Sagoff4-5

Chapter 4: Fragile Prices and Shadow Values

The point of this chapter is to contrast two forms of rationality in policy-making and to provide a series of reasons against the first.

Methological Rationality—rationality consists of mathematical methods, laid down in advance, for inferring policy recommendations from individual preferences. This approach conforms to a philosophy of science that stress notions like value neutrality, replicable experiments leading to exogenous data (data not influenced by measurement) and correspondence to an independent reality. (77)

Juridical or Deliberative Model—rationality consists of virtues such as intellectual honesty, civility, willingness to see a problem in a larger context, openness of mind. (77, 80 Presumably uses pragmatist epistemology); regulation proceeds by deliberation that weighs various normative constraints established by statute against economic costs. Uses statutory law, juridical interpretation, general knowledge and experience, and the virtues of inquiry.

Methodological rationality—or, more specifically, the attempt to price existence or aesthetic values—is objectionable because:

It is in some cases contrary to the intent of law—e.g., PSD (prevention of significant deterioration) provisions of the Clean Air Act
It works only with preferences already extant, rather than developing new preferences (educating and elevating) as the political process does. (96; see also dilemma of information below)
It denies the status of respondents as thinking political beings in the same way that court trial by a priori preference of the jury would.
It is a category mistake to shadow price values as market externalities. Private and public preferences belong to different categories. (read 94; see criticism below)
The attempt of the policymaker to remain neutral and merely measure preferences would give credence to silly ideas (95; e.g., racism, creationism, etc.)

(Most important) It is undemocratic because it limits conflict to those who have something at stake for which they are willing to pay (e.g., developers and environmentalists) and keeps the public qua public out. (Show Common Ground process documents.) (96-7)

The problem of information: this is a dilemma for those who attempt to measure preferences for policymaking purposes:

1 Either you provide the respondents little information or

much information about the subject matter.

2 If you provide little information, the respondents will balk

and not provide good measurements (cf. trial by

antecedent preference).

3 If you provide much, then the preferences you measure

will be those learned in the process of measurement

(endogenous data), which are not good data.

So 4 In either case, you don't get a good measurement of

preferences.

Expressing citizen values as prices involves a category mistake.

Explain category mistake as a nonsensical predication

A: "I think we should prohibit logging in national forests"

B: "How much is that worth to you?"

The problem with category mistake-type criticisms is that almost any combination of words has a potential use. Take Sagoff’s examples:

The square root of two is green

(Consider a synaesthetic context)

The window wants to be closed

(Consider a "smart" window)

If these are metaphorical uses, consider that literal uses are all "frozen metaphors"

The fundamental issue is whether economics is the model for how we should interact with one another. (97B)

General evaluative remark: Sagoff has given us two models of rationality in policy-making and provided reasons against one of them. This is not a good argument for the other—unless we are sure that it does not meet equally weighty objections and that there is no third option.

Chapter 5: Values and Preferences

Central Thesis: The efficiency criterion has no normative basis at all. (107)

Earlier Sagoff defined efficiency as follows:

Efficiency = maximum consumption of goods and services, given available resources (27)

In this chapter Sagoff seems to be using a more specific idea:

Efficiency = provision of goods to those who are most willing to pay.

Efficiency criterion = We should maximize efficiency.

The argument for the central thesis (summarized on 106-7) is as follows:

1 The efficiency criterion evaluates actions "by reference to conditions that precede rather than consequences that follow from them." (107)

2 "The efficiency criterion has no demonstrable connection with any substantive or normative conception of welfare—a conception, in other words, that is not simply defined in terms of it." (106)

3 [Any moral criterion with some basis in utilitarianism evaluates actions by their consequences relative to some substantive or normative conception of welfare.] (Implicit)

So 4 The efficiency criterion has no basis in utilitarianism.

5 The efficiency criterion has no basis in any sort of hypothetical or counterfactual consent. (pp. 107-11) (CBA is unpopular and illegal)

6 [The only available normative bases for the efficiency criterion are utilitarianism and hypothetical consent.] (Implicit)

So 7 The efficiency criterion has no normative basis at all.

Kneese’s argument for hypothetical or counterfactual consent (112):

1 Individuals choose (and therefore consent to) not only the transactions they make but also the outcomes of those transactions, at least within a perfectly competitive market.

2 What a perfect market would do is what people would consent to.

3 [A perfect market would maximize efficiency]

So 4 People would consent to the use of the efficiency

criterion in social regulation.

Note: Sagoff sees 1 and 2 as independent premises; I see 2 as following from 1. In any case, both are false.