Sunday, February 10, 2013

Morality and Economics

So I realized recently that I keep trying to make moral decisions but my model of morality is insufficiently precise to really do so on a consistent basis. I did realize that I had an intuitive model that I was using, but I wasn't really sure if it actually made any sense at all. So I decided to look into it further and try to tease out what was going on. I ultimately ended up at a concept of morality as a form of economic calculation (Please be aware that "economic calculation" means a lot of different things to different people, so that particular phrase might mean a very different thing to you than it does to me).

Take a minute to consider these two questions. I think they are actually interrelated:

First of all, what does it mean to say that "Bob should not murder"? Is it simply a statement of preference equivalent to "I would like it if Bob does not murder"? Is it something more? If it is something more, what more is there?

Second, why the hell should Bob care? Let's assume that it appears Bob would legitimately be better off if he murdered someone (Imagine he kills a random stranger with a remote button press. He never feels guilty about it and all his wildest dreams come true because he did it). Also assume that we cannot catch him (maybe the kill signal was scrambled through a bazillion nested routers or something). Should Bob ever behave morally against his own self interest? Why on earth would he?

Really give these some thought. Come up with a model of morality, make up some hypothetical situations and see how your answers hold up.  Even better, try testing them on a real world scenario. My goal here is not to force feed you the tentative answer I've come up with, but to get you genuinely curious about these implicit rules that govern nearly all the decisions we make.

Ok, ready? Here's what I came up with.

The meaning of "morality"
I think that we do mean more than a simple statement of preference when we say that Bob shouldn't murder. Otherwise we'd just say "I don't want Bob to murder" and leave it at that. Of course, there is the problem that sometimes when people want something they try to make it into a moral issue.

This reminds me that I'm getting hungry writing this blog post for you.

Give me a cookie or you are clearly evil.

See what I did there? Of course, if I was starving to death in front of you things might be different. Or maybe this is legitimately just my way of telling you that I really, desperately want a cookie right now.

So the problem we face is that normative statements are a lot like "love." In everyday usage, they are wonderfully and terribly ambiguous at the same time. We need something more accurate if we are ever going to be able to talk about this at the level of precision I feel would be useful. At this point I could try to forcefully redefine or even coin a bunch of new words to talk about things, but it turns out I don't feel that is at all necessary or helpful. Why? Because fortunately I decided to study economics and my predecessors have already made up a bunch of words (and even math!) to talk about preferences and their interactions within different systems.

Why Economics is Useful Here
 It seems to me that we generally mean that Bob is somehow making a mistake when he murders someone, and that if he knew better he wouldn't do so. That's why the statement that it is "wrong" for Bob to murder has extra force beyond just expressing a desire on our part. I believe this is because morality is a way of describing an ideal game of life (in the game theoretic sense), and that our moral intuitions are largely ways of approximating this solution.

I assume everyone is familiar with the prisoner's dilemma situation. It generally seems "right" for both people to cooperate, even though we know that using our current decision theory both will defect without enforcement or repetition. Likewise, the situation where all agents are forced to cooperate seems better than the one where all agents are (reasonably!) defecting. If I was in a giant game that was similar to the prisoner's dilemma in this way, I would be willing to pay to force everyone to cooperate all the time. If all agents are identical, they would also be willing to pay to force everyone to cooperate. Thus, a structure where everyone cooperates would be pareto-superior to one where everyone defects. The pareto-optimal structure for society as a whole is thus the moral one.

This is why Bob might want to refrain from murdering even though it seems like it is in his self interest to do so. He might benefit from murdering in this one particular case, but he would probably be worse off in the world where everyone murders someone when it is in their short run self-interest.

This seems to be what Immanuel Kant was getting at with his categorical imperative:
Or Rawl's veil of ignorance, where we decide social rules behind a veil that ensures one knows his place in society, his class position or social status; nor does he know his fortune in the distribution of natural assets and abilities, his intelligence and strength, and the like.

This also means that if we want to talk about what is moral, we are really talking about pareto-optimal game structures given everyone's existing preferences. Economics is the science and theory of value system interaction, and the optimal game structure under this model is morality. So the best way to tease that out (at least at the meta-level) is going to be using economic reasoning.

But wait! I've made a mistake in the above. I said: 
"the optimal game structure under this model is morality"
when I should have said:
"the pareto optimal game structure under this model is morality"
Do you see why this correction is important?

The problem is that there exists an optimal game structure for everyone to follow using a certain person's preferences as a criterion. This would be the game that benefits that particular person the most. A friend described the sort of maximizing reasoning that would lead to wanting this configuration very well in an email a few years back:
Human culture and morals as they exist today all just randomly happen to stabilize civilization. If they didn't, civilization wouldn't exist. It's the same argument as "Why isn't the universe lifeless? Because if it was, nobody would be thinking that." The ideal situation for any given individual is to encourage the rest of humanity to follow these restrictive morals while personally rejecting their principles. Breaking the rules is only beneficial if everyone else follows them. Therefore, one must maintain the appearance of respecting sociological laws. The result? Psychopathy. Embrace it people. Or rather, follow your social traditions and let me manipulate you. 

This is very different from the moral game structure which is pareto optimal. The pareto optimality ensures that we account for everyone's preferences in a balanced way. It means the best game structure that everyone could agree upon. 

A Useful Distinction this Model Makes

"the rich should give more money to the poor"

Let me say first of all that this statement drives me crazy. Particularly when it comes from someone in the first world who isn't even making an effort to practice effective altruism. However, the main reason it drives me crazy is a great example of a place where this moral model might be useful. Should the rich really give more money to the poor? Or is this person just expressing that they dislike rich people and would be happier if we took rich people's money and gave it to the sympathetic poor people? We can isolate the moral part by asking the question "Would income redistribution be a pareto optimal policy (in the broadest sense) to enact" and thus separate it out from the mere preferences that haven't been processed with consideration of what everyone else cares about.

Problems and Further Considerations

One interesting problem that I think might be solved by recent work on decision theory and newcomb's problem is why anyone would behave morally when there is no enforcement mechanism. In particular I recommend Yudkowsky and Drescher if you are interested in this.

Another interesting problem is where you draw the line on who is a moral agent and who isn't. This is a VERY good candidate for Hardest Philosophical Problem Ever. Take a look at Non-Person Predicates to get an idea of how insanely difficult this can be. A more everyday scenario could be whether eating meat is ethical. 

There are always the widely understood but still fascinating problems of "how do we find the preferences?", "how consistent are human preferences really?", and "if they aren't how do we model things taking that into account?". My account of morality above is a very broad and high level one, but the details really matter a lot more. They are what actually do the work in constraining actions and systems. 

Finally, there is the problem of shared wants. If many of us value others to some degree, there is going to possibly be a lot of recursion involved in the preferences. I haven't seen any economic models where I can take increases of your utility function as an input into my utility function and I don't really know what the consequences of that might be. 

Finally finally, morality is definitely not a solved problem and this all could (and very likely is) totally wrong compared to the correct model that's out there somewhere. However, it does seem to be substantially better than anything else I have right now, but I'll keep looking because scholarship is important! There is a lot of philosophical grey area for me. For example where do we start the initial positions from for our pareto calculation? I do think that Rawl's approach takes this very seriously, but I haven't read far enough into moral philosophy to even know all the major positions, much less the minor ones and nuanced details. 

Also, I really recommend reading Nyan_Sandwich's recent sequence on LessWrong. Morality is Awesome is indeed quite awesome. Pinpointing Utility also talks about ethics quite extensively using economics as the launchpad. 


  1. Fantastic post! I do have to say that there should be a distinction between "Pareto optimal" and "moral." I think moral acts are in general Pareto improvements (it's hard to imagine a moral act that would NOT be a Pareto improvement), but I think the set of "morally optimal" states of the world is a strict subset of the set of "Pareto optimal" states.

    This is because the state of the world (in an n-player prisoner's dilemma) where everyone cooperates and you defect *IS* actually Pareto optimal. Moving to the "everyone cooperates" state makes you worse off and everyone else better off. Now, this is not an equilibrium in a prisoner's dilemma game, but neither is the "everyone cooperates" state. The only equilibrium is, ironically, the NON-Pareto optimal state.

    Long story short: Pareto optimality sharply underdetermines what states actually are moral or immoral, and there needs to be a little more work done to move from merely Pareto optimal to moral states.

    Rawls solves this by postulating that the agents don't know who they are: a set of rules whereby one person gains relative to the full cooperation state isn't very attractive behind a veil of ignorance, since you don't know if you're gonna be the lucky one!

  2. Hey guys, its Chad from school,

    In general I disagree. Economics is a mathematical structure. It doesnt tell us what we should do. No calculation can ever tell us what we should do, without already relying on some notion that we should follow the calculation. Its the pre-existing notion that ethics comprises of.

    Just two comments in direct response:

    1. I dont think you can bring Kant into a discussion like this. The categorical imperative is a different sort of thing from Game Theory. For example:

    i. When Kant talks about universal laws, he is talking about reason, not human interests. He is trying to derive what we should do from pure reason alone. Kant himself believed morality was different than human interests. Any pareto optimal outcome is still capable of violating the categorical imperative.

    ii. Game Theory, and all of economics is inherently consequential. The Categorical Imperative is not.

    2. Regarding the prisoner's dilemma, its defined by its pay off structure. If you enforce a certain outcome of a prisoner's dilemma, its no longer a prisoner's dilemma. Thus, it follows that all prisoners dilemmas have the same outcome, least they arent actually prisoners dilemmas.

  3. Chad,

    I completely agree that economics is a mathematical structure, and that it is very counter-intuitive that it could tell us what we should do. That being said, I do think it is noteworthy that economics is (at least the beginnings of) a mathematical structure that can be used to figure out optimal actions for a given value system. If we imagine running through the computations with your values and situation perfectly inputted into the system, then the result would indeed tell you what you should do! Of course, we might run into some problems of self-reference and similar stuff that makes this theoretically intractable. I don't really know about that.

    It is my understanding that we can compress down action paths (for "non-consequential" considerations) into consequential states of the universe for the purposes of computation. This would be equivalent to putting "the state of the world where I took this action" as different from "the state of the world where I took this other action." Given that all these states can be subject to a preference ordering, it seems to me straightforward to express the categorical imperative and other deontological reasoning as a subset of consequentialism that is very concerned with particular actions that were and were not taken.


    This is completely right. I apologize for being sloppy in my exposition, but hopefully the general idea I'm trying to convey is still apparent. I will keep going back through the post trying to fix things. Part of the problem is that I have a lot of new "timeless" decision theory stuff going on intuitively behind the scenes, but I'm trying to describe it in more bog-standard terms. Also, I love the word bog-standard way too much!

  4. danny, allow me to translate your (above) second paragraph: "I can make stuff simpler to fit my purposes." Ignorant as chad may be (and as much as you easily win any debate with him or he-who-has-no-structure), you make capitalism and economics a synonym. You say our current structure dictates who we are, thus it is best to "compress our action paths" into pure consequentialism. “Deontological reasoning as a subset of consequentialism”-- I almost applaud you. You are trying to fit a square peg into a round hole danny. You are trying to legitimize your philosophical beliefs by appearing to be open to Kant, Rawls, Descartes and any other deontological thinkers when really you just want to simplify structures. You want teleology and you want it now. This paper smacks of correspondence theory masquerading as coherence theory.

    In your example of Bob murdering, it’s clear that Bob has done something which overrides society. That is why, under Rawls, bob would not murder: It is not in his self-interest because, once taken from behind the veil of ignorance, he could very well become the murdered man. You cite this accurately. However, you consider Bob’s decision to kill to be individual in nature: It does not make the most sense for him, individually, because he could become the murdered man. You separate out the individual from society, from you his decision making is autonomous: much like JS Mill, “Over one's mind and over one's body the individual is sovereign.” Yet, political and social realities are inseparable in Rawls. It is impossible to define the individual as separate from the society—all you do, from the clothes you wear to the language you speak to the food you eat has reciprocity built in. Your brain is structured in a way that is dictated by the rules of your daily life. You are a physical part of that society as much as a mental part. You make up its cogs. Much like Donne, “man is not an island.” People do not have the power to agree to cooperative norms—they make up those very norms, they create them. People do not come together to logically agree to something—creation is something amorphous, with change happening at the moment you type.

    Economics is not “the science and theory of value system interaction.” Economics, as developed in capitalism (I will assume that definition, since as above you equated the two,) is the equaling of the previously unequal. According to marx, any commodity has a use value and exchange value. Use value is found by what you get out of it, exchange value is found by what it can be exchanged for. Use value, however, can only be discovered upon usage: You could eat something with tapeworms in it, if you knew it had tapeworms in it beforehand, there would be very little to no incentive to purchase it. Yet, capitalism assigns the same exchange value to the piece of food, regardless of tapeworms. Thus the two values are incompatible. Capitalism distills a third answer to that incompatible question: How do I exchange X for Y? Limiting a solution to game theory, based on limited capitalism, based on incompatibility is dangerous indeed. Are you certain that your solution to everything can be simply gotten from economics? Are you sure you won’t limit solutions based on the impartial spectator (as in Mill) rather than a pure pareto optimal solution (which is itself limiting, but Rawls only attempts to construct a model, not a dogma)?

  5. Why would you have these beliefs, why must everything for you be presented to economic analysis? Let me tell you a story: There once was a society that believed they could do everything right-hand dominant. Writing, eating what have you: all done with the right hand. All of a sudden, this society discovered another society that used only its left hand. Then the emperor of the right-handed society united with the emperor of the left-handed society—and shook both of his hands. All of a sudden both peoples were put into disbelief “how could my emperor use his other hand, I’d rather go back to MY society the way I was comfortable, where MY life was good.” Then scholars began to construct ways of left-hand shaking and right-hand shaking. Philosophers derived reasons for whether the right hand or the left hand was better for the arts. They argued endlessly. Seemingly this became a matter of discourse only. Yet in using their hands, those people became convicted of one philosopher’s beliefs over the other. Their right hand or left-hand usage became so dominant that philosophically they attempted to describe other theories by handedness. They began to “compress their action paths” in such a way that eliminated any other ways of describing phenomena—even explanations that would be much closer to the truth than “I am right handed, therefore I must eliminate all cats.” Instead of applying their knowledge to new things, these people became obsessed with only their handed philosophy. “It must be right, because I am imperator of all knowledge. I know everything. I am the only thing descartes cannot doubt” was their clarion call.

    This was until a new philosopher showed up, clear out of the blue: He reasoned that both the right hand and the left hand worked in situations, that both solutions were equally logical when beginning from the same premise. The people were elated: they were shown the light out of their metaphorical platonic cave. No longer would they describe phenomena by their standard handedness but instead by its own unique merits. No longer would they use the crutch of “It makes the most sense to a right handed person, so it makes sense to me”— they would instead wonder about things, philosophically.

    Let me show you the light, brother.

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