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Utility, informed preference, or happiness: Following Harsanyi's argument to its logical conclusion

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  • Yew-Kwang Ng

    ()
    (Monash University, Department of Economics, Clayton, Victoria 3168, Australia)

Abstract

Harsanyi (1997) argues that, for normative issues, informed preferences should be used, instead of actual preferences or happiness (or welfare). Following his argument allowing him to move from actual to informed preferences to its logical conclusion forces us to use happiness instead. Where informed preferences differ from happiness due to a pure concern for the welfare of others, using the former involves multiple counting. This "concerning effect" (non-affective altruism) differs from and could be on top of the "minding effect" (affective altruism) of being happy seeing or helping others to be happy. The concerning/minding effect should be excluded/included in social decision. Non-affective altruism is shown to exist in a compelling hypothetical example. Just as actual preferences should be discounted due to the effects of ignorance and spurious preferences, informed preferences should also be discounted due to some inborn or acquired tendencies to be irrational, such as placing insufficient weights on the welfare of the future, maximizing our biological fitness instead of our welfare. Harsanyi's old result on utilitarianism is however defended against criticisms in the last decade. Harsanyi (1997) argues, among other things, that in welfare economics and ethics, what are important are people's informed preferences, rather than either their actual preferences (as emphasized by modern economists) or their happiness (as emphasized by early utilitarians). The main purpose of this paper is to argue that, pursuing Harsanyi's argument that allows him to move from actual to informed preferences to its logical conclusion forces us to happiness as the ultimately important thing. The early utilitarians were right after all! Since I personally approve of Harsanyi's basic argument, I regard myself as his follower who becomes more Catholic than the Pope. (It is not denied that, in practice, the practical difficulties and undesirable side-effects of the procedure of using happiness instead of preferences have to be taken into account. Thus, even if we ultimately wish to maximize the aggregate happiness of people, it may be best in practice to maximize their aggregate preferences in most instances. This important consideration will be largely ignored in this paper.) The secondary objective is to give a brief defence of Harsanyi's (1953, 1955) much earlier argument for utilitarianism (social welfare as a sum of individual utilities) that has received some criticisms in the last decade. The argument (e.g. Roemer 1996) that Harsanyi's result is irrelevant to utilitarianism is based on the point that the VNM (von Neumann-Morgenstern) utility is unrelated to the subjective and interpersonally comparable cardinal utility needed for a social welfare function. Harsanyi's position is defended by showing that the two types of utility are the same (apart from an indeterminate zero point for the former that is irrelevant for utilitarianism concerning the same set of people).

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Bibliographic Info

Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 16 (1999)
Issue (Month): 2 ()
Pages: 197-216

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Handle: RePEc:spr:sochwe:v:16:y:1999:i:2:p:197-216

Note: Received: 29 May 1997 / Accepted: 3 November 1997 received some criticisms in the last decade. The argument (e.g. Roemer 1996) that Harsanyi's result is irrelevant to utilitarianism is based on the point that the VNM (von Neumann-Morgenstern) utility is unrelated to the subjective and interpersonally comparable cardinal utility needed for a social welfare function. Harsanyi's position is defended by showing that the two types of utility are the same (apart from an indeterminate zero point for the former that is irrelevant for utilitarianism concerning the same set of people).
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Citations

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Cited by:
  1. Johansson-Stenman, Olof, 2006. "Mad Cows, Terrorism and Junk Food: Should Public Policy Reflect Subjective or Objective Risks?," Working Papers in Economics 194, University of Gothenburg, Department of Economics.
  2. Nicola Cantore, 2005. "Reconsidering the Environmental Kuznets Curve hypothesis: the trade off between environment and welfare," Working Papers 13, ECINEQ, Society for the Study of Economic Inequality.
  3. Thomas Eichner & Rüdiger Pethig, 2004. "Efficient nonanthropocentric nature protection," Volkswirtschaftliche Diskussionsbeiträge 115-04, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  4. Gowdy, John, 2005. "Toward a new welfare economics for sustainability," Ecological Economics, Elsevier, vol. 53(2), pages 211-222, April.
  5. Johansson-Stenman, Olof & Carlsson, Fredrik & Daruvala, Dinky, 2001. "Measuring Hypothetical Grandparents Preferences For Equality And Relative Standings," Working Papers in Economics 42, University of Gothenburg, Department of Economics.
  6. Zhijun Zhao, 2011. "Preference Relativity, Ambiguity and Social Welfare Evaluation," Working Papers 352011, Hong Kong Institute for Monetary Research.
  7. Johansson-Stenman, Olof, 2006. "Cost Benefit Rules when Nature Counts," Working Papers in Economics 198, University of Gothenburg, Department of Economics, revised 09 May 2006.
  8. Aloys Prinz & Björn Bünger, . "From ’Full Life’ to ’Balanced Life’: Extending Martin Seligman’s Route to Happiness," Working Papers 200115, Institute of Spatial and Housing Economics, Munster Universitary.
  9. Yew-Kwang Ng, 2011. "Happiness Is Absolute, Universal, Ultimate, Unidimensional, Cardinally Measurable and Interpersonally Comparable: A Basis for the Environmentally Responsible Happy Nation Index," Monash Economics Working Papers 16-11, Monash University, Department of Economics.
  10. Ng, Yew-Kwang & Wang, Jianguo, 2001. "Attitude choice, economic change, and welfare," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 279-291, July.
  11. Johansson-Stenman, Olof, 2001. "Environmental Policy when People's Preferences are Inconsistent, Non-Welfaristic, or simply Not Developed," Working Papers in Economics 34, University of Gothenburg, Department of Economics.
  12. Prinz, Aloys & Bünger, Björn, 2012. "Balancing ‘full life’: An economic approach to the route to happiness," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 58-70.
  13. Bruno S. Frey & Alois Stutzer, . "Maximising Happiness?," IEW - Working Papers 022, Institute for Empirical Research in Economics - University of Zurich.
  14. Johansson-Stenman, Olof, 2008. "Mad cows, terrorism and junk food: Should public policy reflect perceived or objective risks?," Journal of Health Economics, Elsevier, vol. 27(2), pages 234-248, March.
  15. Prinz, Aloys & Bünger, Björn, 2009. "From full life to balanced life: Extending Martin Seligman's route to happiness," CAWM Discussion Papers 17, Center of Applied Economic Research Münster (CAWM), University of Münster.
  16. Johansson-Stenman, Olof, 2003. "Should policy be concerned with objective or subjective risks?," Working Papers in Economics 93, University of Gothenburg, Department of Economics.
  17. Johansson-Stenman, Olof, 2001. "Should We Use Distributional Weights in CBA When Income Taxes Can Deal with Equity?," Working Papers in Economics 35, University of Gothenburg, Department of Economics.
  18. John M. Gowdy, 2004. "Toward a New Welfare Foundation for Sustainability," Rensselaer Working Papers in Economics 0401, Rensselaer Polytechnic Institute, Department of Economics.
  19. Olof Johansson-Stenman & James Konow, 2010. "Fair Air: Distributive Justice and Environmental Economics," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(2), pages 147-166, June.

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