New book: Heilmann and Reiss (eds), The Routledge Handbook of the Philosophy of Economics

Routledge handbook of phil of econBy Mark D. White

Just released is The Routledge Handbook of the Philosophy of Economics, edited by Conrad Heilmann and Julian Reiss. From the publisher's website:

The most fundamental questions of economics are often philosophical in nature, and philosophers have, since the very beginning of Western philosophy, asked many questions that current observers would identify as economic. The Routledge Handbook of Philosophy of Economics is an outstanding reference source for the key topics, problems, and debates at the intersection of philosophical and economic inquiry. It captures this field of countless exciting interconnections, affinities, and opportunities for cross-fertilization.

The table of contents is reproduced below—I was honored to be invited to contribute a chapter, which appears in Part IV.

1. Introduction  Conrad Heilmann and Julian Reiss

Part I: Rationality

2. History of Utility Theory  Ivan Moscati

3. The Economics and Philosophy of Risk  H. Orri Stefánsson

4. Behavioral Welfare Economics and Consumer Sovereignty  Guilhem Lecouteux

5. The Economic Concept of a Preference  Kate Vredenburgh

6. Economic Agency and the Subpersonal Turn in Economics  James D. Grayot

Part II: Cooperation and Interaction

7. Game Theory and Rational Reasoning  Jurgis Karpus and Mantas Radzvilas

8. Institutions, Rationality, and Coordination  Camilla Colombo and Francesco Guala

9. As If Social Preference Models  Jack Vromen

10. Exploitation and Consumption  Benjamin Ferguson

Part III: Methodology

11. Philosophy of Economics? Three Decades of Bibliometric History  Francois Claveau, Alexandre Truc, Olivier Santerre, and Luis Mireles-Flores

12. Philosophy of Austrian Economics  Alexander Linsbichler

13. Representation  Hsiang Ke-Chao

14. Finance and Financial Economics: A Philosophy of Science Perspective  Melissa Vergara-Fernández and Boudewijn de Bruin

Part IV: Values

15. Values in Welfare Economics  Antoinette Baujard

16. Measurement and Value Judgements  Julian Reiss

17. Reflections on the State of Economics and Ethics  Mark D. White

18. Well-Being  Mauro Rossi

19. Fairness and Fair Division  Stefan Wintein and Conrad Heilmann

Part V: Causality and Explanation

20. Causality and Probability  Tobias Henschen

21. Causal Contributions in Economics  Christopher Clarke

22. Explanation in Economics  Philippe Verreault-Julien

23. Modeling the Possible to Modeling the Actual  Jennifer S. Jhun

Part VI: Experimentation and Simulation

24. Experimentation in Economics  Michiru Nagatsu

25. Field Experiments  Judith Favereau

26. Computer Simulations in Economics  Aki Lehtinen and Jaakko Kuorikoski

27. Evidence-Based Policy  Donal Khosrowi

Part VII: Evidence

28. Economic Theory and Empirical Science  Robert Northcott

29. Philosophy of Econometrics  Aris Spanos

30. Statistical Significance Testing in Economics  William Peden and Jan Sprenger

31. Quantifying Health  Daniel M. Hausman

Part VIII: Policy

32. Freedoms, Political Economy, and Liberalism  Sebastiano Bavetta

33. Freedom and Markets  Constanze Binder

34. Policy Evaluation Under Severe Uncertainty: A Cautious, Egalitarian Approach  Alex Voorhoeve

35. Behavioral Public Policy: One Name, Many Types. A Mechanistic Perspective  Till Grüne-Yanoff

36. The Case for Regulating Tax Competition  Peter Dietsch

Elsa Kugelberg on norms, choice, and responsibility (in Politics, Philosophy & Economics)

Ppe coverBy Mark D. White

Forthcoming in Politics, Philosophy & Economics is a fascinating article by Elsa Kugelberg (Oxford) titled "Responsibility for Reality: Social Norms and the Value of Constrained Choice," in which she investigates the impact of social norms on the responsibility we bear for our choices, using the example of the interaction of gender norms and HIV prevention measures. From the abstract:

How do social norms influence our choices? And does the presence of biased norms affect what we owe to each other? Looking at empirical research relating to PrEP rollout in HIV prevention policy, a case in which harmful gender norms have been found to impair the choices of young women, I argue that the extent to which we can be held responsible for our choices is connected to the social norms that apply to us. By refining T. M. Scanlon’s Value of Choice view, I introduce a norms-sensitive contractualist theory of substantive responsibility. This feminist ‘Value of Constrained Choice view’ presents those who choose under harmful norms as having generic reasons to reject principles that provide them with opportunities they are effectively constrained from choosing. I argue that to fulfil their duties to us, and our duties to each other, policymakers must study the influence of social norms on choice and accommodate it in public policy. Contractualists have reason to pay special attention to social norms, as their unequal effects on choice reveal that we are not living under terms that no one could reasonably reject.

Bossert, Cato, and Kamaga on sufficientarianism (open-access at Journal of Political Philosophy)

J pol philBy Mark D. White

Forthcoming (and open-access) in the Journal of Political Philosophy from Walter Bossert (University of Montreal), Susumu Cato (University of Tokyo), and Kohei Kamaga (Sophia University), "Critical-Level Sufficientarianism" supplements the utilitarian basis of normative policy-oriented economics with the requirement that no one ends up with too little:

In this article, we employ an axiological approach to identify a class of sufficientarian principles. Our starting point is the notion of absolute priority, a requirement that we consider to be at the very core of sufficientarian ideas. Absolute priority postulates that attention is to be focused on those whose well-being is below the threshold, and the utilities of those above the threshold only matter as a tie-breaker if the criterion to be applied below the threshold fails to be decisive. The feature that is novel to our approach is that we combine this fundamental sufficientarian principle with axioms that have a distinctly utilitarian flavor. This allows us to develop a sufficientarian theory that is based on utilitarian principles. Our most important observation is that our theory, which we refer to as critical-level sufficientarianism, necessarily follows as a consequence of adding the absolute-priority requirement to utilitarian axioms.

Concluding the "Cost-Benefit Analysis at the Crossroads" symposium (LPE Project)

Lpe projectBy Mark D. White

The final two posts at the "Cost-Benefit Analysis at the Crossroads" symposium at the LPE Project are more practical, focusing on the impact of CBA techniques in health care and the environment. (Kudos to the LPE Project for this fascinating and provocative collection of essays.)

In "The 'Value of a Statistical Life': Reflections from the Pandemic," Mark Silverman (Franklin & Marshall College) questions the validity of the concept of willingness-to-pay (WTP) on which most CBA calculations are based, especially insofar as they are taken to reflect risk-reward trade-offs, which are at the center of policymaking during the pandemic. He identifies two specific problems in particular:

The first is specific to the notion of worker rates of substitution between income and risk. In the pandemic-induced recession of 2020, with a restricted range of job opportunities, and little publicly provided material support, newly-acknowledged “essential” workers had little choice to but to accept increasingly risky jobs with little or no hazard pay. In fact, the worse the bargaining position for workers, the less they will “value” their lives – lest they risk their livelihood.

The second criticism focuses on the endogeneity of the underlying preferences. Even assuming away the question of worker bargaining power, we are still left with the question of whether, as a matter of policy, our social willingness to pay for mortality risk should be defined exclusively in terms of agents’ WTP as revealed by the market.

In "The Shaky Legal and Policy Foundations of Cost-Benefit Orthodoxy in Environmental Law," Amy Sinden (Temple University) surveys the numerous difficulties with using CBA to screen environmental policies, given the difficulty of quantifying (or monetizing) environmental improvements. Sinden lays out the implications of this failure:

If important benefits are left out of the equation the vast majority of the time, then CBA operates at best as an informal screening tool, telling us, if we’re lucky, whether the benefits of a regulation in a rough sense exceed the costs. (When you’re not so lucky and your partial benefits estimate comes out lower than your cost estimate, it doesn’t tell you much of anything.) 

Once demoted from a formal optimization tool to a rough screening tool, CBA loses its normative pedigree in welfare economics and joins the ranks of the other perhaps less theoretically beguiling but highly pragmatic cost screening tools that Congress has so often relied on in crafting our environmental statutes. These are the scrappy, street-smart tools of regulatory decision-making, like feasibility analysis, cost-effectiveness analysis, and multi-factor balancing—tools that arguably make up for in pure pragmatic effectiveness what they lack in theoretical elegance. Once your goal is no longer to reach the mythical state of economic efficiency, but rather to ensure that costs are not in some general sense unreasonable, these other tools may actually get you there more quickly, easily, and—dare I say—efficiently

She concludes that, rather than doubling down on CBA, the federal government should defer to individual agencies, who

should decide how to most appropriately account for costs and benefits by choosing among the wide array of tools available. This choice should be tailored to the particular context in which the rulemaking arises, giving particular attention to the feasibility of quantifying and monetizing relevant costs and benefits, along with the agency’s statutory mandates.

Another update to "Cost-Benefit Analysis at the Crossroads" symposium (LPE Project)

Lpe projectBy Mark D. White

Talk about the gift that keeps giving: The "Cost-Benefit Analysis at the Crossroads" symposium at the LPE Project has posted several new entries which collectively focus and intensify the critical look at CBA in the earlier contributions. In this post, I'll look at three that highlight the failures of inclusivity at the heart of CBA.

In "Modernizing Regulatory Review Beyond Cost-Benefit Analysis," Melissa Luttrell (University of Tulsa College of Law) and Jorge Roman-Romero (Equal Justice Works) write that:

Cost-benefit analysis (CBA) is inherently classist, racist, and ableist. Since these are foundational problems with CBA, and are not simply issues with its implementation, they can never be fixed by mere methodological improvements. Instead, the ongoing modernization of centralized regulatory analyses must focus on “moving beyond” CBA, and not on fixing it or improving it.

In response, they suggest a more comprehensive and holistic approach to regulatory review that incorporates values outside of CBA, partly by inviting the input of experts other than economists:

A comprehensive and just approach to regulation that properly balances economic considerations with deontological factors is possible in a post-CBA world. In the context of risk regulation, the regulatory review process should prioritize deontological interests, particularly when controlling statutes don’t provide for a welfarist blueprint, and are, instead, more concerned with protecting rights or promoting equity—as most of them are.

Implementing this post CBA-approach to regulation requires OIRA to diversify its portfolio of career staffers beyond economists, thus avoiding falling into methodological labyrinths that threaten to derail regulatory action with no apparent coherence. By incorporating more areas of disciplinary expertise in the review process, important non-quantifiable considerations like climate resilience, environmental justice, and intergenerational equity would be given predominant weight despite the difficulties associated with assigning a monetary value to the benefits that might accrue from centering them. Moreover, a post-CBA regulatory review that appreciates deontological values should be wary of falling into other reductionist utilitarian frameworks that democratically-enacted statutes do not call for. Recall that the Clinton and Obama administrations both made gestures toward retaining CBA while softening its anti-regulatory effects; these half-measures were ineffective then, as they will be again if CBA is merely “reformed” instead of rejected.

Karen Tani (University of Pennsylvania) follows in the same vein in her contribution, "The Limits of the Cost-Benefit Worldview: A Disability-Informed Perspective," which details two specific objections to CBA in this specific context. First, she highlights who has the power to make decisions and who is subject to them:

In a society that remains inaccessible to many disabled people, some have found it useful to be able to say, “this thing I want (need) is not that costly, especially relative to the benefits, so you should just give it to me.” But as disability law scholars and practitioners would be the first to admit, that same framework carries within it a concession. It suggests that at some point, or for some seekers, cost will be an entirely valid reason for the person who controls access or resources to say “no.” The benefits may be entirely real, but they will not justify the costs.

Surely there are situations in which we don’t want to make that decisional framework available—not because we think we can simply wish away costs, but because of the importance of the interest at stake and because we know just how easy it is to craft compelling narratives of austerity and costliness. To be sure, austerity/cost narratives have counter-narratives—of deservingness, of need, and even of right—but historically, some narrators have received more credence from the American public than others. There is a thumb on a scale against anyone who can plausibly be blamed for their own vulnerability (“welfare mothers” are a prominent historical example).

Second, she questions the ways that different issues are framed, either as costs or benefits:

The second point—again, heard often in the disability community—is about deep structures of exclusion and how easily they escape the notice of policymakers. CBA is particularly unhelpful in this regard. As Martha Nussbaum has argued, in the context of her capabilities work, CBA may help us in answering which of the options in front of us “contains the largest net measure of good,” but it is not an apt tool for naming and questioning the immorality that may be embedded in the set of choices made available. As Nussbaum puts it, CBA foregrounds the “obvious question” and leaves unasked and unanswered the “tragic question” that may be present in the same situation. Thus in the disability context, CBA might help us decide whether and how to make existing public transportation accessible (still a serious problem), but it does not ask why transportation systems were built in ways that excluded so many disabled people in the first place. It might help us make a decision about the pace and nature of deinstitutionalization, but it would not interrogate the morality of a society that has long separated people with intellectual and developmental disabilities from the rest of the community and confined them in warehouse-like settings. More generally, CBA is comfortable casting some people’s needs as the “costs,” and implicitly asking those people show their worth, rather than asking how and why they ended up on that side of the ledger to begin with.

Finally, in "A Post-Neoliberal Regulatory Analysis for a Post-Neoliberal World," James Goodwin (Center for Progressive Reform) echoes the comments of the previous two posts, calling out the undemocratic nature of CBA as well as its neglect of deontological values, and adds an anti-social bias (that will certainly resonate with social economists):

[T]he analysis must recognize and properly account for the complex patterns of social relationships that define and give meaning to each of our lives. Welfare economics-based cost-benefit analysis denies these linkages, viewing individuals in strictly atomistic terms and pretending our existence is little more than the single-minded pursuit of self-interested utility. An analysis lacking a richer understanding of our situated, mutual dependencies is not merely incomplete; it is systematically biased against pro-social policies, such as controls on toxic mercury pollution emissions from fossil-fueled power plants or effective COVID protections for workers in the service industry. Worse still, it rewards and reinforces the cultural disconnectedness at the root of so many of our public policy challenges.

New book: Human Dignity and Political Criticism by Colin Bird

Human dignity and political criticismBy Mark D. White

This was very quick buy (thank you Cambridge University Press author's discount): Human Dignity and Political Criticism by Colin Bird (University of Virginia) promises a fascinating critical look at both the nature of human dignity as well as its potential impact on political institutions. From the publisher's website:

Many, including Marx, Rawls, and the contemporary 'Black Lives Matter' movement, embrace the ambition to secure terms of co-existence in which the worth of people's lives becomes a lived reality rather than an empty boast. This book asks whether, as some believe, the philosophical idea of human dignity can help achieve that ambition. Offering a new fourfold typology of dignity concepts, Colin Bird argues that human dignity can perform this role only if certain traditional ways of conceiving it are abandoned. Accordingly, Bird rejects the idea that human dignity refers to the inherent worth or status of individuals, and instead reinterprets it as a social relation, constituted by affects of respect and the modes of mutual attention which they generate. What emerges is a new vision of human dignity as a vital political value, and an arresting vindication of its role as an agent of critical reflection on politics.

Although I'm concerned about Bird's rejection of the normal (Kantian) understanding of dignity, I am intrigued by his emphasis on the respect it implies.

Updates to symposium on Reviving Rationality (Yale Journal of Regulation)

Reviving-RationalityBy Mark D. White

There have been some new contributions posted to the symposium at the Yale Journal of Regulation I posted about last week on Livermore and  Revesz's book Reviving Rationality: Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health (Oxford, 2021).

"OIRA the Angel; OIRA the Devil," by Bridget C.E. Dooling

"Reviving More Than Rationality," by Stuart Shapiro

"Cost-Benefit Analysis as Policy and as Dialectics," by Shi-Ling Hsu

While Dooling and Shapiro focus in on the nature and politics of the Office of Information and Regulatory Affairs (OIRA) itself, Hsu's contribution is more abstract, addressing the possibility of alternative values and principles to welfarism in public policy and acknowledging the difficulties with balancing these different conceptions of what is good or right:

Perhaps the most serious objection to a welfarist, cost-benefit state, is that welfarism is just another value. Welfarism should stand alongside, and not above, other values such as equality, nondiscrimination, liberty, or freedom. Welfarism might even be subservient to some of these other values. Even welfarists acknowledge the importance of distributional issues, while they work to incorporate them into welfarist frameworks. President Biden has called for changes to CBA to account for distributional issues. Liberty and freedom are obviously fundamental to Americans, as well as other Western societies, as the Brexit vote may well indicate. So perhaps government isn’t even supposed to maximize welfare. It is supposed to reflect the values of a moral individual.

But this line of thinking then leaves unanswered the difficult and obvious question of what government is supposed to do about conflicts in values. What, indeed, is government to do to balance say, public health and safety against liberty and freedom? Personal responsibility against equality? Fairness against prosperity?

They join the first three entries in the symposium:

"Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health," by Timothy Brennan

"Why this is still an important book after the 2020 elections," by E. Donald Elliott

"Cost as the Ultimate Regulatory Restraint," by Jonathan H. Adler

Updates to "Cost-Benefit Analysis at the Crossroads" symposium (LPE Project)

Lpe projectBy Mark D. White

The Law and Political Economy (LPE) Project's "Cost-Benefit Analysis at the Crossroads" symposium, which I blogged about earlier, continues, adding two new contributions.

First, in "Equity in Regulatory Cost-Benefit Analysis," Zachary Liscow (Yale Law School) considers three ways to include distributional effects into CBA—incorporate mesaures of distributional impact in CBA estimates, "cleanse" cost and benefitm measures to account for distributional impacts, and use differential weights in CBA—and acknowledges that, at the end of the day, this is a political decision:

Which of these distributional strategies to adopt ultimately boils down to a political choice. Imposing distributional weights might be controversial politically, not to mention legally. It might be that the public finds explicit weighting quite problematic. We have no direct evidence on this, but the US tends to have strong legal and social norms of formal equality. And explicitly weighting the benefits conferred to some individuals more than others could violate those norms. On the other hand, it could be that the public would pay almost no attention to such procedures of government bureaucrats—or that they would like it if they did pay attention. Ultimately, this choice brings up deep questions of democratic theory: How, if at all, does it matter normatively what the public thinks? Or, alternatively, is this just a question of political feasibility, which depends on the difficult-to-predict reception of a new policy?

Continuing on this theme is "Let's Politicize Cost-Benefit Analysis" by Elizabeth Popp Berman (University of Michigan), author of the forthcoming book Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy (a book I'm certain will be a topic of discussion on this blog upon its release in March 2022). Berman reviews the different ways the two major American political parties have used (and abused) CBA for their own ends, but instead of arguing for CBA as an idealized and "objective" evaluative standard, she sees it for what it is,

a convenient fiction that exists to coordinate action and facilitate decision-making. Our methods for estimating, say, the Value of a Statistical Life are arbitrary. They put a patina of rationality on what is essentially a moral choice. We accept them because they give us a consistent way to produce a number that roughly accords with our sense of what is reasonable—but a dozen other numbers could be similarly justified. Our actual estimates of costs and benefits are often lucky to be correct within an order of magnitude. And minor changes in assumptions—for example, about the appropriate discount rate—can lead to dramatically different assessments of the benefits of a project or decision. [Emphasis added.]

She concludes that, in practice, CBA should (continue to) serve the goals of those using it, and technical improvements to it should be made for the same reasons:

The primary goal of CBA reform should not be to produce the best, most morally defensible analysis. It should be to introduce technical changes that tilt the playing field toward outcomes we think are good. And in areas where CBA seems likely to be irredeemably biased against action, our aim should be to push for alternative forms of evaluation.

Of course, this would negate any independent evidentiary value that CBA may have, but that is Berman's point—it shouldn't be regarded in that way at all. (Again, I eagerly await the publication of her book for more thinking along these lines.)

Symposium on Livermore and Revesz's Reviving Rationality at Yale Journal of Regulation

Reviving-RationalityBy Mark D. White

There must be something in the water... a symposium began recently at the Notice & Comment Blog of the Yale Journal of Regulation on Michael Livermore and Richard Revesz's book Reviving Rationality: Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health (Oxford, 2021).

From Christopher Walker's introduction:

Reviving Rationality is the sequel to Livermore and Revesz’s seminal 2008 book Retaking Rationality, which advances a powerful call for progressives to embrace cost-benefit analysis—or at least to take their seat at the table in regulatory policymaking that involves cost-benefit analysis. Retaking Rationality framed much of the debate on regulatory policymaking and centralized White House review of regulations during the Obama Administration.

Reviving Rationality picks up where Retaking Rationality ends, focusing on the process and quality of regulatory policymaking in the Trump Administration. Livermore and Revesz’s bottom line is, unsurprisingly, scathing of the Trump Administration’s approach, with in-depth case studies from a broad range of regulatory actions over the last four years. But Reviving Rationality is also hopeful and optimistic in how it charts the path forward for how the Biden Administration can rebuild the guardrails for economic analysis and revive rationality in regulatory policymaking.

The contributions so far include:

"Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health," by Timothy Brennan

"Why this is still an important book after the 2020 elections," by E. Donald Elliott

"Cost as the Ultimate Regulatory Restraint," by Jonathan H. Adler (previewed here at The Volokh Conspiracy)