Happiness is a full shopping basket

Press, 11 December 1976, Page 15

Happiness is a full shopping basket

The Joyless Economy. By Tibor Scitovsky. Oxford University Press. 284 pp and index. $15.50. (Reviewed by Adrian Brokklng) Economists are concerned almost exclusively with a world of scarcity. They picture man as having many needs and desires,. but not enough money, time or energy to satisfy all of them completely. Man’s typical problem, as economists see it, is the balancing of different discomforts, one against the other. To reduce one discomfort he must put up with other discomforts either by working or working harder (and enduring the fatigue that entails) or by curtailing his spending and with it the relieving of his discomfort in other areas of consumption. If he is not able to fill all his needs to satiation, he will stop short of fully satisfying all of them, not just one or a few. More-over, not only must he keep unsatisfied margins on all his needs and desires, but he must see to it that any extra dollar he spends on one good yields him as much satisfaction as that extra dollar would if he spent it on any other good. For if that were not so. rearranging his spending pattern could make him better off at no extra cost. Traditionally economists have assumed that the consumer attempts to maximise his satisfactions in a rational manner: they assume that whatever he does must be best for him — given his tastes and circumstances. After all, otherwise he would not have done it. The advantage ■ of such an approach is that economists look upon a consumer’s behaviour as a faithful reflection of his or her preferences. This assumption, with its Implications is known as the theory of revealed preference. It is one of the cornerstones of economic theory, and held to justify the market economy. On it is based the confident expectation that market values ’ and market prices correctly reflect what

consumers want and provide the standard to which the structure of production must conform. For under free and informed market conditions and perfect competition it is the consumer who, voting with his dollar, determines the supply of the commodities he wants; in turn, this works its way through the whole economy, ultimately to determine the allocation of resources, and much of the distribution of income. Of course, this part of economics is unscientific, in the same way that mathematics is unscientific. Both are deductive, not inductive: both involve the writing down by a suitable motor agent of the logical implications of a number of assumptions, using the ordinary rules of inference. Economists are aware of all this; they know that their “rational economic man” is a fiction. But many seem to think that the picture of revealed preference is, for all practical purposes, near enough to reality. In any case they feel that analysing people’s motivation is not the proper subject of economic theory, and that attempting to do so might expose them to the charge of pretending to know better than the consumer what is good for him. Professor Scitovsky’s book is an attempt to lay the groundwork for a scientific theory of consumer behaviour, using the methods and findings of experimental psychology. He argues, not that consumer behaviour is irrational, but that it turns out to be much more complex and subtle than those who merely assume rationality are,wont to believe. Economic activity and economic welfare are placed into the much larger framework of the psychologist. The result is a clear separation of economic and non-economic satisfactions, a discussion of that curious borderline case, the satisfaction of work, and perhaps a better understanding of whether a particular source of satisfaction will or will not be within the realm of economics.

Scitovsky’s point of departure is the definition of personality in terms of arousal levels, and their implications on comfort, pleasure, and the need for stimulation. He suggests that the needs for stimulus and novelty are especially underestimated. This theoretical framework is then applied to various economic choices, leading to a redefinition of what constitute necessities, luxuries, and comforts, and the relationship between income and happiness. Scitovsky follows this with an attempt to explain the why and wherefore of the American way of life, and the Americans’ tendency to get too much of some of the good things in life, and too little of some of the other good things. To this extent much of what he says is strictly valid only for the American experience. But because many nations seem set to follow this, it would be expedient to review their aspirations and goals in the light of its example. Much of what is said is tentative, incomplete, and often subject to qualification and open to question. A number of straw men are erected for the simple pleasure of knocking them down, and on the other hand, a rigorous insistence of the “behaviourist” approach seems to lead the author into inconsistencies. But “The Joyless Economy” Is a stimulating and thoughtful book, full of insights into the relationships between economics and religious and cultural traditions, the importance of education in shaping our tastes and values, and the implications of specialisation and mass production on our artistic experience and our enjoyment of life. The dust jacket shows a thoroughly unhappy woman pushing a shopping cart past the overflowing shelves of a supermarket. This is incongruous, for in the context of the book’s arguments shopping would appear for many people to be a joyous experience, or at least an anxiety reliever. (Adrian Brokking is commercial editor of “The Press.”]