Wednesday, January 26, 2011

How much freedom to choose?

Ed Glaeser argues that the "moral heart of economics" is "freedom" and in particular the "freedom to choose:"

Improvements in welfare occur when there are improvements in utility, and those occur only when an individual gets an option that wasn’t previously available. We typically prove that someone’s welfare has increased when the person has an increased set of choices.
When we make that assumption (which is hotly contested by some people, especially psychologists), we essentially assume that the fundamental objective of public policy is to increase freedom of choice.

I will leave it to others to dispute the notion that more choices are always better than fewer.  But I can't help but think that it is to easy for those of us who are tenured professors to extoll the virtue of free choice, for the simple reason that we get so many, well, choices.  We get to choose what we write, we to a large extent get to choose what we teach inside our classes, and we can piss our deans off and pay fairly little in the way of consequences.  We might not get a raise or we might have to teach a class that we would rather not, but this is all small beer.  We can make an awful lot of choices and still be economically secure.

Now consider the administrative assistant at a corporation who has a boorish boss and a sick kid.   The company she (he) works for has a good health insurance plan, but if she were to leave, she would find herself unable to get coverage at a reasonable price.  Does she really have choice?

Consider the West Virginia coal miner who goes into a dangerous mine every day, and whose life expectancy is shortened with each hour worked underground.  Now consider the fact that the miner grew up in a West Virginia town with a poor school in an environment where going to college was a rare phenomenon.  Does that miner have a choice?

I could go on, but I think the point is fairly clear.  There are times when government intervention could expand the choice set up a large number of people.

Ed does point out how government can improve choice sets, and for that he deserves credit.  But the more fundamental problem is that market economies produce large institutions that have limited markets inside of them, and therefore sometimes have hierarchies that can be as inhospitable to personal liberty as government bureaucracies.  Elinor Ostrom's Nobel win in 2009 shows that the economics profession is beginning to recognize this problem,  but I am not sure Ph.D. students are broadly encouraged to study it.    


William said...

I believe that there is no absolute freedom while we are living in this world.

Seattle Real Estate
Lift Kits
Jeep Parts | Jeep Accessories
Edina MN Realty
Minnesota Real Estate

Kien said...

The examples you cite seem to support Ed Glaeser's thesis that it's welfare enhancing to expand choice. Is the point of your post simply that the distribution of choice/freedom is extremely unequal (and arbitrary), and economists aren't doing enough to address the distribution problem?

Competition law and policy seems to be an important policy tool for promoting more equal freedom everywhere. However, as with so many other policy areas, economists seem divided between the "Chicago School" and proponents of competition law and policy.

Dityo Ramadhani said...

Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I will be subscribing to your feed and I hope you post again soon. Kesha Tickets Kesha Tickets Kenny Chesney Tickets

Ches said...

Maybe the point is to teach people how to make reasoned decisions rather than have the government provide them. The woman with the corporate job with the sick child can then see that maybe her situation may only get worse if she were to chose something else. But the coal miner could see that if he moved to another job in another location his life could drastically improve albeit with less money to take home.

Jim said...

I'm about to head to work to go load trucks for a few hours with a whole lot of people who don't have a lot of freedom or choice in any meaningful way (they are lucky to be union so they are better off than most of their cohorts but I digress).

The fact that working class people have a few voices of reason in academic circles is reassuring. Thanks for your post...

Richard H. Serlin said...

The more money you have the more choices you have, with diminishing returns to this benefit.

Thus, if you wanted to maximize total person-choices or person-utils (plus just the total size of the pie), then there is a great deal government could do. But extreme libertarians care relatively little about this if it means losing even small bits of personal freedom from government.

Methew said...

Rich people have more choices then poor people who have short money
newurban discount code