Would a good society seek to maximize a social welfare function?

 This article is about my personal experience in attempting to understand social welfare, the concept of a good society, and my role as an economist involved in the processes of social choice. I decided to write about this topic after writing an article for Savvy Street on the related topic, “Can social planning enhance individual flourishing?”

When economists talk about maximizing social welfare, they are referring to a concept that appears to have something to do with the well-being of people. However, the concept is best viewed as a signaling device to suggest that the social planner claims to have obtained insights about society from studying an abstract mathematical model. Such signaling is not helpful to consideration of the merits of policy proposals.

Maximizing social welfare can encompass policies that would enlarge the economic pie (national product) so that there is potential for everyone to be given a larger slice. In that case, it might be reasonable to argue that the policy would receive widespread support among citizens. A good society - one that is good for the people who live in it – could be expected to adopt such policies. However, claims about pursuing social welfare objectives make such policies no more attractive than if they are advocated to simply expand opportunities for individual flourishing.

Maximizing social welfare can also encompass policies to redistribute the economic pie in a manner that advocates believe will somehow enhance the collective well-being of citizens.  When maximizing social welfare is said to require redistribution of the cake, some citizens will be advantaged at the expense of others. It is possible for some policies of this nature to receive widespread support (e.g. provision of a basic social safety net) but that is less likely when extensive redistribution is proposed to equalize the utility that different individuals obtain at the margin from additional income.

Whose welfare function should we maximize?

The idea of social welfare maximization implies the existence of a social welfare function reflecting insights about determinants of collective well-being and expressing the “general will’ of the people. It was over 50 years ago that I began to realize that this idea is highly problematic. My libertarian friends might find this hard to believe, but it happened while I was studying welfare economics.

An article by Francis M Bator influenced me greatly, although perhaps not in the way the author intended. As I was reading Bator’s article - ‘The Simple Analytics of Welfare Maximization, The American Economic Review, 17(1) March 1957 - I remember feeling that this was an object of great beauty. I suppose the article seemed beautiful for the same reasons that abstract art can seem beautiful. Bator provides a geometric presentation of the derivation of a production possibilities curve, then proceeds to derivation of the utility possibility frontier, which he then crowns with a social welfare function, as shown in the diagram above.

Bator’s description of that diagram left a lasting impression on me. He tells us that BB represents the grand utility possibilities frontier, showing at each point the maximum utility for person X given any feasible level of utility for person Y, and vice versa. He then proceeds to explain the “bliss point”, Ω, in the following words:

“To designate a single best configuration we must be given a Bergson-Samuelson social welfare function that denotes the ethic that is to “count” or whose implications we wish to study. Such a function – it could be yours, or mine, or Mossadegh’s, though his is likely to be non-transitive – is intrinsically ascientific.”

What Bator meant by ascientific is that the function involves ethical valuations. However, the point that has stuck in my mind is that despite the heroic assumptions Bator was making in constructing his beautiful geometric edifice, he did not try to pretend that it could be crowned with a social welfare function aggregating the preferences of all citizens. The function depicted “could be yours, or mine, of Mossadegh’s”. (Mohammad Mosaddegh was an Iranian prime minister who held office from 1951 until 1953, when his government was overthrown - apparently in a coup orchestrated by M16 and the CIA.)

Is it possible to make sense of the diagram? 

As I look at the diagram now, the idea of choosing between the utility levels of different people seems problematic. It would also be problematic to some modern utilitarians whose social welfare function is defined simply in terms of maximizing average life satisfaction (making the implicit ethical judgement that everyone deserves to have the same life satisfaction). In that case, if the axes measure the life satisfaction of X and Y, the bliss point would be defined by the intersection of the possibility frontier and a 45⁰ line drawn from the origin. The 45⁰ line would represent all points where X and Y have equal life satisfaction – X and Y would each have maximum life satisfaction at the bliss point.

However, I reject that modern utilitarian view. It seems to me to reflect an inadequate understanding of the determinants of individual flourishing. As argued in Freedom, Progress, and Human Flourishing, even though average life satisfaction may be a reasonable indicator of the average psychological well-being of large groups of people, psychological well-being is just one of the basic goods of a flourishing human. In my experience, when people are encouraged to offer more than perfunctory responses to questions about how they are faring, they tend to talk about a combination of different things such as their aspirations and the choices they have made, their health, and their personal relationships. Satisfaction is relevant, but does not encompass all relevant aspects of human flourishing.

To make sense of the choices represented in the social welfare function depicted, I would need to replace “utility” with “opportunity to flourish”. Even then, I would need good reasons to make an ethical judgement about whether X and Y deserve to have their opportunity to flourish enhanced or restricted.

What are the implications for social choice?

While Bator’s description of the social welfare function let the cat out of the bag for me, I remember reading about Kenneth Arrow’s impossibility theorem at about the same time. I think the main lesson I took away was that the processes of government must inevitably be somewhat dictatorial. That makes it important to have constitutions that protect liberty and electoral processes that are capable of kicking tyrants out of office.

While studying welfare economics, I also took a course in public choice in which I had my first exposure to The Calculus of Consent, by James M Buchanan and Gordon Tulloch. That book and other writings by Buchanan have had a profound impact on my views about the good society and the role of economists.

Buchanan and Tulloch noted that when individuals are considering constitutional rules that they expect to be in place for a long time, they are uncertain as to what their own interests will be in any of the whole chain of later collective choices made according to those rules. Such uncertainty may enable people to set aside their current economic interests in making constitutional choices. One implication is that individuals will tend to choose somewhat more restrictive rules for social choice-making for areas of potential political activity that could involve violation of liberty.

Buchanan and Tulloch link liberty directly to the concept of a good society:

“The acceptance of the right of the individual to do as he desires so long as his action does not infringe on the freedom of other individuals to do likewise must be a characteristic trait in any “good” society. The precept “Love thy neighbor, but also let him alone when he desires to be let alone” may, in one sense, be said to be the overriding ethical principle for Western liberal society.” (p 217).

 Buchanan later warned that the norms that underlie democratic institutions are under threat when politics is allowed to become little more than a ‘commons’ through which competing coalitions seek mutual exploitation.  (For further discussion of this please see Chapter 6 of Freedom, Progress, and HumanFlourishing).

What should economists do?

Economists who advise on public policy often view themselves as social planners who are advising benevolent despots. They are frequently disappointed to find that those whom they advise give higher priority to political and personal goals than to publicly stated economic objectives, or lack the political power to implement recommendations.  

James Buchanan suggested that economists should adopt a contractarian approach, with a focus on the consequences of rules and, in particular, on the question of what rules of the game individuals might accept voluntarily as participants in an authentic constitutional convention. In providing an example of this approach, Buchanan suggested that such a convention would be unlikely to endorse rules of the game which allow majorities in a single generation to impose public debt burdens on subsequent generations of taxpayers. (Nobel prize lecture).

My career

The focus of my career in public policy advice was partly contractarian. For most of my public service career I had the good fortune to work in agencies of the Australian government (predecessors of the Productivity Commission) which undertook research and published reports on the economic implications of changing the rules of the game for economic development. The focus of much of this work was assessing effects of barriers to international trade and other forms of industry assistance.

I note that my career was only partially contractarian because the agencies were required to make recommendations to the government according to specific terms of reference for individual inquiries and more general guidelines. The specific terms of reference were sometimes designed to ensure that governments received politically palatable recommendations, but the research and policy analysis published in inquiry reports, and in annual reports, informed policy-making processes in ways that led eventually to adoption of rules of the game more favourable to free trade.

The advisory agencies were given general guidelines including having “to have regard to the desire of the Australian Government …  to improve and promote the well-being of the people” and to “improve the efficiency with which the community’s productive resources are used”. I do not believe that the collectivism reflected in the reference to people and privately owned capital as “the community’s productive resources” had one iota of influence on the research and policy analyses conducted by the agencies.

I have endeavored to maintain a focus on the implications of different “rules of the game” in the public policy aspects of my subsequent consulting career and my writing on freedom and flourishing on this blog and in my books. There have been some lapses, but I hereby forgive myself 😄 . It has not always been easy to avoid falling into the trap of viewing oneself as a social planner advising a benevolent despot. 

How good is this image of self-actualization?

When you think about Abraham Maslow’s hierarchy of needs, what is the image that appears in your mind? I expect that most people who have some knowledge of the concept would think of a pyramid in which needs are layered one on top of the other, with physiological needs at the bottom and self-actualization needs at the top. If you have no idea what I am talking about, there is no need to worry. Andy Ogden’s sailboat illustration, provided above, is better. That image has been used effectively by Scott Barry Kaufman in Transcend, his recently published book which seeking to update Maslow’s hierarchy.

Kaufman points out that the pyramid image was created by a management consultant rather than by Maslow. He argues that the pyramid “had the unfortunate consequence of reducing Maslow’s rich and nuanced intellectual contributions to a parody and has betrayed the actual spirit of Maslow’s notion of self-actualization as realizing one’s creative potential for humanitarian ends”.

I have read many books aimed at the self-help market, but Transcend has more endorsements by psychologists than any I have previously read. Those praising the book include Martin Seligman, Steven Hayes and Steven Pinker. My inner economist tells me that there must be something wrong with a book preceded by five pages of praise, but I haven’t found much wrong with this one.

Kaufman’s sailboat image captures Maslow’s idea that all needs can be grouped into two main classes, deficiency needs and growth needs. The planks of the boat represent deficiency needs and the sails represents growth (or self-actualization). 

In explaining his metaphor, Kaufman suggests:

“Life isn’t a trek up a summit but a journey to travel through – a vast blue ocean, full of opportunities for new meaning and discovery but also danger and uncertainty”.

The deficiency needs that comprise the boat, safety, connection, and self-esteem work as a dynamic system. Under good conditions they work together toward greater security and stability. Under unfavourable conditions, they can lead toward insecurity and instability, causing people to focus attention on defending themselves.

The growth needs comprising the sails are exploration, love, and purpose. Kaufman suggests that “the drive for exploration is the core motive underlying self-actualization”. It involves the desire to seek out and make sense of novel, challenging and uncertain events. Love and purpose can build on the fundamental need for exploration. Loving is noted to be a powerful force, linked to growth, compassion, coping and authenticity. Purpose is defined as “the need for an overarching aspiration that energizes one’s efforts and provides a central source of meaning and significance in one’s life”.

Kaufman sensibly emphasizes the hazards of attempting to fulfill a need for purpose without working on other areas of growth:

“It is entirely possible to choose a striving that brings out the worst in yourself and others because it is motivated by a desperate, never-ending quest to fill a deficiency in one of the security needs, whether it’s safety, belonging, or self-esteem”.

The need for transcendence is depicted as being in the sky above the sails. Kaufman suggests that transcendence “goes beyond individual growth (and even health and happiness) and allows for the highest levels of unity and harmony within oneself and with the world”. Some further explanation might be helpful for those who, like me, read that and think immediately that they don’t need mystical experiences. The transcending experiences written about are not all mystical. Kaufman notes that transcendence incorporates a “unitary continuum,” of experiences ranging from becoming engrossed in a book, sports performance, or creative activity (what psychologist Mihaly Csikszentmihalyi refers to as the flow experience), to experiencing awe at a beautiful sunset etc, all the way up to the great mystical illumination.

A particularly useful contribution of the book is to make a clear distinction between healthy self-esteem and narcissism. Kaufman points out that narcissism is not just high self-esteem, in the sense of a quiet and sturdy confidence in oneself. Narcissists feel superior; they are arrogant and unwilling to accept criticism.

In writing the book, Kaufman has drawn on Maslow’s unpublished writings to illustrate the range and depth of his thinking. This passage, written by Maslow about 50 years ago, has contemporary relevance:

 “It is … vital to emphasize that a democratic society is rooted in a set of feelings toward other people—feelings like compassion and respect. …  If we did not trust other people, if we did not like them, if we did not pity them, if we did not have brotherly or sisterly feelings for them, then a democratic society would of course be out of the question. Obviously, human history provides many examples to prove this point.”

Readers may have guessed already that I am impressed by Kaufman’s book. In my view he does an excellent job in bringing together many findings of psychologists relating to personal development. I particularly like the imagery in his use of the sailboat metaphor because it recognizes that each individual has prime responsibility for his or her own journey through life.

How can the traditional virtues help people to have the basic goods of a flourishing human?

After setting out a few days ago to write about the origins of the concept of progress, I was re-reading portion of The Enlightened Economy, by Joel Mokyr, when my attention was diverted to the relationship between goodness and happiness. In discussing the meaning of the Enlightenment, Mokyr mentions Roy Porter’s characterisation of it as a gradual switch from asking ‘how can I be good?’ to ‘how can I be happy?’.  Mokyr suggests that pithy summary “captures perhaps something essential” (p 33). (Porter’s discussion is in The Enlightenment in England, 1981.)

I agree both with Mokyr’s endorsement and his equivocation. Darrin McMahon, in his book Happiness: A History (2006) noted the role of St Thomas Aquinas (1225 – 1274) in drawing renewed attention to the works of Aristotle and opening up a space in which some partial happiness can be achieved in this life.  Aquinas helped open the way for the subsequent attention given to betterment of material conditions of humanity by Enlightenment thinkers but, like Aristotle before him, he saw virtuous activity as providing the answer to human aspirations for both goodness and happiness. Many Enlightenment thinkers and, more recently, Neo Aristotelians, also see a strong link between virtuous activity and happiness.

The series of posts I have just completed about the basic goods of a flourishing human have obvious relevance to the question, ‘how can I be happy?’, but those posts don’t mention virtue explicitly. I could explain that in terms of the focus of those posts on societal institutions rather than personal development. However, my time could be better spent considering the role of virtue in helping individuals to attain the basic goods.

Ed Younkins comes to mind as a scholar who emphasises that human flourishing “comprises and requires a number of generic goods and virtues” whose proper application is unique to each person.

The role of the virtues in individual flourishing has been discussed at greater length by Douglas Den Uyl and Douglas Rasmussen in The Perfectionist Turn (2016). Those authors argue that the fundamental problem of ethics is taking responsibility for figuring out how to fashion one’s own life. Within the context of their template of responsibility, human flourishing is viewed as “the exercise of one’s own practical wisdom”. Integrity is the central virtue of that framework. The authors explain:

“Integrity expresses itself interpersonally in honor; but when applied to the agent herself, the term ‘integrity’ signifies a coherent, integral whole of virtues and values, allowing for consistency between word and deed and for reliability in action”.

Integrity explains how the basic goods, as I have identified them, are linked together as an integrated whole when a human is flourishing. Integrity is necessary for exercise of the wise and well-informed self-direction that, in turn, helps individuals to live long and healthy lives, maintain positive relationships, manage their emotional health, and live in harmony with nature.

Neera Badhwar, in Wellbeing: Happiness in a Worthwhile Life" (2014), offers a somewhat different perspective to that of Den Uyl and Rasmussen, but she reaches similar conclusions.  The central propositions Badhwar advances are that the highest prudential good (HPG) consists of happiness in an objectively worthwhile life, and that a person who leads such a life must be characteristically autonomous and reality-orientated.  

Although Badhwar’s view of happiness focuses on positive emotions, thoughts and evaluations, she emphasizes that the HPG also requires an objectively worthwhile life. She explains that an objectively worthwhile life must be “worthwhile for creatures with our needs interests and capacities – including the capacity for asking what sort of life counts as worthwhile”. Her view of an objectively worthwhile life incorporates external goods, such as wealth, to the extent that such goods are compatible with the ability of a person to use them virtuously and happily. It must therefore also incorporate the basic goods I have identified: physical health, positive relationships and living in harmony with nature, as well as psychological well-being and wise and well-informed self-direction.

Badhwar argues that virtue is of primary importance because it ensures the attitudes and actions that are necessary for happiness in a worthwhile life. She suggests that the integration of emotional dispositions with the practical wisdom required by virtue, “makes virtue highly conducive to happiness, since a common source of unhappiness is conflict between our emotions and our evaluations” (p 152). In other words, we can make ourselves unhappy by allowing transient emotions to distract us from acting in accordance with our values.

That brings us back to the importance of integrity to individual flourishing.

How does integrity relate to the traditional virtues of western society as they are understood in the modern world?

In considering that question I have consulted Deirdre McCloskey’s book The Bourgeois Virtues (2007).

Integrity isn’t listed specifically among either the four ancient cardinal virtues - prudence, courage, temperance and justice – or the three Christian virtues – faith, hope and love. McCloskey lists integrity as a sub-virtue of faith and, by listing honesty as a sub-virtue of justice, implicitly recognizes its connection to justice. However, integrity may be required for a person to acquire any of the virtues in a manner that is likely to enable her (or him) to do the right things, towards the right people, for the right end, and in the right way, and to take pleasure in so doing.

In order to explore that possibility, let us take a quick excursion to consider McCloskey’s perception of the virtues and what integrity involves in the context of each virtue.

Prudence (or practical wisdom):

McCloskey recognizes its importance, but is highly critical of the “prudence only” approach of schools of economic thought that have sought to equate individual flourishing with utility maximization.

In the context of practical wisdom, integrity implies reality-orientation, or a disposition to seek truth and understanding.

Courage:

McCloskey argues that courage needs to be balanced with temperance. She is somewhat critical of those who hold up the courage of ancient warriors as a relevant model for the modern world, but is also uneasy about the apparently lack of courage displayed by those in charge of a peace-keeping mission in Srebrenica in July 1995. She admires the courage of those who undertake new ventures and overcome fear of change.

Integrity helps people to act with the courage of their convictions.

Temperance:

McCloskey points out, for the benefit of confused psychologists, that it is temperance, not prudence, that is the virtue of controlling impulses. She notes that temperance is required to listen to customers and avoid temptations to cheat, as well as to save and accumulate wealth.

It is relatively easy for a person to decide to become more temperate in some contexts, but integrity is required to stay on course.

Justice:

McCloskey notes that just conduct involves, among other things, respect for property honestly acquired, paying willingly for good work and breaking down privilege.

Integrity is closely connected with justice, because both integrity and justice require individuals to be honourable and trustworthy in their dealings with others.

Faith:

McCloskey suggests that the relevance of faith is not confined to people who have religious beliefs. In support, she quotes Stephen Barr, a physicist, who suggests that when we ask questions about the real world, we have faith that those questions have answers. She also explains the connection between faithfulness and integrity, in the context of adhering to one’s commitments. She notes the Aristotelian tradition of ethics as a matter of habit and character, and Adam Smith’s account of the role of the impartial spectator, as a behaviourally instilled internal voice of conscience.  

It seems to me that integrity is also required as mature individuals exercise their personal responsibility to decide whether an annoying spectator, that was installed within as a default setting during their childhood, is consistent with their own values.

Hope:

McCloskey writes: “Hope is of course essential for eternal life, and for humdrum life, too, as one can see from the lethargy that comes over a human who, as we say, ‘has nothing to look forward to’.” Hope involves expectation as well as a wish for something good to happen.

Integrity helps steer us toward realistic optimism and away from the hazards of wishful thinking.

Love:

McCloskey is critical of major schools of thought within economics that have viewed love in the same way as other goods, by putting the beloved’s utility into the lover’s utility function, along with ice cream etc. She points out that this implies prudence only, and is contrary to the approach of Adam Smith, the founder of economics, who recognized that people seek a balanced set of virtues, including love. Smith wrote approvingly about benevolence and of “the great law of Christianity” requiring us “to love our neighbour as we love ourselves” Theory of Moral Sentiments, 1759, 25 (5).

Integrity is required to ensure that love offerings are made with a pure heart and not subsequently confused with obligations for provision of reciprocal benefits.

Bottom line

Traditional virtues can help us to be both good and happy, but we require integrity if we are to do the right thing, at the right time, and for the right reasons.

What are the basic goods of a flourishing human?

A good place to begin is with the discussion of the basic goods of “the good life”, by Robert and Edward Skidelsky in their book How Much is Enough (2012). The relevant discussion is in Chapter 6, entitled ‘Elements of the Good Life’. I published a somewhat critical review of the book on this blog some years ago, but I saw some merit in the authors discussion of human flourishing.

The authors adopt the following criteria to identify basic goods:

Universality: not specific to eras or cultures;

Finality: not just serving as a means to a more basic good;

Sui generis: not incorporated in some other good;

Indispensability: lack of the good leads to loss or harm.

I accept those criteria.

The authors identify the following seven basic goods:

• Health: ‘‘the full functioning of the body, the perfection of our animal natures”.
• Security: ‘‘an individual’s justified expectation that his life will continue more or less in its accustomed course, undisturbed by war, crime, revolution or major social and economic upheavals”.
• Respect: an individual’s feeling that others ‘‘regard his views and interests as worthy of consideration, as things not to be ignored or trampled on”.
• Personality: ‘‘the ability to frame and execute a plan of life reflective of one’s tastes, temperament and conception of the good”.
• Harmony with Nature: ‘‘a sense of kinship with animals, plants, and landscapes”.
• Friendship: ‘‘all robust, affectionate relationships”, including work relationships etc. as well as family relationships.
• Leisure: “that which we do for its own sake”, not just time off work.

That list summarises 17 pages of discussion, so it may not do justice to the authors’ deliberations. Nevertheless, it provides a basis to consider whether items have been identified appropriately, and whether anything important has been left out.

Health is obviously an essential characteristic of a flourishing human. The authors want to discourage “an obsession with longevity”, but it is reasonable to assert that flourishing involves living healthily for the term of one’s natural life.

Security is important, but it serves as a means to other goods, including a long and healthy life and psychological well-being (an important omission from the authors’ list of basic goods).

Having others respect of one’s views and interests feels good, but it isn’t indispensable to individual flourishing. Respect for one’s natural rights (life, liberty and property) is certainly indispensable, but serves as a means to other goods, including the ability to live a long and healthy life, interact with others for mutual benefit, and to the acquire human and physical capital that contributes to flourishing.

“Personality” does not seem to capture adequately the ability to frame and execute a plan of life reflective of one’s tastes, temperament and conception of the good. The authors use the term personality, rather than autonomy or practical reason, because it implies “spontaneity, individuality and spirit”. Those aspects of personality could be more appropriately incorporated under psychological well-being. The basic good corresponding to framing and executing a plan of life seems to me to be best described as accepting responsibility for self-direction.

Living in harmony with nature is important to human flourishing, and not just because of environmental impacts on human health and well-being. As I see it, the motivation for living in harmony with nature stems from deep-seated intuitions about our kinship with other living things.

Friendship doesn’t seem the most appropriate word to capture the wide variety of relationships that the authors put under this heading. The relevant basic good seems to me to be positive relationships.

Leisure is usually thought of as time off work, rather than engagement in doing things for their own sake. Martin Seligman uses the term ‘engagement’ to refer to the relevant basic good in his book Flourish (2011).

The other four elements of well-being identified in Seligman’s PERMA acronym (discussed here) are positive emotion, relationships, meaning and achievement. Of these, Skidelsky and Skidelsky only directly acknowledge relationships as an element of the good life. It seems to me that positive emotion and a sense of achievement are essential characteristics of a flourishing human.

Meaning requires a little more discussion. Seligman defines ‘meaning’ as belonging to and serving something that you believe is bigger than the self. This makes sense if serving the self means pursuit of personal pleasure. Those who see their lives as meaningful could be expected to value more things in life than their own pleasure.

So, here are the basic goods that I would expect a flourishing human to have:

1.  The prospect of a long and healthy life.
2. Wise and well-informed self-direction.
3.  Positive relationships with family, friends, colleagues, acquaintances and trading partners.
4. Psychological well-being: emotional stability, positive emotion, satisfaction with material living standards, engagement in doing things for their own sake and learning new things, perception of life as meaningful, a sense of accomplishment, optimism, resilience, vitality, integrity, and self-respect.
5. Living in harmony with nature.

What do I plan to do with this list? My interest is in the factors that lead to differences in opportunities for human flourishing in different countries. For example, which are the countries where some person chosen at random is likely to have the best prospects of a long and healthy life? How can we explain why the prospects for that individual are better in those countries?

Such questions will be explored in later posts.

Isn't it good to be able to get what you want by helping others to get what they want?

When I was at university studying neoclassical welfare economics - about half a century ago - the standard discussion of the benefits and limitations of free markets began with a demonstration that, under certain assumptions, individuals with stable and internally consistent preferences could maximize their utility through voluntary transactions. As I write, I have a picture in my mind of neat sets of indifference curves in an Edgeworth Box, rather than the gains from trade diagram shown above.

Of course, in the 1960s and 70s a great deal of attention was given to market failure stemming from violation of competitive market assumptions and the existence of externalities. Since then, research by behavioural economists has provided evidence that individuals’ preferences tend to be context-dependent, rather than stable and internally consistent. For example, as we all know, what we choose to buy may be influenced by the placement of items on supermarket shelves.

Just as evidence of market failure led many economists to advocate remedial government interventions, evidence that individuals’ preferences tend to be context-dependent has been used by some behavioural economists to argue for paternalistic interventions to nudge people to make better choices. Wise economists urge that consideration should also be given to government failure - the tendency for government intervention to make matters worse even when politicians intend to produce better outcomes.

Robert Sugden has shone light through the smog caused by the standard neoclassical assumptions about individual preferences in his recently published book, The Community of Advantage. Sugden dispenses with assumptions about individual preferences by substituting the principle of individual opportunity – the idea that individuals will choose to have more opportunities rather than less.

Sugden’s book has been praised by some eminent scholars working at the interface between economics, psychology and ethics. It is pleasing that Cass Sunstein, whose advocacy of paternalistic nudges is challenged in the book, describes it as “one of the very few most important explorations of liberty in the last half-century.

Sugden makes the powerful point that there is no basis for behavioural economists to interpret contraventions of the standard neoclassical assumptions as necessarily attributable to cognitive error or self-control problems. There is no known psychological foundation for human decision-making to be modelled as “a neoclassically rational inner agent, trapped inside and constrained by an outer psychological shell”.

Nevertheless, humans obviously make cognitive errors and experience self-control problems. Should economists wash their hands of those problems and leave them for psychologists to deal with? Sugden suggests that economists may be able to help by adopting a contractarian approach – addressing their recommendations to individuals - usually by showing them how they can coordinate their behaviour to achieve mutual benefit - rather than addressing recommendations to paternalistic governments. It is consistent with a contractarian approach for economists to point out the mistakes that individuals are liable to make and to suggest types of choice architecture (e.g. nudges) that they could use, if they wanted, to avoid making those mistakes.

One of the highlights of the book is the perception it offers of the workings of “the invisible hand” of the market. The invisible hand is sometimes portrayed as something that has to be mysterious since it is able to convert self-interest into community benefits. Sugden suggests that the invisible hand is far from mysterious when perceived in terms of the activities of profit-seeking traders looking for arbitrage opportunities. If some individuals are willing to sell something at a lower price than other individuals are willing to pay to buy it, traders can take advantage of the profit opportunities of that situation. From the perspective of the buyers and sellers the transaction helps realize an opportunity for mutual benefit, whether traders are involved or not.

As I see it, from an individual’s perspective the market provides expanded opportunities along the lines suggested in the gains from trade diagram shown above. A person who subsists without trading with others has little leisure time left after eking out a living. By participating in trade - earning a market income in this example - her consumption possibilities are expanded. She is able to get more of what she wants – more leisure and/or more other goods - by helping others to get what they want.

Opportunities for mutual benefit are not limited to market exchange. Mutual benefit is possible in many different types of cooperative interaction. Sugden provides an insightful analysis of team reasoning, contrasting a contractarian approach in which individual team members seek to achieve mutual benefit with the alternative of perceiving the team as a single entity and seeking to maximize the overall good of the team, as judged from some neutral viewpoint.

The author’s analysis of adherence to voluntary practices is also insightful. He notes that individuals realize mutual benefits directly by conforming to voluntary practices, e.g. tipping conventions, because regularities of behaviour provide salient benchmarks for expectations about one another in specific interactions. By conforming to the practice, they also sustain the expectations upon which it depends and help to maintain it as an institution.

In my view, the most important contribution of the book is its discussion of the ethics of intending mutual benefit. A long-standing and recurring theme of criticism of market exchange is that it involves extrinsic motivations that are not virtuous. That line of thinking implies, implausibly, that the intrinsic satisfaction that I obtain from blogging might evaporate if I were to obtain monetary rewards for my efforts. Sugden observes that when people participate in markets they can act with the intention of achieving mutual benefit, rather than personal benefit. He urges readers to adopt the following principle of mutual benefit:

“When participating with others in a voluntary interaction, and for as long as others’ behaviour in that interaction is consistent with this very principle, behave in such a way that the other participants are able to satisfy normal expectations about the consequences of the interaction for them."

The author explains that one of the merits of the principle of mutual benefit is that what it requires of us individually is independent of the motivations of the people with whom we interact. It is in our interests to seek mutual benefit in interactions with as many other people as possible. The principle never requires us to make judgements about another person’s intentions.

The Community of Advantage is the best book I have read about the economics of human flourishing. This brief review has provided only a glimpse of what it is about. Hopefully, it has whetted your appetite to read the book.

The book has raised several issues that I hope to be able to explore further on this blog:

• Is the principle of mutual benefit consistent with the primacy of personal responsibility as discussed by Douglas Den Uyl and Douglas Rasmussen in The Perfectionist Turn?
• When is it possible for economists who are engaged in provision of public policy advice to adopt a contractarian approach?
• Does the principle of mutual benefit mesh well with the views of Elinor Ostrom on management of common property resources, the views of Vincent Ostrom on politics, and the views of Max Borders about the prospects of a Social Singularity?

Where is the best place to live?

The pathway above Orion beach, Vincentia, NSW, Australia

Over the last few months I have had personal reasons to ponder this question. My wife and I decided that the time had come for us to move closer to family and downsize.

I can’t claim that I reviewed research relating to the question in a systematic way before we decided where we should live. However, I have been reading and writing about happiness research for over a decade, so that probably had some influence.

Since we made our decision I have read some of the more recent literature on the impact of happiness of location. Perhaps my recent reading could be explained in terms of seeking additional evidence to support the decision we have made, but I do find the topic intrinsically interesting.

My intention here is to discuss research findings on the impact of location on happiness rather than to attempt to justify our decision.  Relocation decisions made by different individuals and families obviously need to reflect their differing values and changing priorities at different stages of life.

If you do an internet search on “happiness best place to live” one of the first items to come up is likely to be an article telling you that according to a major Gallup poll, Hawaii is the U.S. state with the highest well-being ranking, with the top score in the physical, financial and community categories. If you search for the cities that are the best places to live, you are likely to find articles based on Gallup polls which suggest that the cities that score highest are near the ocean. When you read on you find that there is more involved than just beachside living. Research by Andrew Oswald has shown that average life satisfaction levels in different places closely correlate with objective measures of the quality of life – as measured sunshine hours, congestion, air quality etc.

Survey data on the happiness of people in different federal electorates in Australia suggests that many of the happiest electorates in Australia are not close to the coast (although the New South Wales south coast electorate of Gilmore, where we have lived for the last 12 years, is among the top five). Some of the unhappiest electorates in the country are in suburban Sydney. Some headlines claiming that major cities create unhappy Australians prompted me to write sceptically on this topic a couple of years ago. I suggested that current life satisfaction is not the only important consideration in making location decisions. Many families face trade-offs between current and future life satisfaction.

I recommend that people considering a move should also read an article by Brad Waters in Psychology Today which draws upon the insights of Daniel Kahneman to make the point that life satisfaction is influenced by many factors other than location. He suggests that people considering relocation should ask themselves: “Does a move satisfy those factors or does it temporarily distract us from satisfying them?”

There is evidence of substantial benefits from living in a location where it is possible to see family and friends frequently. For example, research by Nick Powdthavee, undertaken about a decade ago, suggested that the benefits of seeing relatives and friends “most days” rather than “less than once a month” was greater than the benefit of getting married and was sufficient to compensate for about two-thirds of the happiness loss from such events as unemployment or going through a separation.

A couple of years ago when I wrote about the link between happiness and nature connectedness I speculated that some part of the correlation between nature connectedness and happiness is associated with “feeling connected”. Feeling connected to nature might be similar in that respect to feeling connected with family, friends or community.

Evidence continues to accumulate that actual contact with the natural environment has positive benefits for health and happiness. For example, a study conducted by Simone Kuhn (and others) for the Max Planck Institute for Human Development (discussed in this Forbes article) found that city dwellers who live near forests were more likely to have healthy amygdalas and thus better able to manage stress, anxiety and depression. A study by Chris Neale (and others) using mobile EEG has found that when walking in urban green space old people had a higher level of engagement and lower levels of excitement than when walking in both busy urban commercial streets and quiet urban space. The authors concluded that the urban green space seemed to have a restorative effect on brain activity.

An article by Ming Kuo has identified 21 plausible pathways linking nature to human health and has postulated that one pathway, enhanced immune functioning, may be of central importance.

Thoughts along those line prompted me to begin reading The Secret Life of Your Microbiome, why nature and biodiversity are essential to health and happiness, by Susan Prescott and Alan Logan. Perhaps I will write more about that later.

Meanwhile, my bottom line is that, other things equal, it might be a good idea to find a place to live where you can spend a fair amount of time in the natural environment with family and friends. Unfortunately, many people in this world do not currently have the luxury of making that choice.

Why might economic development influence how unhappy people feel when they don't get the love they desire?

There is evidence that a discrepancy between the amount of self-transcending emotion (e.g. love, trust) that people want to feel and what they actually feel has an adverse impact on their happiness.  Researchers have observed that this adverse impact is greater for people in countries with relatively high levels of economic development.

What is it about economic development that could explain this?

Before canvassing possible explanations I need to provide some background information. The evidence referred to above is in a recent article entitled ‘The Secret to Happiness: Feeling Good or Feeling Right?’  by Maya Tamir, Shalom H. Schwartz, Shige Oishi, and Min Y. Kim. The study was based on a cross-cultural sample of 2,324 participants from 8 countries around the world.  I wrote about the main findings of the article on this blog in my last post entitled: What was Aristotle’s secret of happiness?

As indicated in the diagram reproduced above, the authors found that the absolute discrepancy between desired and experienced self-transcending emotions had a larger impact on life satisfaction and depressive symptoms of people in countries with relatively high ratings on the Human Development Index (HDI).

Evidence that economic development influences the impact of emotional discrepancy on happiness was only observed in respect of self-transcending emotions. The findings of the study suggest that economic development has no influence on the way discrepancies between desired and experienced anger, excitement and calmness impact on life satisfaction and depressive symptoms.

So, what is it about economic development that could explain why it seems to make happiness levels more sensitive to feeling the right amount of love? The authors suggest that perhaps “for people who struggle to meet their basic needs the amount of love they actually feel matters more for their happiness than whether this amount feels right or not”. They suggest that this would not apply to other emotions because love is “linked to social connectedness”, which “is presumably a basic human need and a key determinant of well-being”.

I’m not sure I understand what the authors mean. Anger might also be linked to social connectedness. Angry people might find it harder to maintain strong social connections.

A distinguishing feature of love, relative to emotions such as anger, is that when people are asked how much love they feel they could think of either how much they feel loved by others, or how much love they feel toward others.

If we think in terms of Maslow’s hierarchy of needs, it might be reasonable to speculate that people whose basic physiological and safety needs are satisfied might place higher priority on obtaining love than those who are struggling to meet their basic needs. In economic terms this could be thought of as an upward shift in the marginal utility of love as incomes rise. That could explain why a shortfall in love obtained relative to the desired level seems to have a larger impact on happiness of people in countries with relatively high HDI ratings.

That is just speculation. The authors suggest future research should explore further “when, why, and how” the links between emotion discrepancies and well-being vary across countries. It will be interesting to see what eventuates.

How can we measure human flourishing?

This graph suggests that, at a national level, three quite different indicators of human flourishing tell a similar story about human flourishing. The opportunity measure, shown on the horizontal axis, encompasses economic freedom, income, education, health and environmental performance. The thriving measure, shown on the vertical axis, shows the percentage of the populations who are positive about their present life situation and optimistic about the next five years. The measure of psychological flourishing, shown by the size of the bubbles, reflects the percentage of the populations whose responses to questionnaires indicate competence, emotional stability, engagement, meaning, optimism, positive emotion, positive relationships, resilience, self-esteem, and vitality. 

The focus on European countries was dictated by the data source on psychological flourishing:  an article by Felicia Huppert and Timothy, ‘Flourishing Across Europe’ (published in Soc.Indic.Res. in 2013). The thriving data is from Gallup World Polls using the Cantril scale which asks people to evaluate their lives relative to the best possible and worst possible life. The opportunity measure was created using methodology described in Chapter 6 of my book, Free to Flourish.

The graph raises such questions as whether Scandinavian countries will be able to sustain high rates of thriving and psychological flourishing in future without further expanding individual opportunities.

However, I want to focus in this post on how we came to measure human flourishing in three different ways and what the different measures tell us.

First, consider measures of opportunity. GDP per head of population has been used by economists as a rough measure of well-being for many decades, even though its potential shortcomings for this purpose have been well known since the concept was developed in the 1930s. Recognition of such problems led to efforts to take account of longevity and education, in the UNDP’s Human Development Index, and of a wider range of indicators of the quality of life in the OECD’s Better Life Index and similar indexes - including the opportunity index used in the graph. All those indexes can be viewed as measures of opportunity; they are not direct measures of well-being or human flourishing. It is possible to be wealthy, highly educated and have good physical health and yet to be deeply unhappy.

Second, there are attempts to measure well-being directly using surveys asking individuals to give a simple numerical rating to their happiness or their satisfaction with their lives.  The data on thriving shown in the graph are based on subjective well-being assessments of that kind.

The meaning that should be given to life satisfaction ratings is less obvious than the meaning of happiness ratings. The happiness question clearly elicits responses about feelings. Available evidence suggests that life satisfaction ratings reflect evaluations of lives rather than momentary feelings. Research by John Helliwell et al for The World Happiness Report shows that a large part of variation in life satisfaction ratings among countries can be explained by differences in income levels, social support, freedom to make life choices, generosity and perceptions of corruption.

Analysis of data from long-running national panel surveys for Australia, Germany and Britain provides evidence that adaptation and resilience tend to restore life satisfaction to previous levels following positive and negative changes in circumstances. Nevertheless, recent research by Bruce Headey and Ruud Muffels suggests that most people go through periods of their lives when they have relatively high and relatively low life satisfaction. Positive feedback loops between life satisfaction and variables such as health, social support, frequency of social activities, and satisfaction with work and relationships partly account for extended periods of high or low life satisfaction.

As I have discussed in a previous post, evaluations of life satisfaction can also be interpreted as frames of mind, which influence the extent to which people experience positive emotions. Monty Python (and many philosophers and psychologists) tell us that people who have a disposition to look on the bright side of life are better able to maintain relatively high life satisfaction. The evidence that life satisfaction is influenced by dispositions that are attributable to genetics also supports a frame of mind interpretation. People in Denmark are apparently particularly favoured by genes that promote high life satisfaction.

The main reservation I have about the tendency to use of life satisfaction as the gold standard in measuring human flourishing stems from evidence (for example, findings of research by Daniel Benjamin, OriHeffetz, Miles Kimball and Nichole Szembrot)  that when faced with relevant choices people rank life satisfaction less highly than other criteria such as the overall well-being of their family, being a moral person, having a meaningful life, and having many options and possibilities in life and freedom to choose among them. Some of the findings of this research are not easy to understand, but those noted above are, at least, consistent with the choices people could be expected to make when they exercise their practical wisdom.

That leads me to the third approach to measurement of human flourishing: the eudaimonic approach, which draws some inspiration from ancient Greek philosophers.  In their research, referred to above, Felicia Huppert and Timothy So viewed flourishing as lying at the opposite end of a spectrum to depression and anxiety. The authors identified 10 features of positive well-being: competence, emotional stability, engagement, meaning, optimism, positive emotion, positive relationships, resilience, self-esteem, and vitality.  As noted in my previous discussionof this study, an important finding was that was that the individuals identified as flourishing did not correspond very closely to those identified as having high life satisfaction. For Europe as a whole, the percentage who were both flourishing and had high life satisfaction was 7.3%. Among people who met the criterion for flourishing, 46.0% had high life satisfaction, and among people who had high life satisfaction, 38.7% were flourishing. (The correlation between life satisfaction and flourishing was only 0.34.)

As the philosopher Daniel Haybron has observed recently, there is no consensus among eudaimonic psychologists about what their measures of well-being should look like. Dan Haybron has provided what seems to me to be a good account of the “philosophical basis of eudaimonic psychology” in a chapter of that name in J Vitterso (ed.) Handbook of Eudaimonic Well-being.  I don’t agree with him on the question of whether it is possible for the wicked to flourish, but I don’t think that impinges greatly on the measurement issues. Haybron argues cogently that the main factors that should be targeted in eudaimonic measures of psychological well-being are:

• Agency - personal development, competence and autonomy
• Relationships - close personal relationships, social enjoyments, community trust etc.
• Meaning - engaging in activities that are meaningful or worthwhile
• Emotional well-being - endorsement (or positive emotion) engagement and attunement (tranquillity or peace of mind).

He also acknowledges the importance of some other factors that researchers may wish to measure: authenticity, knowledge and virtue.

In my view Haybron’s contribution should provide a useful basis for further consideration of these matters by psychological researchers, but any consensus they reach will inevitably be somewhat arbitrary and tenuously related to the perceptions of individual survey respondents about the factors that are important to their own flourishing.

I end by raising a couple of questions:

First, how should researchers determine what weights should be given in combining ratings of factors targeted in their surveys? My answer, very briefly, is that this should be left to the practical wisdom of survey respondents. I considered the question here.

Second, would it be enlightening to attempt to combine measures of economic opportunity with measures of psychological flourishing? My initial thought is that before considering that question we should have a clear view of the purpose(s) for which such a combined measure might be more useful than separate indicators of economic opportunity and psychological flourishing. I can’t think of any right now.

Postscript: 

Dan  Haybron has provided the following comments:

Very nice post! It might be useful to see your opportunities index related to the capabilities framework, which in my view is really just a kind of opportunity approach--and possibly better framed as a matter of opportunities (though maybe the connotations of the latter aren't always helpful). 

I suspect policy should consider well-being/outcome and opportunity metrics, and also don't see any clear rationale for combining them, except perhaps in some still broader index including lots of other stuff as well. In my work on capabilities, I suggest that the latter better captures something like parents' concern that their kids have good opportunities (so push them in school), which is distinct from a wish that they be happy/do well, which can sometimes be in tension with giving them the best opportunities. (If your kid goes to Harvard, great opportunities, probably not so happy.) Though in line with your graph, I assume they generally tend to be positively correlated.

On life satisfaction (LS)  measures: you point to one of the odd features of the Benjamin et al work, which generally seems to undervalue emotional goods as well. I suspect the setup skews answers misleadingly on things like that (though I think their work is really cool). But also, partisans of LS should not be bothered by that result: the smart position is to allow that LS itself isn't very important (hence the responses), but is very useful as an indicator of success in the things people do care about. So if LS is a valid measure, it should reflect all those other things, in proportion to how much people care about them. i suspect the Benjamin et al framework might be used to help test LS measures: are they sensitive enough to what people actually care about? Or do they lean too heavily on information that is chronically salient, like day-to-day material concerns? 

How should researchers combine different aspects of happiness into a single measure?

A recent paper by Gus O’Donnell and Andrew Oswald considers the question of how to combine measures of different aspects of subjective well-being into a single overall measure.

The authors focused specifically on the four aspects of well-being measured in annual surveys by the UK Office of National Statistics. These are:

• how satisfied you are with your life nowadays;
• to what extent you feel that the things you do in your life are worthwhile;
• how happy you felt yesterday; and
• how anxious you felt yesterday.

All aspects are measured on an 11 point scale from 0 to 10.

The approach taken by O’Donnell and Oswald in their exploratory study implies that all aspects of happiness should be weighted according to their “social importance” as determined by the average weight given to them by citizens in opinion surveys. The specific method they employ involves asking people to allocate 100 points across the four measures. For example, if all four measures were considered to be equally important, 25% would be allocated to each measure.

This method of developing weights seems to me to be much better suited to combining well-being indicators such as those included in the OECD’s Better Life index (e.g. income, education, health, environment) than to combining survey data relating to different aspects of subjective well-being.

I feel uneasy about the method adopted because I don’t think individual citizens are equipped to make judgments about the “social importance” of the feelings of others. For example, the majority view about the “social importance” of feelings of anxiety might understate the impact of anxiety on the well-being of people who suffer from anxiety.

The authors have reported results from the use of their method of obtaining weights from four different samples: economics students, MBA students, professional economists, and a wider group of citizens chosen using web-based methods. All groups gave anxiety the lowest average weight, but apart from that there is not much common ground in the views of the different groups. The wider group of citizens gave happiness the greatest weight, but the other groups all gave life satisfaction the greatest weight. The economics and MBA students gave “doing worthwhile things” a much higher weight than happiness, but professional economists gave it about the same weight as happiness.

It seems to me that a better way to proceed would be to attempt to estimate the well-being of individuals by using weighting systems that individuals consider to be relevant to their own lives. There are potentially several ways to do that.

First, there is the approach adopted by Daniel Benjamin et al in their paper, “Beyond Happiness and Satisfaction”, discussed on this blog, in which people were asked to choose between hypothetical situations using different measures of happiness and a range of different ratings.

Another possible approach would to ask survey respondents questions along the following lines: “If you were offered an opportunity that would add a 1 point improvement in your feeling that the things you do in life are worthwhile, how much life satisfaction would you be willing to forgo in order to obtain that benefit?” When I ask myself that question the answer I obtained seemed to make sense, but my mind went blank when I ask myself how much life satisfaction I would be willing to forgo in order to obtain a 1 point increase in happiness. The same happened when I asked myself how much happiness I would be willing to forgo in order to obtain a 1 point increase in life satisfaction. So I can hardly recommend that approach!

The third approach is to simply ask survey respondents to allocate 100 points across the four measures according to the weight that they consider should give to the different measures in assessing changes over time in their own personal well-being. That approach has the virtue of being simple and directly related to estimation of relevant weights.

In order to obtain an accurate overall impression of subjective well-being at a national level it is important to know to what extent the weights that individuals consider to be relevant to assessment of their own personal well-being vary according to the circumstances of their lives.

What does economics tell us about making New Year's resolutions?

Opportunity cost was the first thing that came to mind the other day after the thought occurred that I should perhaps consider making a New Year’s resolution. That was probably because I just happened to be paying attention on the day the concept of opportunity cost was explained when I was at university many years ago. 

Opportunity cost is just a label. If you haven’t had the benefit of studying economics you might still be aware that the time and effort you spend making resolutions and trying to keep them could possibly be spent doing something more enjoyable. You may also be aware that there are emotional costs associated with making resolutions and then failing to keep them.

On the other hand, by now some of you will be thinking that opportunity costs are just excuses for inaction. You might want to urge me to consider the potential satisfaction of making resolutions that might enable me to become a healthier or better person.

That is why my mind now turns to the law of diminishing marginal utility. That law says, more or less, that as you obtain more of any good, the additional happiness you obtain from each additional unit tends to diminish. Every wine drinker should know that a larger increment of happiness is likely to be obtained from the first glass of wine than from the second, and a larger increment of happiness from the second than from the third, and so on. If the truth of that observation is not obvious to you on New Year’s eve, it might well become very obvious on New Year’s day.

It seems to me that the law of diminishing marginal utility applies to New Year’s resolutions in much the same way as to other goods. For example, a person who swears a great deal might gain some satisfaction if she can refrain from using foul language in the presence of children. The further increment she obtains from refraining from swearing in front of people whom she knows to be disgusted by the behaviour, might be somewhat smaller. The increments in satisfaction could be expected to become progressively smaller as she adds further classes of people or situations.

All this brings to mind the image of a scissors diagram, regarded as a thing of great beauty by many economists of my vintage. The downward sloping line in the diagram below represents the declining marginal utility of resolutions and the upward sloping lines represent the rising marginal cost of resolutions (expressed in utility terms). If you are having difficulty viewing the quantity of resolutions as a homogenous good, think of the horizontal axis as measuring the extent to which you might consider reducing your use of a particular swear word over the next year. 

I have drawn two cost curves in the diagram to illustrate how the optimal investment in resolutions would change if it became less costly to make and keep resolutions. The initial optimum is at point A, where our subject makes a relatively small investment in New Year’s resolutions. If it became less costly to make resolutions, the optimum would move to point B. At that point she would make more resolutions - and her total utility would be higher.

So, what does economics have to tell us about how to reduce the costs associated with New Year’s resolutions? An obvious place to look is behavioral economics. It is not difficult to find articles on the internet suggesting how we can use behavioral economics to help us to stick to our resolutions. Much of the underlying research is more in the field of psychology than economics, such as the work of Roy Baumeister on willpower (which I discussed here).

In my view the area of economics that has most potential to help us to understand and reduce the costs associated with making and keeping resolutions is ‘identity economics’. The key idea of identity economics – as explained in a book of that name by George Akerlof and Rachel Kranton - is that individuals gain satisfaction when their actions conform to the norms and ideals of their identity. In the way Kranton and Akerlof develop the concept, identity is determined to a large extent by the groups to which individuals belong. 

However, when you think about your own identity, as an autonomous individual, you are free to think of it as being defined by the qualities you value most highly - or identify with. (There is some relevant discussion in a recent post in which I reviewed Russ Harris’s book, The Happiness Trap.) Recent research by Anthony Burrow and Nathan Spreng, which suggests that having a purpose in life tends to impede impulsivity, points to the potential benefits of keeping in mind the qualities we value most highly.

This brings to mind the potential to draw a possibilities diagram showing trade-offs between some of the things I value. On one axis is excellence and on the other axis is tranquility. I will leave it to your imagination.

Postscript

On reflection, it doesn’t seem to make much sense to think in terms of trade-offs between excellence and tranquility. It might make more sense to think in terms of a trade-off between satisfaction with professional achievement and satisfaction with relationships, as shown below. An investment in emotional health might expand the possibilities available.