Cultural Externalities and Harm

Robin Hanson’s ongoing discussion of positional goods, signaling, and consumption externalities at the new, exclusively Robin Hanson Overcoming Bias has been terrifically stimulating. I have a few thoughts about the relationship between externalities and “harm” that Robin’s discussion has stirred up.

Suppose you’re a Millian liberal devoted to the harm principle, which goes like this:

That principle is, that the sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.

Now suppose you, like many economists, are inclined to leap a bit hastily from “negative externality” to “harm.” And then suppose you, like Robert Frank, have a strong view about consumption externalities. When I buy a really expensive car, this story goes, it subtly shifts my community’s frame of reference for signals of social status and for judging the the adequacy or socially acceptability of certain vehicles. By diminishing the status signal sent by older and/or less expensive models, my choice exerts a subtle pressure for others to increase spending simply to maintain the constancy of the signal sent by their cars. If we decide to count this kind of effect as a “harm,” then sumptuary taxes pass Mill’s test and therefore do not count as paternalistic. We need not even torture the language and call regulation to reduce consumption externalities anything stupid like “libertarian paternalism,” since it’s not paternalism at all! Sure, the person facing a steep tax on luxury may be helped by a fiscal inducement to stay off the conspicuous consumption gerbil wheel, but that’s by the bye. The point is to prevent “harm” to others through individual consumption choices.

As Robin has been insistently pointing out, how good-looking we are, the quality of our mates, how smart and funny we are when we talk, and the impressiveness of our children’s achievements signals at least as strongly as our cars. If our investments in appearance, mate selection, Bourdieuian cultural capital, and children are not equally harmful, then why not? If you think regulating luxury consumption passes Millian muster, then why wouldn’t regulating extremely impressive feats of oratory or athleticism?

I think this line of thinking can be taken even further. Many so-called “culture wars” are largely about cultural externalities. Consider Linda Hirschman-like arguments to the effect that women who choose to stay at home raising children impose a significant cost on women who wish to pursue professional success by reinforcing traditional stereotypes of women’s relative strengths and by creating rational expectations among employers that firm-specific investments in female employees will have a lower than average expected payoff due to the possibility of maternity leaves or long-term exit from the labor market. The argument that stay-at-home moms ought to be stigmatized, or at least be extended decreasing levels of social esteem, is basically an argument for the cultural version of a tax on choices that have negative spillover effects for others. If the state took a side on this and actually did tax stay-at-home moms, would that pass Millian muster, on the grounds that mothering choices have spillover effects that “harm” other women?

I think that at this point Mill would suggest that something has gone dreadfully wrong. It looks like we’ve defined “harm” so loosely that the harm principle, so understood, could be the basis for the state regulation of any action whatsoever that affects anyone else in a way they don’t like.

Consider pecuniary externalities. If I open a hot dog stand across the street from your hot dog stand, I will take some of your business, or force you to cut your margins, and thereby make you poorer. Have I “harmed” you in some way that requires that you be made whole, or that suggests the wisdom of the state’s preventing future instances of such harm? The law says no, and the law is right. You have no right to local monopoly profits from hot dog sales. Indeed, pecuniary externalities are so valuable that there is a whole body of antitrust law ostensibly intended to promote them.

Now, when a black family moves into a neighborhood of white racists, thereby causing great unhappiness, or when the recognition of the legitimacy of gay marriages causes traditionalists to feel that their traditional marriages have been “devalued,” that’s the cultural analogue of a pecuniary externality. Somebody really is getting hurt in some real sense. But I don’t much care, and Robert Frank probably doesn’t either, if some racists are disgruntled by their neighbors’ color, or if some religious folk feel aggrieved by a perfectly accurate sense that the social esteem afforded their particular type of marriage has fallen in relative value.

Coasean logic focuses us on the duality of externalities. In the land of the deaf, there is no noise pollution. In the land of cosmopolitan enlightenment, there is no “there goes the neighborhood.” Progressive social change occurs through a revaluation of where to locate “the problem.” Is it in the signal or in the receiver? To identify a “harm,” and to invoke the harm principle, the moment there is a complaint, is the essence of reactionary politics. It is to shut down the very possibility of relocating “the problem” from the source of a reaction to the reaction itself. This would be the very opposite of the intention of Mill in On Liberty, which is at bottom a call for the cultural version of dynamic, ideally competitive markets roiling constantly with the hurt of lost market share.

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24 thoughts on “Cultural Externalities and Harm

  1. By Hanson's logic, showering (especially if one uses soap), brushing one's teeth, and avoiding the Bubonic Plague are all forms of harm, because they increase my chance of a date on a Friday night, thereby *decreasing* the date prospects of the other eligible bachelors in my home town. In fact, to take this to a Swiftian conclusion, is not remaining *alive* a conscious act of harm against everyone else, because by this selfish act, I decrease the resource pool for the rest of humanity? I mean, what kind of selfish rat-*$^tard am I to go on living?

  2. Will,I like your analysis of the standard criticism that the conception of 'harm' is loose in Mill's Harm Principle. Jerry Gaus, in his '99 Social Philosophy, responds to this criticism simply: Mill thought that one had to defend a conception of harm in addition to defending the harm principle. In fact, the harm principle is merely the first step in the argument for a comprehensive social regulatory principle. The second step is to defend a particular conception of harm. On Jerry's view, it would be uncharitable to interpret Mill as making such an obvious error. Instead, we should understand Mill as having a two step argumentative strategy.Jerry argues that Mill believed we should exclude 'evaluation-dependent harms' from the harm principle; you'll definitely want to check out the (reasonably brief) chapter. Jerry makes a variety of other qualifications in Chapter 8 of the book as well. Gaus's final characterization of a harm is as follows:Betty's Action X harms Alf if X sets back or prejudices Alf's welfare interests, where this set-back does not depend on any belief of Alf's that X is perverse, wrong, bad or immoral.Look to the chapter for qualifications. As for Robin, he seems too philosophically corrupt to be redeemed. Brains is one thing, but it doesn't tell you when to see an argument as a modus ponens or as a modus tollens. I don't know how you teach someone that, even if you can. After Robin's debate with Brian Caplan, I am simply stupefied by his way of doing moral philosophy.

  3. Great post.I fear that most egalitarians will recoil at the suggestion that the envy that they want to appease is comparable to racism or homophobia. “Those things are evil, while this is unalterable human nature.”Of course, to me, they sound like the racists and homophobes, and punishing innocents to appease any of them inhibits moral progress.

  4. 'So monstrous a principle is far more dangerous than any single interference with liberty; there is no violation of liberty which it would not justify; it acknowledges no right to any freedom whatever, except perhaps to that of holding opinions in secret, without ever disclosing them: for, the moment an opinion which I consider noxious passes any one's lips, it invades all the “social rights” attributed to me by the Alliance. The doctrine ascribes to all mankind a vested interest in each other's moral, intellectual, and even physical perfection, to be defined by each claimant according to his own standard.' — J.S. MillTaken out of context, but still…

  5. OK, hold on. The most limited example of the loss of signaling ability for my aging car is 1) taken into account when I buy the car, therefore by being known to me and involved in my decision. There is no loss of signaling power, only the “natural” decay of that type of signal in the contemporary and 2) not a loss at all. If I carry my adequately operating signal (my new car) into a different context (e.g. the future, Bhutan, Space) where my signal doesn't work or is altered (my car is not new anymore, gets bad gas mileage on Himalayas, just sort of floats there without any grounds to drive on) that would be my fault, not the fault of the context. Secondly, all the other examples of harm prevention you describe more accurately fall under the heading of “harm” itself. The monopoly, the racists, forcing women not to have children, of course they're bad. But your reasoning on the stay-at-home Mom tax is that we can detect the failure of their conception of harm by their failure to achieve good results. Instead, there needs to be a common sense application of the other side, so that we limit harm not to the individual but to the group, and take into account the harm of harm limitation. That's not nearly as hard as you make it out to be, WIll. Second, and more importantly, any solution to the problem of women's wages brought on by social conditions isn't necessarily the best one. Taxing stay at home mothers would be idiotic, not least for adding to an already burdened financial situation. If, on the other hand, we were allowed to realize the ramifications of certain social structures on individuals, we can go the other direction and enforce equal pay, or any other of the hundred solutions that would cause less harm in their harm reduction than stay at home moms.

  6. Assuming that Bryan's recounting of your position is correct, this is why I thought you were corrupt:”…Robin endorses an endless list of bizarre moral claims. For example, he recently told me that “the main problem” with the Holocaust was that there weren't enough Nazis! After all, if there had been six trillion Nazis willing to pay $1 each to make the Holocaust happen, and a mere six million Jews willing to pay $100,000 each to prevent it, the Holocaust would have generated $5.4 trillion worth of consumers surplus.”http://econlog.econlib.org/archives/2009/04/are…This seems to be a reductio of your position. If you accept it, I can't figure any good reason that you would except if you were ignoring some crucial set of moral intuitions, ones that we require people to weight appropriately to consider them … not corrupt. That said, 'corrupt' is a word I wish, in retrospect, to not have used. But that was what I had in mind. As for the point about moral philosophy – I take it when you're talking about harms, you're talking about something normative, which falls within the domain of moral philosophy.

  7. “And then suppose you, like Robert Frank, have a strong view about consumption externalities. . . . If our investments in appearance, mate selection, Bourdieuian cultural capital, and children are not equally harmful, then why not?”

    It shouldn't be too surprising that people with lots of non-pecuniary capital like Robert Frank think we should levy high taxes on income and material wealth. Frank and those like him are well-positioned to reap large status gains if it becomes more difficult to gain status via conspicuous consumption.

  8. In the land of cosmopolitan enlightenment, there is no “there goes the neighborhood.”What great news for Detroit. Just advertise the cheap housing and contract Richard Florida to bring in some cosmpolitans, surely ones as tolerant as Quakers should to the trick.There are some slights we are just going to ask others to suck up and deal with.if we are to live peaceably together. The libertarian coercion heuristic seems to be the best rule of thumb we've found. Arguments that taxing consumption is no more regressive or harmful than taxing income is another issue.

  9. This is a very stimulating post.Sure, the person facing a steep tax on luxury may be helped by a fiscal inducement to stay off the conspicuous consumption gerbil wheel, but that’s by the bye. The point is to prevent “harm” to others through individual consumption choices.Actually there are two motives for the tax: prevention and redress.Prevention occurs when the full marginal cost of the activity exceeds the full marginal benefit. Redress (you could also call it redistribution) occurs when the full marginal cost is less than the full marginal benefit. In cases of pure redress, the amount of “harming activity” is no less than before, but money is being shuffled around (at least theoretically) to compensate the losers (sometimes it's just being given to the government, which is very theoretical redress given that the government's payout profile may not match the profile of those harmed). The argument that stay-at-home moms ought to be stigmatized, or at least be extended decreasing levels of social esteem, is basically an argument for the cultural version of a tax on choices that have negative spillover effects for others.This example and the example of the hot dog stand are very sharp.IMO the right way to put this is that static analysis of externalities is insufficient to justify Pigouvian taxation. Every instance of a Pigouvian tax is not an isolated decision but rather part of a comprehensive policy of Pigouvian intervention. The benchmark of a good Pigouvian redistribution is not that it redresses an externality but that it is organically connected to a comprehensive policy that maximizes well-being.So, you don't have to compensate the hot dog vendor for his broken monopoly, because such an intervention is not organically part of a comprehensive policy of intervention which maximizes well-being. (The comprehensive policy would be “always compensate people for their broken monopolies”, which does not have wellbeing-maximizing effects).Taxing stay-at-home moms is a subtler case. In order to justify it, someone would have to state the general principle at work here. Who else do we tax, once we tax stay-at-home moms? If the general principle is “always tax negative externalities,” then our answer is “this is not a principle that maximizes well-being.”Often it will be unclear which policy maximizes well-being. In such a case it would probably be wise to “back off” to a fallback position of allowing maximal liberty, since that is a very general principle that has a good track record of promoting well-being.

  10. If you think regulating luxury consumption passes Millian muster, then why wouldn’t regulating extremely impressive feats of oratory or athleticism?Indeed, pecuniary externalities are so valuable that there is a whole body of antitrust law ostensibly intended to promote them.These are kind of dumb examples. Artisitic or athletic feats may primarily benefit the individual who performs them, but we allow them precisely because they also have extremely strong positive externalities. Which is what happens in economics too? The positive externalities are way stronger than the negative externalities to the person who now faces competition.Frank's point is that conspicuous consumption doesn't have enough positive externalities to balance out the negative externalities. So, that's why we might consider luxury taxes etc.?

  11. how good-looking we are, the quality of our mates, how smart and funny we are when we talk, and the impressiveness of our children’s achievements signalsThese are all on a more fixed scale, i.e. you can't get better looking than Megan Fox. Whereas you can always get a newer or better or more expensive car.

  12. I don't think you quite understand the harm principle, Will, because it doesn't matter how broadly “harm” is defined. The harm principle does NOT state, as you seem to think, that any action that harms other people may be curtailed. Rather, it says that no action which does NOT harm other people may be curtailed. “Harm” is a necessary but not sufficient characteristic of acts that should be regulated, as Mill states quite clearly: “it must by no means be supposed, because damage, or probability of damage, to the interests of others, can alone justify the interference of society, that therefore it always does justify such interference.”What would Mill say about consumption taxes, then? On Liberty doesn't really concern itself with where regulation IS justified; its endeavor is to show where it CANNOT be justified, and the only thing we can infer about anywhere else is that regulation MIGHT be justified. If Mill were privy to recent “keeping up with the Joneses” happiness scholarship, he might be convinced that consumption taxes would lead to a higher utility for virtually everyone, and that they would be justified. Interestingly, the justification Mill gives for competitive trade (which harms other people) is that “it is, by common admission, better for the general interest of mankind,” and that defense cannot be used for conspicuous consumption. On the other hand, Mill was generally suspicious of governmental interference in marginal cases, and may have disliked consumption taxes on those grounds. It's likely that in a case like this, Mill would call for social opprobrium of conspicuous consumers. “The acts of an individual may be hurtful to others, or wanting in due consideration for their welfare, without going the length of violating any of their constituted rights,” he says. The offender may then be justly punished by opinion, though not by law.”

  13. I don't think you quite understand the harm principle, Will, because it doesn't matter how broadly “harm” is defined. The harm principle does NOT state, as you seem to think, that any action that harms other people may be curtailed. Rather, it says that no action which does NOT harm other people may be curtailed. “Harm” is a necessary but not sufficient characteristic of acts that should be regulated, as Mill states quite clearly: “it must by no means be supposed, because damage, or probability of damage, to the interests of others, can alone justify the interference of society, that therefore it always does justify such interference.”What would Mill say about consumption taxes, then? On Liberty doesn't really concern itself with where regulation IS justified; its endeavor is to show where it CANNOT be justified, and the only thing we can infer about anywhere else is that regulation MIGHT be justified. If Mill were privy to recent “keeping up with the Joneses” happiness scholarship, he might be convinced that consumption taxes would lead to a higher utility for virtually everyone, and that they would be justified. Interestingly, the justification Mill gives for competitive trade (which harms other people) is that “it is, by common admission, better for the general interest of mankind,” and that defense cannot be used for conspicuous consumption. On the other hand, Mill was generally suspicious of governmental interference in marginal cases, and may have disliked consumption taxes on those grounds. It's likely that in a case like this, Mill would call for social opprobrium of conspicuous consumers. “The acts of an individual may be hurtful to others, or wanting in due consideration for their welfare, without going the length of violating any of their constituted rights,” he says. “The offender may then be justly punished by opinion, though not by law.”

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  15. There is a reason the book is titled “On Liberty” as opposed to “On Why You Hurt My Feelings”.

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  17. What Will is saying, that we cannot immediately try to legislatively fix every situation where someone feels harmed is applicable on both sides of the aisle. Liberals and conservatives both have a tendency to do this. He is also correct that it is a completely reactionary type of politics and in my mind, reactionism is a dread disease on the government. I also liked his notion of re-evaluating where to locate the problem (signal or receiver?) I think in this contest we could fairly say that the liberal tendency is to assign blame to the receiver while the conservative tendency is to blame the signaler. In both cases errors can be made.

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