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Two types of utilitarianism

Summary:
Here’s Bryan Caplan: I say utilitarianism is utterly crazy.  After all, as Huemer previously told us: It’s worth taking a moment to appreciate how extreme the demands of utilitarianism really are. If you have a reasonably comfortable life, the utilitarian would say that you’re obligated to give away most of your money. Not so much that you would starve, of course (because if you literally starve, that’ll prevent you from giving away any more!). But you should give up any non-necessary goods that you’re buying, so you can donate the money to help people whose basic needs are not met. There are always plenty of such people. To a first approximation, you have to give until there is no one who needs your money more than you do. If that’s not crazy, what is? It seems to

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Here’s Bryan Caplan:

I say utilitarianism is utterly crazy.  After all, as Huemer previously told us:

It’s worth taking a moment to appreciate how extreme the demands of utilitarianism really are. If you have a reasonably comfortable life, the utilitarian would say that you’re obligated to give away most of your money. Not so much that you would starve, of course (because if you literally starve, that’ll prevent you from giving away any more!). But you should give up any non-necessary goods that you’re buying, so you can donate the money to help people whose basic needs are not met. There are always plenty of such people. To a first approximation, you have to give until there is no one who needs your money more than you do.

If that’s not crazy, what is?

It seems to me that there are two types of utilitarianism.  One type treats utilitarianism as a compassionate but authoritarian religion, demanding that people behave in such a way as to maximize aggregate utility.  A second type of utilitarianism is a sort of policy guide or an aspirational religion if you prefer.  It describes what we should do to make the world a better place.

To be sure, it’s not completely obvious that the world would be a happier place if I gave away almost all of my money to the poor.  There are various costs and benefits to income redistribution.  But it’s certainly plausible that the world would be happier if I gave much more money to charity.  So for the moment let’s take that as a given.  Would utilitarianism then “demand” that I do so?  Not my version, which is not the authoritarian religious version.

When Bryan says that behaving in such a way that the world is a happier place is “crazy”, I don’t think he’s saying it would necessarily be a bad thing, rather that it’s unrealistic to expect people to behave that way.  Most people are partly selfish and partly altruistic, and thus it’s a bit unrealistic to assume (or “demand”) that people behave as if they are 100% altruistic.  That doesn’t mean that being 100% altruistic would be a bad thing, just that one doesn’t observe many people with that sort of personality.

Most people wish to be healthy, but for selfish reasons almost everyone occasionally does things that are unhealthy.  Most people wish to be altruistic, but altruism is costly.  For this reason, most people exhibit a mixture of selfish and altruistic behavior.  For instance, altruism is my only motivation for voting—I don’t actually expect my vote to impact my personal life.  So I vote on an altruistic basis—why else would I even bother to show up at the polls?  If I were so selfish that I voted for my personal interests, then I wouldn’t bother voting at all.

On the other hand, selfishness is my motivation for not giving more money to charity.  (As an aside, the share of your income that you give to charity isn’t really what counts, what matters is the share of your lifetime income that you and your heirs eventually consume.)

I do understand that there is another form of utilitarianism.  The version that makes “demands” says that Jeff Bezos should move to a simple room in a monastery and donate his $160 billion to charity.  In my version, while the world would be a better place if Bezos were to do this (perhaps), I don’t really expect him to behave this way.  If instead he spends $10 billion on consumption and then when he dies donates the other $150 billion to charity, then that’s also fine with me.   Not optimal, but I am pretty realistic about human nature.  Most of us are a mixture of selfish and altruistic motives.

What if Bezos spent all $160 billion on consumption and didn’t give anything to charity?  That’s why I favor a progressive consumption tax.  Indeed I favor setting the tax rates at a level that maximizes aggregate utility.  On the other hand, I don’t favor a tax system that is so punitive that it reduces most of us to poverty, as I worry that it would so distort incentives that it would even fail in its goal of boosting aggregate utility.

Unlike Bryan, I don’t regard even the “compassionate but authoritarian religion” version of utilitarianism as being crazy.  Indeed there are some popular real world religions that make equally unrealistic “demands” of their adherents, without kicking them out of the church when they (inevitably) fall short.  Think about a religion that demands that you love your fellow human beings, even if they murdered one of your family members.  Not easy to do, is it?

Although I am not religious, I would never call a religion like Christianity crazy just because it’s almost impossible for any normal human being to live exactly as Jesus suggested we should live.  Indeed, Jesus might well have agreed with those more demanding utilitarians who insist that the rich should give most of their wealth to the poor.  So why the double standard?  Why demand more of utilitarianism than we demand of various popular religious creeds?

All utilitarianism is actually saying is that the world would be a better place if people behaved in such a way as to boost aggregate happiness.  And that’s true!  The fact that it’s difficult to always behave that way doesn’t change that truth.

Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment". In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

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