THE INDEXING PROBLEM PART ONE
Professor Buchanan has explicated for us, both in his paper today and in the book which this session serves to celebrate, the limitations of the sorts of unanimity partial orderings to which Vilfredo Pareto has given his name. In my remarks today, I should like to explore some of the ways in which economists and philosophers have sought to extend the scope of inter-systematic comparisons, and to suggest reasons for believing that intersystemic comparisons must always implicitly or otherwise embody some evaluative presuppositions. My thesis is one more instance of a much broader theme, to which I have many times returned in writing and teaching, namely that supposedly value-neutral models of formal analysis usually contain powerful unacknowledged value assumptions which shape their formal structure as well as their substantive content.
The problem with unanimity partial orderings is that although they are transitive, they are not complete. If everyone at our picnic prefers chocolate ice cream to vanilla, then we can be sure that switching the dessert from vanilla to chocolate will produce an increase in social welfare, assuming that everything else remains unchanged, and that there are no externalities. Furthermore, if we all prefer vanilla to pistachio as well, then the transitivity of individual preference guarantees that we will all prefer chocolate to pistachio, and therefore a switch of the dessert from pistachio to chocolate must increase social welfare. But suppose some of us prefer chocolate to vanilla and the rest prefer vanilla to chocolate. How shall we evaluate the move from vanilla to chocolate, as a collective or group decision?
Obviously, it becomes necessary, at the very least, to ask how much the chocolate lovers prefer chocolate to vanilla, and the vanilla lovers vanilla to chocolate. Some cardinal measure of preference intensity, pleasure, welfare, preference priority, or even, a la Plato and Mill, the relative objective value of the desire for chocolate versus the desire for vanilla, will have to be invoked if we are to aggregate the preferences or desires of the individuals at the picnic into a single group ranking suitable for the making of a collective social choice. In short, we shall have to define an index.
Bentham assumed that pleasure is the only good, pain the only evil, and that pleasure and pains, no matter whom they afflict, are intersubjectively comparable and hence commensurable. These assumptions do not, of themselves, suffice for the construction of an index, of course. It was still necessary for Bentham to stipulate an aggregation rule or, in the modern jargon, a social welfare function. His version of utilitarianism is just such a rule. We might state it in modern terms something like this:
1. As between two policies, actions, or states of affairs, A and B, if B provides to each individual in the society at least as much net happiness as does A, and if there is at least one person to whom B provides more net happiness than does A, then assign B a higher index number than A.
2. As between two policies, actions, or states of affairs, A and B, one of which provides more net happiness to some individuals and the other of which provides more net happiness to other individuals, measure the amounts of happiness accorded by each alternative to each individual, using the same scale of measurement. Then [this, strictly speaking, is the aggregation or indexing rule], following the rule ‘everybody to count for one, nobody for more than one,’ add the quantities of net happiness accorded by each alternative to all the individuals in the society, and assign to A or B whichever has the larger sum.
We are accustomed, in the light of the New Welfare Economics of the late nineteenth and early twentieth century, to focus our attention on the phrase, ‘using the same scale of measurement,’ and then to invoke the supposed logical impossibility of interpersonal comparisons of utility as a reason for rejecting classical utilitarianism. But as Sen, Suppes, Harsanyi, and a number of other theorists have shown us, there are ways of getting around the problems of interpersonal comparisons which pose no greater philosophical difficulties than the extreme solipsism that generates the problem in the first place. The real problem is the purely normative clause, ‘everybody to count for one, nobody for more than one.’ We can defend the assumption that the welfare of the society consists in the arithmetic sum of the welfares of its individual members only by positing the moral and political premise that all individuals are equally important, or that each individual's happiness deserves to be given equal weight in the social sum. And this premise simply begs all of the questions of policy that utilitarianism was designed to resolve.
Let us take a look, now, at a number of practical and theoretical contexts in which the indexing problem arises. My aim is to show you that in each case, a resolution of the problem requires a normative or prescriptive premise which must be exogenously introduced, as economists like to say.
My first example is drawn from the work of John Raw1s. Raw1s, you will recall, undertakes to extract a normative principle of distributive justice from non-normative, or minimally normative, premises, by means of the conceptual device of a bargaining game among rationally self-interested agents. In order to avoid certain theoretical difficulties which stand in the way of his establishing the principle that he wishes to promulgate, Raw1s introduces into his theoretical construction a limitation on the knowledge available to the participants in the bargaining game which he labels ‘the veil of ignorance.’
Unfortunately, the veil of ignorance deprives the players in the game of so much information that they no longer have any rational reason to care about its outcome. So Raw1s is forced to re-equipped them with knowledge that they have coherent life–plans whose fulfillment they are rationally committed to pursuing. But even this information is insufficient, for what one wishes to bargain for depends on what in particular one has chosen as a life plan. Hence Raw1s must add the notion of primary goods, which is to say those things – ‘rights and liberties, opportunities and powers, income and wealth’ – which, as he says ‘ a rational man wants whatever else he wants.’ The idea is simply that no matter what life plan one turns out to have chosen, possession of these primary goods will serve to advance it.
But now the indexing problem rears its head. Clearly, as between two principles of distributive justice, A and B, if B promises at least as much of each primary good as does A, and more of at least one, then B is to be preferred to A. But suppose B promises more opportunity and less wealth, or greater income but less power. How then shall the rational man behind the veil of ignorance choose? [I say ‘rational man,’ because as a careful reader of A THEORY OF JUSTICE will discover, Raw1s' world contains only men.] The answer is to construct an index of primary goods. It is this number which the individuals in the original position bargain over.
Although Rawls is aware of the problems of indexing, he glosses over them, admitting that we must ‘rely on our intuitive capacities.’ Nevertheless, he stands by the fundamental claim on which his entire philosophy rests, namely that his theory allows him’ to replace moral judgments by those of rational prudence…’ [THEORY OF JUSTICE p. 94]
Raw1s’ actual discussion of the indexing problem is arbitrary in the extreme. First he stipulates, with very little ground, that bargainers in the original position will choose to make rights and liberties lexically prior to all other primary goods. This has the effect of eliminating the need for an index that aggregates rights and liberties with the other primary goods, for lexical priority stipulates that any increase in rights and liberties, however small, will take precedence, for example, over any loss of wealth or income, however large.
This still leaves the problem of aggregating wealth and income with opportunities and powers. Since this is manifestly impossible – how, for example, shall we compare an increase of ten percent in the opportunity to pursue a medical career as against a decrease in income of five thousand dollars a year? – Rawls make yet another simplifying assumption. Reminding us that the Difference Principle concerns itself primarily with the least well-off representative man, Rawls simply asserts that the least advantaged tend to have both the least wealth and income and the least powers and opportunities. In Short, Raw1s assumes away any indexing problem at all.
But clearly the issue is not so simple resolved. One of the major points of controversy in modern social welfare policy concerns precisely the relationship, in the lives of the least advantaged, of income or power. Radical critics of current welfare practices have argued that transfer payments, particularly payments in kind, have the effect of depriving the poor of social and political power, and indeed may even have that as their purpose. Hence, as between two social policies, one of which increases the income of the least advantaged while making them impotent clients of the welfare bureaucracy, the other of which increases economic or political power but at the cost of a lowered income, it becomes a matter of substantive and evaluative social philosophy which to espouse.
Rawls himself has finally recognized the inescapably normative element in his notion of life plans and primary goods. In a recent volume of essays titled UTILITARIANISM AND BEYOND, edited by Amartya Sen and Bernard Williams, Rawls returns to the subject in an essay on ‘Social Unity and Primary Goods.’ In the following passages, Rawls virtually acknowledges that the formation of an index of primary goods presupposes normative constraints on what will count as an acceptable life plan.
Imagine two persons, one satisfied with a diet of milk, bread and beans, while the other is distraught without expensive wines and exotic dishes. In short one has expensive tastes, the other does not. If the two principles of justice are understood in their simplest form (as I assume here), then we must say, the objection runs, that with equal incomes both are equally satisfied. But this is plainly not true…. The reply is that as moral persons citizens have some part in forming and cultivating their final ends and preferences. It is not by itself an objection to the use of primary goods that it does not accommodate those with expensive tastes. One must argue in addition that it is unreasonable, if not unjust, to hold such persons responsible for their preferences and to require them to make out as best they can. But to argue this seems to presuppose that citizens’ preferences are beyond their control as propensities or cravings which simply happen.
And Rawls continues:
The idea of holding citizens responsible for their ends is plausible, however, only on certain assumptions. First, we must assume that citizens can regulate and revise their ends and preferences in the light of expectations of primary goods. [And so forth]
In short we can hope to arrive at a usable definition of an index of primary goods, only if we require that our prudentially self-interested bargainers constrain their life-plans by considerations of fairness and, as Rawls says a bit later in the same essay, the higher-order interests of moral persons.’ I think we can fairly conclude that Rawls has failed, in his own words, ‘to replace moral judgments by those of rational prudence.’