How much is enough?

"If everyone had enough, it would be of no moral consequence whether some had more than others", says Harry Frankfurt. Skepticlawyer agrees. In a recent post on ‘progressive fusionism’ she suggests combining Frankfurt’s ‘doctrine of sufficiency’ with Amartya Sen’s capabilities approach. But what does ‘enough’ mean?

Libertarians have long struggled against the crudest form of egalitarianism — the demand that everyone’s income should be the same. This was the egalitarian ideal that animated Edward Bellamy’s 19th century utopian novel Looking Backwards. Bellamy dreamed of a society which was both meritocratic and egalitarian — a society where all workers were motivated to do their best and all were paid the same (with no rewards for inherited ability).

Hayek spotted a fatal flaw in Bellamy’s vision — without a price mechanism there would be no way to coordinate economic activity. And with a price mechanism there would be no way to maintain equality of income (or reward in proportion to talent and effort ).

While number-crunching sociologists and economists still focus on gini coefficients, egalitarian philosophers who follow John Rawls embrace positions which are immune to Hayek’s criticism. Rawls’ influential version of egalitarianism allows inequality as long as the social arrangements that produce it improve the prospects of the least advantaged. This is why some libertarians think that it might be possible to combine Rawls’ philosophy with Hayek’s economics. This is the ‘progressive fusionism’ skepticlawyer refers to in her post.

Progressive fusionism & the difference principle

According to the Cato Institute’s Brink Lindsey, progressive fusionism "seeks some kind of reconciliation between Hayek and Rawls." For Hayek’s followers, the sticking point has always been Rawls’ difference principle — the idea that social and economic inequalities should be allowed only if they benefit the least advantaged.

According to the difference principle, the least advantaged have a veto over everyone else’s gains. To many people this makes the poor look like a dog in the manger. No matter how large the gains or how many people benefit, reforms that don’t benefit the worst off, can’t go ahead. And in the same way, reforms that provide only minor benefits to the worst off must go ahead even if the cost to everyone else is astronomical.

Libertarians worry that a strict application of the difference principle in the short term could cripple the market’s ability to improve living standards in the long term. In the short term resources might go into developing ‘luxuries’ for the the rich that later become everyday items of consumption for almost everyone. One day luxuries like car air bags and anti-lock brakes might join indoor plumbing and antibiotics.

Classical liberals like Hayek have never endorsed a strict interpretation of the difference principle. While Hayek favoured a guaranteed minimum income available to all, he intended this to be no more than a guarantee against severe deprivation.

Frankfurt’s ‘doctrine of sufficiency’

Frankfurt’s ‘doctrine of sufficiency’ is more demanding than Hayek’s minimum. In his 1987 paper ‘Equality as a Moral Ideal‘ he wrote:

It is essential to understand that having enough money differs from merely having enough to get along or enough to make life marginally tolerable. People are not generally content with living on the brink. The point of the doctrine of sufficiency is not that the only morally important distributional consideration with respect to money is whether people have enough to avoid economic misery. A person who might naturally and appropriately be said to have just barely enough does not, by the standard invoked in the doctrine of sufficiency, have enough at all.

The key idea is contentment. For Frankfurt, a person has enough money when they have no active interest in getting more. "A contented person regards having more money as inessential to his being satisfied with his life … He is simply not much interested in being better off, so far as money goes, than he is."

The price of contentment

So how much money does a person need in order to feel contented? Paul Sweeney and Dean McFarlin examined data on people’s satisfaction with income in 12 nations. They found that people’s satisfaction depended, not just on their own income, but on their income relative to others — "In all cases, satisfaction with income dropped when the comparison suggested that employees were worse off than others in one’s country."

Comparison effects are common in the literature. for example, analyzing data for West and East Germany from 1990 to 2004 Conchita D’Ambrosio and Joachim Frick, found evidence consistent with Runciman’s theory of relative deprivation. Even though incomes in Germany rose over the period, satisfaction with income did not. Where people ranked on the income scale seemed to be more important than their actual income.

Research from the Asian Development Bank shows that people can be content with very low incomes if they perceive themselves to be rich. Having more than in the past, or more than you expected to have, can be more important for contentment than the absolute level of income.

Comparison effects are difficult to predict. Research suggests that comparisons can influence people’s desires and that their desires influence their level of satisfaction.

Inequality redux

Frankfurt argued that "Economic equality is not, as such, or particular moral importance." But even if his ‘doctrine of sufficiency’ is right, inequality might still matter. If people have a strong desire to have an average or above average income, then an income distribution that places the majority of the population below the mean might leave many people discontented.

To libertarians Frankfurt’s doctrine of sufficiency might seem an attractive alternative to Rawls’ difference principle and crude egalitarianism. But unless people lose their aversion to being excluded from normal levels of consumption, the problem of income inequality returns.

Capabilities?

The Indian economist Amartya Sen was deeply influenced by Rawls’ theory of justice. But he argued that Rawls’ account placed too much emphasis on primary goods like money and not enough on people’s ability to use these goods to achieve things they valued. Individuals differ in their ability to convert goods into ‘functionings’. For example, a person with paraplegia needs more resources to achieve the same level of mobility as a person without a disability.

Creating a society that maximises the capabilities of people with disabilities means more than just throwing some money their way. It means changing the way all of us go about our business. Buildings, railway stations, buses and taxis need to be accessible for people using wheelchairs. Services usually delivered by telephone and voice need to be made accessible to those who are deaf. And people with poor sight need alternatives to information which is usually provided by signs and brochures.

In a lightly taxed, lightly regulated society, people with severe disabilities are only likely to be content if they learn to desire a lower level of capability than other citizens. And if they can do it, then why can’t everyone?

Rational desires?

One issue Frankfurt doesn’t try to settle is whether ‘enough’ refers to the amount of money an individual actually needs in order to be content with their income or the amount it would be reasonable for them to be content with. In the first case there is the problem of people with expensive tastes — princess and the pea types who can only be content with the very best. In the second there is the problem of deciding what it is reasonable for people to desire.

Thousands of years of philosophical debate have failed to produce a consensus on that issue. But perhaps we can crack the problem in the comments thread.