The Happiness Industry (7 page)

The classical economists had studied capitalism in terms of toil, sweat and the physical produce that resulted. Jevons represented it merely as the play of fantasies and fears, rendered mathematical. This was partly an effect of historical context. Between his childhood in industrial Liverpool and his middle age spent living a comfortable scholarly existence in Hampstead, north London, industrial economies were exhibiting some profound changes, especially manifest in cities.

The world's first department store opened in Paris in 1852, introducing the experience that we now recognize as ‘shopping'. Never before had products simply appeared on display, magically separated from their producer, with nothing but a price tag to represent the pain of acquiring them.
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Nationwide rail networks meant that goods were now moving around further and faster than most people. Official bank notes or fixed prices would have been relatively uncommon in the 1830s, with many shops still maintaining their own ledgers of who owed what to whom, and at what agreed price. By the 1880s, retail culture, based upon widespread circulation of paper money and even some recognizable brands, was established. In the absence of such a culture, an economic theory founded on the premise of individual pleasure-seeking would have looked like crazed utopianism.

In short, capitalism could now be viewed as an arena of psychological experiences, in which physical things were merely props for the production of sensations, to be acquired through cash. A commodity, for Jevons, was simply anything that can ‘afford pleasure, or ward off pain'.
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Alfred Marshall, one of the giants of English economics who followed directly after Jevons, expressed this acutely:

Man cannot create material things. In the mental and moral world indeed he may produce new ideas; but when he is said to produce material things, he really only produces utilities; or in other words, his efforts and sacrifices result in changing the form or arrangement of matter to adapt it better for the satisfaction of wants.
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During the 1980s, it became fashionable to declare that capitalism had suddenly become based upon ‘knowledge', ‘intangible
assets' and ‘intellectual capital', following the demise of many heavy industries in the West. In truth, the economy was reconceived as a phenomenon of the mind a whole century earlier. Capitalism became oriented around consumer desire, directed by that most alluring spokesman for our silent inner feelings, money.

Measurement revisited

‘I hesitate to say that men will ever have the means of measuring directly the feelings of the human heart', wrote Jevons in
The Theory of Political Economy
.
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This must have been a difficult thing for him to admit. After all, he had made some strong claims about precisely how human beings take decisions. Like Bentham, he looked to the natural sciences in the hope that they might one day provide the empirical basis for his theory of individual choice. ‘The time may come,' he suggested, ‘when the tender mechanism of the brain will be traced out, and every thought reduced to the expenditure of a determinate weight of nitrogen and phosphorous.'
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He even conducted some experiments of his own, very similar to Fechner's, in which he lifted weights to study the impact of objects on his own sensations.

For a cluster of British scholars, working between 1850–90, the challenge of psychic measurement would not be given up without a struggle. They drew on Bentham and Darwin in search of a theory of human behaviour that might confirm their largely aristocratic political prejudices, which often translated into a belief in eugenics. One of them, James Sully, had studied with the great German physicist Hermann von Helmholtz in Berlin and returned to England with the new psychophysical methods
pioneered by Fechner. Another, Francis Edgeworth, became a neighbour and close friend of Jevons, through whom he was introduced to economics.
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Building on Jevons's example, Edgeworth pushed the case for psychic measurement even further.
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He had high hopes for the science of feelings. We need ‘to imagine an ideally perfect instrument, a psychophysical machine, continually registering the height of pleasure experienced by an individual'. Such a machine would be called a ‘hedonimeter'. ‘From moment to moment the hedonimeter varies,' he went on, ‘the delicate index now flickering with the flutter of the passions, now steadied by intellectual activity, low sunk whole hours in the neighbourhood of zero, or momentarily springing up towards infinity'. Of course, in 1881, this was mere science fiction. Some would claim that in the twenty-first century, it is no longer so, that we are approaching the point when the inner feelings of consumers (for example, whiplash claimants) can be scientifically discerned. The more interesting question is why such a scientific fantasy has long exerted such a hold over our economic imaginations at all.

The question that Jevons was not able to answer was why, if markets are working effectively, such a science of pleasure and pain is necessary. If we can simply
assume
that individuals are broadly pursuing their own interests, and that they know how to do this, why not just let the market sort it out? Why would we also worry about how much ‘nitrogen and phosphorous' is churning through their brains, or build ‘hedonimeters' to represent their pleasures? For Bentham, as a public policy thinker, it was quite clear why such instruments were needed. Governments needed a science which informed them of what was the best use of their power and money. But wasn't the great advantage of the market price system that it would perform such a science of its
own accord? Surely money was the measure of value, not psychology. Did economists really need to know what was going on inside people's heads?

For the economists who came immediately after Jevons, the answer was a firm ‘no'. Following Jevons's death in 1888, economists began to distance themselves from his psychological theories or methods.
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In place of Jevons's theory stating that each pleasure and pain has its own discernible quantity, a theory of preferences was introduced in its place. As economists such as Marshall and Vilfredo Pareto saw it, economists have no need to know how much pleasure a pizza gives me, but only whether I would
prefer
to have a pizza or a salad. The way I spend my money is determined by my preferences, and not by my actual subjective sensations.

Gradually economists discovered that they could say less and less about what goes on in the minds of consumers, to the point where it's enough to simply observe their use of money and assume the rest. By the 1930s, the divorce of economics from psychology was complete. Jevons would have been delighted to see how mathematical the science was becoming. But he may have been somewhat disappointed to discover that the basis for such science owed nothing to his theories of happiness. In which case, why, today, is happiness everywhere once more?

Economic imperialism

Jevons is one of the architects of what is often referred to as
homo economicus
, a somewhat miserable vision of a human being who is constantly calculating, putting prices on things, neurotically pursuing his own personal interests at every turn.
Homo
economicus
doesn't have friends and doesn't relax. He is too busy looking out for number one. If he ever really existed, he would be deemed a psychopath. But of course that is partly the point – this theoretical construct doesn't actually exist. Jevons imagined the mind through
metaphors
of geometry and mechanics; he never went quite as far as suggesting that the brain is actually a physical balancing instrument.

At the end of the nineteenth century,
homo economicus
made sense as a scientific theory to help understand markets. There was never any sense that it should be applied outside of the monetary arena. The theory of utility maximization, as it was developed by Jevons et al. in the 1870s, was useful to the extent that it explained why people buy and sell things. That was all. But over the second half of the twentieth century this economic theory became increasingly expanded, until it came to serve the same broader public function that Bentham's original utilitarianism sought to achieve. What began as a theory of market exchange was gradually inflated until it became a theory of
justice
.

Consider the following example. On 24 March 1989, the Exxon Valdez oil tanker ran aground off the coast of Alaska, while carrying 55 million gallons of oil, resulting in what was then the largest oil spill in US history. Over one hundred thousand sea-birds were killed, and the populations of various fish, sea otters and other wildlife were still below their previous level over twenty years later. Various reports emerged regarding the negligence of those on board, inadequate staffing, and poor equipment that might otherwise have prevented the disaster. The legal consequences of this took several years to be worked out. But beyond Exxon's liability for the cost of the clean-up, there was a broader moral question: how to punish the company for the damage they
had done to a thousand miles of beautiful coastline? How to counterbalance what they'd done?

One of the answers to this question was produced by the state of Alaska. Using a technique known as a ‘willingness to pay survey', a representative sample of citizens in all of the other forty-nine US states were interviewed on how much they would be ‘willing to pay' for the Exxon Valdez disaster not to have taken place.
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They were each provided with information about the extent and impact of the disaster to inform this mental calculation. The answer, so it turned out, was an average of $31 per household. Multiplied by 91 million households, this produced the calculation that Exxon owed the American public $2.8 billion. This figure was used to help calculate the final legal settlement of what Exxon had to pay as a fine.

What we witness in this sort of example is economics becoming used as a basis for broad public agreement, well beyond the limits of the marketplace. Techniques invented for the study of equilibrium in small private market exchanges are extended to deliver judgements over major public moral controversies. And think what a strange activity is at work at the heart of this: citizens scattered across America were required to close their eyes and imagine what they personally would pay in order for some distant event not to have happened. They must reach down inside themselves, in search of some number which they believe to be equivalent to the ‘value' of a clean coastline. How odd it is that a technique based on wild introspection, whose veracity is entirely impossible to prove one way or the other, should attain higher authority than, say, the testimony of judges or elected officials or wildlife experts.

And yet the political authority of such techniques is growing all the time. Wherever the capacity to reach publicly acceptable
agreements recedes, so the recourse to economics to settle disputes has increased. To find out whether it is worth spending money to protect beautiful landmarks, making cultural resources freely available to the public or increasing transport safety, policymakers increasingly use techniques such as ‘willingness to pay surveys' to work out what the hypothetical price of those goods might be.
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Other techniques include studying the effect of a beautiful park on local house prices, to understand the park's value in money terms. In health care, where limited resources must be spent in the best way possible, the question of ‘value for money' is a constant problem. Once again, psychological introspection plays a role, with the public being surveyed to discover their numerical evaluation of cancer or blindness, despite typically having no experience of these hypothetical syndromes.

These techniques represent a fudge between a democratic worldview, which demands that the voice of the public be heard, and a Benthamite science, which states that only numbers can be trusted. The unwieldy outcome is that the public may speak, but on the condition that they adopt metrics and prices as their language. In order to have their say, they must mimic a calculator.

In the early 1990s, economics and psychology experienced something of a reunion. Data on ‘well-being', drawn from surveys, began to be used by economists. New techniques for measuring ‘experienced' utility (as opposed to ‘reported' or ‘anticipated' utility) were introduced, such as the ‘day reconstruction method', in which participants try and record how they actually felt at various times during the day, or smartphone apps which prompt the user for an update on their current feelings throughout the day. Appropriately enough, one of these apps, developed at the London School of Economics, is referred to as a ‘hedonimeter'.

If economists can establish precisely the link between psychological pleasure and money (through comparing the well-being of people with different incomes), and they can then study the relationship between well-being and various non-market goods (such as safety, clean air, health and so on), a series of correlations can be traced in order that a price can then be put on anything. The British government has used just such a technique to establish the monetary ‘value' of art galleries and libraries: find out how much happiness these places create, and then find out how much income would be required to produce the equivalent amount of psychological benefit.
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This enables decision-makers to put a price on public culture. The same technique has been suggested as a basis on which to calculate damages payments to those who have been victims of some intangible or emotional harm, such as the loss of a child.
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None of this is to say that such techniques are not useful. Spending on health care, for example, requires
some basis
on which to navigate dilemmas. Money has become the moral lingua franca through which this is now done: different health outcomes are given different monetary values by specialist health economists. But as economics is drawn into more and more public issues and moral disputes, so the psychological question of valuation becomes more problematic. In order that money and economics can stand up as viable means of dealing with public controversies, Jevons's question of how we experience pleasures and pains becomes harder to ignore.