World Happiness Report 2013
(1) The egoistic and materialist assumptions that utility is a function of the individual’s consumption of market commodities rather than of social relations, virtues, state of mind, well-being of others, and other non-market conditions; (2) The stability assumption that the utility function is unaffected by experience, education, social norms, or moral instruction; (3) The moral presumption that individual tastes should be taken as given, in both a moral and descriptive sense. As Stigler and Becker famously put it, quoting a Latin saying, “De Gustibus Est Non Disputandem,” tastes are not subject to dispute, and certainly not subject to improvement through ethical training;30 (4) The loss of interest in happiness per se, as utility theory is reinterpreted not as a theory of well-being (as with Bentham, for example), but as a theory of consumer behavior. Mainstream economics in effect lost interest in the state of mind of individuals, and in closely related questions of character, virtue, and happiness. Instead of asking about the economic, social, psychological, and ethical determinants of happiness, economists increasingly focused their attention on the study and explanation of observed consumer behavior. They lost interest in the question of whether an increase of market consumption truly raises the well-being of individuals, and they began to doubt that happiness could, in any event, be measured with reliability. Such was the growing influence of the economics profession that no other profession, such as moral philosophy or psychology, succeeded until the past quarter century in counteracting the economists’ retreat from the study of happiness. Bentham’s utilitarianism lived on in the specialized sub-field of welfare economics. But even there, welfare economists paid most attention to policies that could raise social well-being without requiring interpersonal comparisons of happiness, the so-called Pareto improvements
that leave everybody at least as well off as before the change. A few hardy economists continued to follow Bentham in believing that utility functions could and should be aggregated through a “social welfare function” in order to maximize social well-being along utilitarian lines, but this remained the minority practice. Even as 19th century economists retreated from an interest in happiness and virtue, there were still a few residual glimmers of virtue ethics. The Catholic Church, of course, maintained its own teachings on virtue ethics, for example in the influential Papal Encyclical Rerum Novarum (Of New Things) in 1891.31 This encyclical insisted on a moral framework for the market economy, one in which private property must conform with moral laws: “It is lawful,” says St. Thomas Aquinas, “for a man to hold private property; and it is also necessary for the carrying on of human existence.” “But if the question be asked: How must one’s possessions be used? - the Church replies without hesitation in the words of the same holy Doctor: “Man should not consider his material possessions as his own, but as common to all, so as to share them without hesitation when others are in need. (Paragraph 22) Beyond the Catholic Church, traditional virtues of prudence and temperance were still looked to for social harmony. John Maynard Keynes, in The Economic Consequences of the Peace, emphasized that the vast new wealth of the late 19th century industrial era was socially tolerated in part because the rich did not in fact consume their vast wealth, but rather invested it: Herein lay, in fact, the main justification of the capitalist system. If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect.32
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