Sunday, April 02, 2006

Wants versus Likes

Will Wilkenson, who blogs pretty much exclusively about happiness, lays out a challenge to "economist folk theory." The post is somewhat technical, but I recommend slogging through it because I think it highlights one of the key problems with the economic approach to welfare -- namely, the assumption that satisfying preferences produces hedonic satisfaction (which is a fancy way of getting at whether or not more choices make people better off). It is not obvious to me what people maximize (or should maximize) -- satisfaction of wants or hedonic pleasure. It is probably some combination. Wilkenson's post, though, provides some nice framework for thinking about this issue and some intersting neuroscience evidence.

Some key excerpts:

So, in the formal theory, the highest ranked preference has the highest utility. And the highest ranked preference is revealed by the agent’s actual choice. (If something else had been more preferred, it would have been chosen instead.) Now, the folk theory adds a substantive hypothesis that is no part of the formal theory: preference satisfaction is involves a kind of psychological satisfaction as well as abstract semantic satisfaction (i.e., a fit between the semantic content of the preference and the state of the world.) That is to say, preference satisfaction is satisfying. And the satisfaction of the most preferred option is most satisfying. Economist folk theory envisions a kind of pre-established harmony between formal utility and hedonic utility, and that’s how it is supposed to work. (I blame Bentham.)


The problem is that pre-established harmony is false. The neuroscience shows that satisfaction of the highest ranked preference does not imply the greatest hedonic satisfaction. It does not imply any hedonic satisfaction. Take a look at this paper, “Parsing Reward,” [pdf] by Kent Berridge and Terry Robinson. They report that “wanting” and “liking” have “are in fact dissociable and have different neural substrates.” Roughly, the dopamine system is more about wanting–”incentive salience”–and liking or hedonic satisfaction has more to do with opioids.


And that pretty much demolishes pre-established harmony. What choice reveals is what we most want. But what we most want need not correspond to any kind of representation of what we expected would produces the best hedonic outcome, and doing what you want need not produce any hedonic payoff at all.

This will trouble a lot of people, mostly economists, who buy into economist folk morality. Without pre-established harmony, some libertarian economist folk wisdom falls apart. It will be possible in many circumstance to make people better off hedonically by decreasing their budget–by taking alternatives away. The hedonically ideal choice set will be the one in which the most preferred option corresponds with the biggest hedonic payoff. But that will be a choice set in which all the options that you want more, but which satisfy less, have been removed.


Like I said, check it out, and read the comments as well for some challenges to his point of view.

I feel like this issue is deeply related to the concept of affective forecasting-what ppl will predict will make them happy/satisfy them (not sure if those two things are the same) and what actually does. The seminar I'm taking on this issue proposes that people often make substantial errors in judging what will make them happy (for example, overestimating the effect of an event). This seems parallel to the differences between "wants"/"preferences" and "hedonic pleasure." In other words, satisfying your wants would be the equivalent of giving people what they predict will make them happy in the future-but since ppl cannot do this properly (either do the pyschologicial/cognitive limitations or, in economics terms, imperfect information), these things do not give them the amount of pleasure as other possible outcomes. So I don't really think that there's a discrepency between satisfying somebodies preferences versus providing them with maximal hedonic pleasure; I think that if people were able to form their preferences with perfect information, the outcomes would mimic those of maximum hedonic pleasure.
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