Interpersonal comparisons of welfare – and another go on income redistribution

Here’s a favourite economic journalist – Samuel Brittain – dispatching the idea that economics shouldn’t make interpersonal comparisons of welfare. He’s spent most of the column – engagingly titled “Truth, bullshit and economics” hopping into the more extreme relativist claims of something which is taken to be ‘postmodernism’.

What has all this got to do with political economy? More than some might think. In the 1930’s Lionel Robbins, then professor at the London School of Economics, caused a stir by “denying interpersonal comparisons”. This led to a flurry of activity in which economists tried by tortuous means to arrive at welfare judgments without making such comparisons. We ended up with a vast mathematical industry, many learned papers and not a few Nobel prizes by intellects that could have been better employed.

But it was all based on a misconception. All of us, whether a mother allocating goodies among her children, or a government making policies, compare the welfare of different people all the time. Such comparisons cannot be exact and have an inevitable subjective element. But you can only “deny” them altogether in the same frame of mind in which sceptics find a problem in the existence of “other minds” than their own. You do not have to knock down the sceptic to reject the Robbins denial. You merely have to point out that political economy exists on a different and more mundane level in which a common sense view of the external world is accepted for the purpose in hand. . . .

Too right Sir Sam!

He then goes on to say this.

One might add that a denial of interpersonal comparisons was quite unnecessary to rebut the case for the compulsory equalisation of incomes which was one of the motivations behind the whole enterprise. The moral I would now draw is that is wise to avoid using a steam hammer to crush a nut.

Well, that’s all very well for “compulsory equalisation of incomes” but his own concession that ‘commonsense’ is the criterion here leaves the old fashioned comments that some redistribution of income enhanced aggregated welfare by the likes of Marshall and Pigou in good shape. Or – as I quoted him in an earlier post Arnold Schwarzenegger said the same thing more colorfully. “I now have $50 million, but I was just as happy when I had $48 million”.

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Geoff R
2022 years ago

Maurice Dobb and Joan Robinson argued that the shift away from inter-personal utility comparisons was directly due to the egalitarian implications of diminishing marginal utility.

If ‘postmodernism’ is just to be an insult why use it?

Nicholas Gruen
2022 years ago

Yes, I agree with you – it was SB’s choice to use the epithet. That’s why you may have noted some diffidence in the way I introduced the term.