How do preferences relate to well-being?

Readers of this blog will know that I am attracted to a developmental view of individual well-being. I have previously argued that if happiness is viewed as a positive emotional state (involving, for example, peace of mind, optimism, uncompression, exuberance, flow, joy and cheerfulness) then well-being cannot be the same thing as happiness. Well-being also involves other factors - including personal security and security of property, health and longevity, access to goods and services – as well as a positive emotional state. (See: What are the links between freedom and flourishing?) The kind of life that is best for all humans is a life of flourishing - one that follows a pattern of psychological and physical growth filled with enjoyment.

 What does a developmental view of individual well-being have to say about the relationship between well-being and the satisfaction of preferences? Richard Kraut’s questions whether a more preferred outcome is necessarily a better outcome for an individual, even if it satisfies her properly informed and rational desires. His point is that it is possible to have properly informed and rational desires that are not good for us.

 One example Kraut gives is a desire for fame:


“There is no way to criticize the desire for fame except to say that its object is not something that it is good to have. But it should not be at all surprising that human beings sometimes have desires whose objects fall into this category. Nature has not installed in us some wonderful mechanism that guarantees that what propels us forward and focuses our minds on certain courses of action will bring us to something that it is good for us to have. Somehow or other, we have to take steps to learn about what is good for us, and even to care about what is good for us; that is not a topic about which we inevitably come to have tacit knowledge merely by virtue of having desires” (“What is good and why”, p 185).


Daniel Hausman and Michael McPherson note that if well-being is not the same as preference satisfaction then the normative significance that economists attach to preference satisfaction would appear to be without foundation. These authors then offer a new partial defence of welfare economics based on the view that if people are more or less self-interested with respect to certain alternatives, then economists can use their preferences to make inferences concerning what they believe will benefit them. This means that if it is reasonable to suppose that individuals are good judges of what will benefit them, then economists can use people’s preferences as evidence concerning what in fact makes them better off (‘Preference satisfaction and welfare economics’, Economics and Philosophy: 25 (2009).


What happens if we are dealing with policy issues where evidence has accumulated that individuals are often poor judges of what will benefit them? Does this mean that paternalistic government intervention will produce better outcomes? No. The argument that imperfections in individual judgement justify government intervention is just as fallacious as the old argument that departures from perfect competition in markets justify government interventions to increase competition.


In order to consider whether intervention is warranted it is necessary to consider the consequences of alternative institutions, or rules of the game. The judgements that governments make on behalf of individuals may be worse than the judgements that people make on their own behalf. For example, compulsory superannuation in Australia forces some young people to begin to save for their retirement at a time of their life when they would probably be better off saving to buy a house.


In addition, it is important to consider the consequences of government interventions that displace personal responsibility. It is good for adult humans to accept responsibility for decisions affecting their own well-being because this contributes to their personal development and self-respect.