinez-Espineira ECON 3670 Applications of Choice Theory

2. Introduction We will comment on the works of Tibor Scitovsky related to our choices about leisure About the way in which the model of rational choice might not be fully usable in this case We will draw on a survey by Marina Bianchi: A questioning economist: Tibor Scitovsky's attempt to bring joy into economics

3. Introduction • joyful stimulation, novelty, and variety, can increase individual and social well-being • Scitovsky gave a new importance to the consumption skills rather than productive skills in expanding the set of consumption possibilities • For more on this, see his book The Joyless Economy (1976)

4. Introduction • Puzzle: Economic progress in the West has raised living standards, • yet these have not translated into increased leisure time • nor into time for the cultivation of one’s own mind and for ‘idle’ speculation • Why?

5. Introduction • First, although working weeks are shorter now, the total amount of working time for the population as a whole has not greatly decreased • We saw a redistribution of leisure from professional and business people to the manual workers – the main beneficiaries of a legislated shorter working week

6. Introduction • Second: in crucial economic sectors, such as those of personal and repair services, the pace of productivity increase has not matched general increases in labour costs, making these commodities relatively more expensive (plumbers, electricians, lawn mowers, massage therapists, live arts performers, etc.). • People now tend to perform by themselves more personal and repair services that has therefore increased at the expense of leisure time, especially among those of middle income

7. How do we use our free time • People now tend to fill their free time with goods-intensive leisure, because time-intensive leisure is more expensive too • According to Scitovsky, the best type of leisure requires a lot of time and having consumption skills to enjoy it

8. Defensive versus creative consumption • Scitovsky noticed two opposite types of consumption: the one that gives us comfort and the one that gives us pleasure • Economists usually assume that rational individuals know what they want and manage to choose what they prefer, but… • This distinction between comfort and pleasure will work against that

9. Comfort against pleasure • Scitovsky noted the relevance of the distinction between the goods devoted to preventing pain or distress, and the goods intended to deliver positive satisfaction or gratification

10. Comfort against pleasure • Comfort: activities that relieve physical pain or distress, as well as those activities that alleviate fatigue and bother, that save time and effort, or skill • Pleasure: activities that generate positive satisfaction through the delectation of the senses, and the exercise and enrichment of one’s faculties, from taste sensation to intellectual constructs • Defensive consumption maintains life and makes it easier • Creative consumption provides most of life’s pleasures • But why should there be any source of conflict between these two indispensable and complementary activities?

11. Comfort against pleasure Scitovsky offered two reasons: • First, stimulating activities and their pleasures require an active effort on the part of the subject in terms of time but also in terms of knowledge and skills. • Second: in our modern economic societies all the productive ingenuity, and the economists’ attention, has gone into ways of saving on discomfort and increasing comfort • However, when this same strategy of decreasing discomfort is extended to pleasure and stimulating activities as well, the result is perverse • Pleasure can be obtained only at the costs of some comfort, by striving for comforts one ends up destroying pleasures.

12. Standardized goods against unique goods • Scitovsky paradoxically thought that there is too little novelty in our consumption society • Monopolistically competitive markets yield variety but at the cost of waste • Scitovsky would like us to have more waste, because he valued the variety so much • And remember that boring goods are replaced more often because they are boring 

13. Standardized goods against unique goods • But why don’t consumers demand more unique goods? Why don’ they rebel against the dullness of what the suppliers offer? • Scitovsky argues, habit formation and lack of consumption skills

14. Generalistic against specialised skills • Scitovsky notes the puritan ethic leading us to favor production skills in the education system over liberal arts • We now have more free time • But we don’t know how to enjoy it • Why can’t we use our productive skills to enjoy our time?

15. Generalistic against specialised skills • Why can’t we use our productive skills to enjoy our free time? • Precisely because you need generalist skills for that, while you get specialized skills to make yourself productive • We choose to specialize to become productive because become a good generalist is harder and less glamorous

16. Generalistic against specialised skills • We choose to specialize to become productive because become a good generalist is harder and less glamorous • People strive to become surgeons, dentists, roof technician, vinyl siding installer, rather than… • Family doctor, housewife/band, handyman/woman, etc.

17. Generalistic against specialised skills • We delegate to specialists the task of decorating our houses, cooking and planning our meals, playing with our children, walking our dogs, and clipping their nails 

18. The force of habit • We develop habits about effort saving and comfort that are difficult to kick • We will see more of this when we deal with addiction too

19. Where does “happiness” from? Not totally from income apparently…Scitovsky suggests four ‘un-measurable’ measures of the quality of our lives: • Status • Work satisfaction • Novelty • Habituation

20. Final thoughts: Where does “happiness” from? • Status, but if this is about income it is all just a rat race • Work satisfaction is lower if our work becomes easier and less creative • Novelty is good for happiness, although too much to fast is overwhelming • Habituation works against our pleasure, but favours our feeling comfortable

21. We may be looking to substitute lack of excitement imposed by collective choices: • By engaging in sports and other competitive activity • By travelling, and increasingly doing that off-the-beaten-path • dangerous activities (extreme sports, crime, violence, addictive behaviour, etc…) • By gambling (illegal gambling, buying stocks, etc…entrepreneurial activity too)

22. We may be looking to substitute lack of excitement imposed by collective choices: • By engaging in collective action (helping with electoral campaigns, participating in demonstrations, etc.) • By using chemical sources of excitement

23. We try to follow Wundt’s Law: excitement is good, but in the right measure Too much of it is scary, too little is boring

24. This is all OK in principle…but In many occasions an individual search for individual excitement leads to external costs on other people What are externalities? That is where the economist puts on a normative hat and makes policy suggestions…

25. One suggestion is that we could stop making things so safe for everyone, so we stop looking for excitement and risk that can negatively impact others