Do we know what we want?
Robert Solow writes (via dsquared):
What does it mean for someone to be “better off?” Many criteria are possible: you could say that a man is better off if he makes a bigger contribution to the health of the State or the glory of God. In economic theory, however, it has usually meant that he is better off in his own estimation. If you want to know whether A prefers working over a hot stove or in a nice cool sewer, you ask him; or better still, you offer him a choice between the two jobs and see which he chooses. […]
[Views like this] are under attack these days, usually for the wrong reasons. It is said that ordinary people can not be entrusted with the judgment of their own welfare, not even with the choice of the thing they buy. This is because they are ignorant of “true” satisfaction, or because they are manipulated by advertising[…]
It seems like Solow’s argument is missing a step. Even if we agree that I am the best at judging whether I’m better off in a sewer or over a stove, that doesn’t mean I actually will know in advance. Perhaps I mistakenly pick the sewer and come to regret my choice. And then I switch to the stove and realize no, I was really right the first time. Just because I can realize this in retrospect doesn’t mean I can make the right choice in advance.
And this is exactly where advertising becomes problematic. If one is bombarded by commercials about how “nice” and “cool” our sewers are, it’s not hard to see why one might decide to pick them, even if they really would prefer the stove. And it doesn’t seem practical for everyone to try every job to figure out which one they really like.
If this were a real blog post, I’d draw out some practical conclusions, but I’m tired and I’ll stick to just pointing out the error.
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