Economics and Sociology

I spoke yesterday in a plenary session at The Australian Sociological Association’s annual conference at ANU. The session was on ‘Economics and Sociology’, and I shared the stage with RSSS Director David Marsh and TASA President Michael Gilding (who I know because of the fascinating work he has done on wealth holdings). There were of course the usual anti-economics jokes (economics is about how people make choices, sociology is about how people have no choices), and anti-sociology jokes (economists are told that if they’re good, they’ll be reincarnated as physicists, and if they’re bad, they’ll be reincarnated as sociologists).

I spoke about how I see the two disciplines, what I’ve learned from sociology in my own research, and what the two disciplines might learn from one another. In case it’s of interest, here are my slides. The Q&A session was terrific fun, though it made me realise that I’ve forgotten almost everything I ever knew about Marxist economics. I’m also not sure everyone was convinced when I argued that Stevenson and Wolfers had shown that the Easterlin Paradox didn’t exist, and that economic growth was on balance pretty good for wellbeing.

8 thoughts on “Economics and Sociology”

  1. The first joke could be just as easily interpreted as an anti-sociology joke as an anti-economist joke (at least by an economist…)

    I remember being surprised (and interested) when going to graduate school outside of Australia and meeting (more) conservative graduate students in sociology – I thought this might have been my limited exposure to sociology here but perhaps not.

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  2. Easterlin Paradox is obviously wrong as an absolutist theory (ie There is NO corrlation).
    Additonally that Stephenson and Wolfers paper does support your statement that ‘on balance’ economic growth is good for happiness.  However you hide heaps of issues in that, let alone the difficulty measuring happiness.  To quote the authors:
    “we find a modest positive relationship between the HDI
    and happiness, and a stronger positive relationship
    between the HDI and life satisfaction.”
    I’m not saying your wrong here… but the alternative way of phrasing it is that ‘economic growth has a small to moderate effect on happiness that is highly variable across countries and does not explain most the variation.  Therefore, whilst it is a variable there are likely to be more important factors”.
    Not exacetly blowing the Easterlin hypothesis out of the water.  If you modified it to ‘there are more important things that economic growth to happiness’ I don’t think the paper disproved that.
     

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  3. Tri$, I have a feeling you may be reading the wrong paper (are you looking at Leigh-Wolfers?). Try “Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox”.

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  4. Okay, I found that paper and would tamper, but not retract my previous comments.

    There is clearly a consistant and strong positive relationship between wealth and happiness and the origional hypothesis, as stated especially with it’s low ‘cap’ level on where wealth would no longer correlate with happiness is basically, garbage.

    However, you have to admit, it is certainly possible there is another few factors hiding out there that have just as great an effect and the variation between countries (let alone individuals) around the, mostly moderate, trend lines is quite massive.

    My point is, that saying the paradox is wrong is a much different thing than concluding that GDP is the most important factor determining happiness for a country, and wealth for an individual.   (And let’s not get into the possible survey design bias on some of the happiness measures)

    I admit that’s not what you said.  But it’s also something, I think needs to be specifically stated.  If I had an extra $200 000 right now would I be happier?  Definately. 

    Will it continue to make me happier in the future than I would be – probably. 

    Would this extra money be the most important factor in determining my future happiness, or be causal to other factor that determine it… dunno.  And neither do Leigh and Wolfers. 

    However, it’s probably not if I’m religious or otherwise:
    http://www.infm.ulst.ac.uk/~chris/63.pdf

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  5. Andrew,

    you say “I’m also not sure everyone was convinced when I argued that Stevenson and Wolfers had shown that the Easterlin Paradox didn’t exist”

    not only was I not convinced by their presentation that there was no Easterlin Paradox, but moreover they themselves presented their paper more as evidence that absolute income mattered more than previously thought whilst not discounting the relative income argument of Easterlin. Indeed, the strong version of the Easterlin paradox was alive and well for their longest country time series (the US in particular). The death of the Easterlin paradox has been gravely exaggerated.

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  6. This would be a lot more interesting if we were testing theories about how people use money to manage their wellbeing and interests.
     
    The naive theory (apparently used as working assumption by some economists) is that all consumption is like buying fast food at a drive-through and eating alone in your car.
     
    But there are lots of others ways to use money.
    1. Signaling. This goes back to Adam Smith who argued that a linen shirt protected its wearer against shame  (ie if you can’t afford a linen shirt then you’re probably too lazy to work, too incompetent to keep a job or too interested in drinking, gambling etc). If signaling is ‘consumption’ then the ‘good’ is other people’s opinions.
    2. Alleviating existential guilt. According to some psychologists, some people suffer ‘existential guilt’ when they believe they are better off than others but don’t deserve to be. They may respond by donating to charity or agitating for higher taxes.
    3. Meeting moral obligations. For example, parents may feel obligated to do everything they can to protect and help their children. The more they have the greater the obligation. Meeting obligations results in pride, failing to meet them leads to guilt.
    4. Promoting collective interests. Individuals will sometimes place collective interests above their own wellbeing (eg volunteering for military service). Some consumption will be motivated by collective goals and will reduce wellbeing.
    Talking about utility as if it were pleasure minus pain doesn’t seem very enlightening. Neither does assuming that people always act to maximise their own happiness. If economists open the black box, then they’ll have to take psychology seriously.

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