Thinking about analytical egalitarianism

American Journal of Economics and Sociology, The, July, 2008 by David M. Levy, Sandra J. Peart

On the occasion of this symposium we have taken the opportunity to revisit what we have called analytical egalitarianism with the comments of our colleagues in mind. Before we began Vanity, we were intrigued by two discussions about types of agents. The early work in public choice by James Buchanan and Gordon Tullock (1962) held emphatically that agents in market transactions were no different from agents in political transactions. The socialist calculation debate illustrates the danger of supposing that planners could be counted on to act in the public interest (Levy and Peart 2008d). Folk wisdom in economics also suggests that economists are not exclusively truth-seeking agents. "Torture the data until it confesses" is one expression of this attitude attributed to Ronald Coase. Edward Leamer's "Let's Take the 'Con' Out of Econometrics" (1983) is perhaps the best known statement of this.

What we've tried to do in Vanity is to recover a tradition. We offer two requirements for analytical egalitarianism (AE). First, differences among types of agents in an AE model are endogenous to the model. Second, the theorist who creates an AE model is the same type as the agents in the model. We prefer this characterization to the older "nature" and "nurture" terminology that Kevin Hoover suggests because our characterization explicitly takes the modeler into consideration.

These conditions are in keeping with our reading of Adam Smith's practice. Philosophers and porters are very different types of people, but all differences are explained by the working out of the model that Smith describes. As a result of the division of labor, philosophers offer their insights in exchange for other goods. The question is how to keep the benefits of the division of labor (expertise) without giving experts the power to exploit the deference accorded to them.

AE is thus a characterization of types of agents in a model and the relationship between the model and the modeler. For many problems we can adopt the familiar "as-if" move. Indeed, as we are unlikely to work with models in which height is an interesting variable, we can afford to laugh at ourselves and the AE supposition. The hard question is, what do we do when both AE and laughter fail? We start where we began, with Smith. In Theory of Moral Semtiments, Smith writes about those whose natural endowment is a cause for regret ("idiots"), and he distinguishes between those who accept their inferiority and those who out of pride struggle to see themselves as the equal of others ([1759] 1982 VI iii: 49).

An example closer to the material in Vanity was provided by A. C. Pigou in the chapter from Economics of Welfare entitled "The Quality of People." The chapter starts by asking the question of whether the claims of the biostatisticians concerning genetic differences among people, which Pigou accepts as true, imply that the traditional imperative of economic utilitarians toward income equality would be reversed. What if some people were more capable of happiness than others? Pigou developed the intriguing line of argument that if the capacity for happiness were endogenous, equalization of income in itself would help equalize the capacity for happiness ([1932] 1950: 106-122). This aspect of Pigou's work is apparent also in John Rawls's commentary on the utilitarian tradition (Rawls [1971] 1999: 222; Levy and Peart 2007). The endogeneity of capacity may help explain why the traditional measure of cognitive capacity--performance on IQ tests--has been growing rather markedly over time (Flynn 2007).

We now turn to some specific points for discussion. For ease of exposition, we'll divide the responses into two sections; first, those that are correct and, second, those that warrant further discussion.

I

Criticisms That Are Precisely Right

DAN HAMMOND RIGHTLY HIGHLIGHTS what is in the "shadows" of Vanity: religion. While the Irish as a people are targets of those who favored hierarchy, behind the people often lurked their religious beliefs. And much of the discussion centered on the Catholic Church in Ireland. Moreover, we agree that it is important to make our commitments clear to the reader.

Andrew Farrant is correct to emphasize James Mill's Analysis of the Phenomena of the Human Mind (James Mill [1829] 1869; J. S. Mill 1869). We've begun to remedy that defect. Not only do we now have a much clearer picture of sympathy in the 19th-century discussions--from Smith to Dugald Stewart to James and John Smart Mill--but we've also acquired a new understanding of Smith's emphasis on motivation by praiseworthiness. Motivation by praiseworthiness may answer the question of how the two great reforms Smith advocated, free trade and abolition of slavery, could be effected despite Smith's pessimism to the contrary (Peart and Levy 2007). If a world without special privilege becomes a norm and action to move the world closer to the norm is a praiseworthy act, then the desire to behave in a praiseworthy manner can change the world.