Mary Hirschfeld on Economics, Culture, and Aquinas and the Market
May 20 2019

Aquinas-and-the-Market-198x300.jpg Author, economist, and theologian Mary Hirschfeld of Villanova University talks about her book, Aquinas and the Market, with EconTalk host Russ Roberts. Hirschfeld looks at the nature of our economic activity as buyers and sellers and whether our pursuit of economic growth and material well-being comes at a cost. She encourages a skeptical stance about the ability of more stuff to produce true happiness and/or satisfaction. The conversation includes a critique of economic theory and the aspect of human satisfaction outside the domain of economists.

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Explore audio highlights, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.

READER COMMENTS

Craig
May 20 2019 at 10:05am

Russ and, apparently, many other professional economists seem to think that economics is about describing, or pretending to describe, how individual people behave. About specifying the utility function they are presumed to maximize, if you will. In my understanding, this is a fundamental misunderstanding of the actual content of economic thought.

To me economics is not that at all, but about describing how the world works, what are the necessary consequences of people’s behavior. That is, of the fact that they do act not that they do, much less should, act in any particular way. And one of the fundamental advances of modern economics is that the very concept of a utility function is nonsense.

SaveyourSelf
May 20 2019 at 2:52pm

@32:00 Mary Hirschfeld  said, “I would really like to see social science move more in the direction of thinking through how to balance out these things or what’s involved in these norms.”

This is an excellent example of THE major failing of economics. Not that economists are weighting the wrong products. Not that using beer rather than dignity in their examples is holding back the world. The biggest problem in economics is that economist think that it is possible to understand society by thinking about it in the right way. They don’t get… she doesn’t get, that the quantity of information contained in a society or market is infinite relative to the computational and storage capacity of an individual—including an individual economist.  It does not matter if that economists spends every hour of every day of their entire life meditating on prefect happiness using perfect models. That will not change the FACT that it is not possible for a glass of water to understand the ocean. Even if that glass of water is in the ocean during the time of said contemplation. The audacity of such a claim is incredible… And she’s not even claiming it. It is a given in her thinking—an assumption that she takes for granted.

 

@ 23:36 Mary Hirschfeld  said, “So, incentives shape behavior. But insofar as incentives also suggest that more is better, they also might undermine some of these other norms or other higher goods. And so, a policy-maker needs to be careful about balancing them.”

More of the same. The same critique applies. Which brings up an important point. This problem of overconfidence and lack of insight is not restricted to economists. It is a human flaw. Policy makers CANNOT balance norms and goods no matter how careful they are. No one can. The information they are trying to contemplate is infinite relative to their own computational and storage ability. Attempting to do so GUARANTEES failure. The whole reason that using incentives to understand economics is that they work on the level of an individual, which is something a single decision maker can understand.

Aaron Cuevas
May 20 2019 at 9:59pm

Why didn’t she told her student “well, you seem to maximize your utility by teaching at a low wage, and lower your utility by not teaching at a higher wage. So you should teach despite the low wage.”

Jackson Mejia
May 21 2019 at 7:50am

Yes, precisely. It isn’t like economics refuses to deal with this. Any intro labor econ course makes a point of emphasizing compensating wage differentials, the heterogeneity of preferences over risk, and so forth. Sure, there will often be a dollar value associated with different components of a job so that they can be appropriately weighed and compared, but what’s wrong with that? People pay for different qualities in work and life and we know that.

The way Dr. Hirschfeld contrasted the higher virtues and lower (material) goods also seemed to be wrong. She implied that we need to focus more on non-scarce goods, i.e., the higher virtues, but the fact of the matter is that they are scarce simply because virtuous behavior occurs in time, which is itself a scarce resource. And she acknowledged that virtue creates tradeoffs, so it’s bizarre that she claimed that morals are not scarce. Clearly they are since people would not otherwise pay for certain standards of morality, which they do all the time.

Finally, it just seemed like she was setting up straw men to knock down. Maybe I have had a different experience than most economics students (doubt it), but I have rarely gotten the idea from instructors that only wealth matters or only material goods matter. Sure, our more rudimentary models might only include material goods because they are easier to understand, but those models are almost always accompanied with a note from the lecturer on how there are other things in life besides more widgets.

Sorry for the rant. Really enjoyed her discussion on sunk costs.

Eric
May 21 2019 at 12:07am

So many thoughts, where to begin?

The reason many people work harder than others is because it is expected. If you’re unlucky enough to have one of those bosses who sends out email at 10:30 in the evening, you had better make sure you’re checking email at 10:35 or you’ll be blindsided in the morning. And the reason your boss is checking mail is because his boss is checking mail, all the way up to the CEO who is answering to the big players on Wall St, who never sleep ‘lest they miss out on an opportunity.

The other thing is that while money (and the pursuit) isn’t going to buy happiness, unfortunately we’re all running up a down-going escalator when it comes to our wages. If we had a currency designed to be a constant, like the Kilogram, then perhaps we would be a little more comfortable in our future plans. But because economic theory says that money supply has to expand and theoretically contract, we can never really know what our savings will buy in the future.

And finally, the reason you pay the janitor a decent wage is so he doesn’t join the Communist party. But these days the trend toward outsourcing and focus on core competency means your accounting department negotiates a cutthroat contract with the janitorial service, who then cuts the wages of their employees. So not only don’t you care about the janitor, you probably don’t care about most of the people working in your building, since they’re probably contractors too. And Bernie Sanders gets a boatload of supporters who probably wouldn’t mind seeing a little violent revolution.

Michael Joukowsky
May 21 2019 at 7:56am

Where is Nassim Taleb when you need involved with this conversation?  I thought for a moment that I was listening to a podcast from Mother Jones.  1) In due respect, who is Ms. Hirschfeld to know, tell or have some government entity to describe what they want, level of achievement either monetarily, “stuffwise” or status wise?  It is up to the individual. 2) The left has done such a great job destroying faith and morality, that people like Ms. Hirschfeld believe that the new religion is economics, social sciences or science and just trust the “us” professors to teach social conduct.  I disagree, we have the chance to learn morality and faith which is taught everyday in our Synagogues, Churches and other places of Worship.  3) Ms. Hirschfeld does not understand that she will be paid more whether she likes it or not.  Why?  The Government dictates it in order for school status and “equality”.  I say, look if you happy with what you have, give away the rest.  4)  Keynes had no skin in the game, professors have no skin in the game, administrators have no skin in the game, economist do not have any skin in the game.  So stay out of the game.  5) I believe in an aspirational word where we create new “stuff” everyday.  So get your hands off my stuff and my creativity of creating and inventing new stuff.

Jordan Miller
May 21 2019 at 7:00pm

Totally agree.  Its always tiresome getting lectured by tenured professors about our supposed mad cravings for more “stuff.”

What exactly is this “stuff” she’s so worried about ?  A mutual fund that could help one of our family members some day or keep us from being a burden on them if we lose our job? A beach house for fun and memorable family vacations? A lovely garden where family & friends could be entertained?  You see where I’m going with this…

Apparently Ms. Hirshfeld lives in a world where she will never be laid off, her retirement funds are secure, her children dont need student loans, she will never start a business and thus need investors, etc. No skin in the game indeed.

JD August
May 23 2019 at 1:51pm

Yep – The intellectuals get to make the rules for the rest of us who actually live in the real world. — What’s wrong with making a ton of money to support your family, your parents, maybe your grandparents, help your friends and community, donate to charity, purchase goods that are made by working people, prepare yourself and your family for your old age and demise, save for emergencies and especially for medical ones, prepare your children to be financially secure and unburdened by economic hardship, have money time and energy to enjoy travel and experience the world beyond your workplace and neighborhood block, have the ability to finally write that novel or paint that landscape that’s been burning inside you since were a youth, enjoy Nature before it’s completely destroyed and maybe even  donate a wing to the children’s ward at the local hospital, start a youth camp for underprivileged children — and in short, enjoy all the good “stuff” that hundreds of millions — probably billions of people cannot do, because they have not been privileged enough to be born into an American liberal elite that despises money and wealth. — And I’m a blue-collar born Ph.D. educated democrat from Baltimore, hon.

Brian Joselit
May 21 2019 at 9:43am

Great Episode. I was afraid it was going to get way too Utopian but than Mary stated her policy goals are to talk, not to hand over the power to enforce to the government. and that changed the episode from “How a Libertarian becomes a Socialist” to “Smart Economists point out that Economic Models should not be what you base your life on”

Rob W
May 21 2019 at 10:27am

I enjoyed this episode and found much to agree with in it. I would like to challenge one common argument in it that I think is faulty though.

Hirschfeld and Russ both agree that pursuing physical attractiveness is a bad goal to have in life, for the stated reason that ultimately as you age your beauty will be impossible to maintain, leaving you high and dry.

Pursuing attractiveness probably isn’t a great goal, but this argument isn’t very compelling.

To start with, any investments you make in human connections and relationships will fade away at a similar pace to your beauty fading away due to age. People forget things they did together, drift apart, move to different cities, get dementia and illness, and so on. This isn’t a good argument against pursuing connections, because you can enjoy them for what they are while they last. But the same is true of being attractive.

Ultimately, both beauty and human connections will completely disappear as you get sick and die, but so what?

The argument I find more convincing against pursuing beauty – beyond what is required to motivate people to live health lifestyles – is that it’s a more positional good than friendship. People want to be more beautiful than others, and value being attractive in large part as a way to outcompete others. So it’s harder for everyone to feel beautiful at the same time.

Whether you are fulfilled in your friendships is more valued as a good in itself, and less in comparison to other people’s friendships. So pursuing good partnerships with others is a more pro-social behaviour in which we can all flourish together.

Alex
May 21 2019 at 11:42am

Free trade can and should be defended on both ethical and efficiency grounds. Trade restrictions impose on a large number of individuals the obligation to spend more and/or obtain lower quality if they need certain products or services, to the benefit of a smaller number of individuals. This is unjust. Period. Even if it “preserves communities from breaking up”.

Mark Maguire
May 24 2019 at 5:33pm

I agree. Toward the end of the podcast, I had a couple of thoughts about the idea of a humane economy, and tariffs vs free trade.  Consider “humane” from various points of view. First, free trade can be considered humane to consumers. As a consumer I love free trade because it enhances my personal economy,  having the best product (“stuff”) at the best price at the best convenience.  Second, is the focus a humane US economy, or a humane economy for the world?  Free trade does not look so great or humane for a US employee who loses his job to it, but that job did not go away. Someone has that job somewhere else, and is  happy about their personal economy. So from a wider world view, that could be considered humane.

Dede
Jun 2 2019 at 1:56am

“If goods and services do not cross borders, soldiers will” (author unknown to me, apparently not Bastiat even if he would not have disagreed).

I would tend to think that such an assertion, if true or believed, should close the debate. Efficiency is way behind in terms of justification for free trade and I am surprised to hear Russ blaming himself to focus exclusively (or mainly) on it.

Mark Maguire
Jun 7 2019 at 5:27pm

I love that quote, and never saw it. In the 1980s I was peripherally involved with trade of computer systems with engineers in Shanghai China.  I recall developing the same thoughts at that time,  thinking that when a country as powerful as China needs resources, I’d much rather see them get it via trade, instead of military force.  Oil for example. Now I’m thinking it only works to a point… I was disheartened to see their actions in the South China Sea, and their aggressive efforts to control Hong Kong.

Nick Ronalds
May 21 2019 at 1:57pm

A good discussion, and Ms. Hirschfeld comes across as thoughtful, empathetic, and wise. But: do  we really have so much in advanced economies that further economic growth is an unnecessary luxury? That seems like an upper middle class world view (I’m avoiding the cliche about living in a bubble). Foe one thing, who is “we”? I recently visited a relative living in a trailer “community”. Few people there have full-time jobs, or if they do, can keep them for long. The current strong labor market is allowing them to keep head above water, but they don’t have a lot of gadgets and toys and even a mild recession would be devastating.I suspect, many others people in the country are similarly situated.  Sure, the super-rich with 65 thousand acre estates could do with less, probably much less. But come-on, that describes a tiny sliver of the 1%. Many in the top 10% likely don’t feel that confident they’ll have enough for retirement.

An end to economic growth would surely unleash even uglier politics than we now have, and unrelenting conflicts over more distribution of wealth and income would likely lead to  recession, and even uglier politics, in a dismal spiral.

Yes, many of us have the wrong values, some of us have poor ethics and morals, and many of us are deluded about what’s really important to happiness. But I’m not sure a world (or country) with no economic growth, which would be a far less dynamic world, would be a happy solution.

 

Schepp
May 21 2019 at 2:40pm

An economic assessment of the Israel daycare.

Before the fine the cost of lateness was shame.  After the fine, a monetary price was set.  The unintended consequence of the fine was to remove the price paid in shame.

If you are going to set a price, make sure it covers the costs.

I claim this is assessment is how good economics can be done.

Russ Roberts
May 21 2019 at 4:23pm

For sure. There’s nothing that startling about the claim. They just set the monetary price too low. But the result is used to claim all kinds of things that go beyond that finding. And the result may not be true though it’s certainly intuitive and believable. Read the Rubinstein article in the resources page for this episode.

Greg G
May 21 2019 at 7:42pm

This was my favorite part of the conversation.  I had heard the story before but never before thought to question the understanding that setting a price itself was obviously the thing that had the effect of making late pickup just another acceptable service on the menu for sale.

Once Russ pointed out the price could simply be too low to have the desired effect I felt I had known it all along.  A late pickup “price” set high enough to be an obviously intended as a  punishment will be accompanied by a a stigma in a way that a low price never could be.  And, of course, fewer people will be able to afford it.

This is a great example of why I never miss an episode of EconTalk.

 

 

SaveyourSelf
May 25 2019 at 11:20am

The story of the daycare assumes that, after a price is set for arriving late, the daycare employees still don’t want parents to arrive late. But that is likely not the case at all. Before the employees were not being paid for that extra times spent at work, now they are. It is probable that at least some of them would enjoy staying late after a price was instituted. And if they didn’t, just raise the price till they do. In other words, the “moral” of the story only holds true if you “hold” everything constant. But prices change and people on both sides of a trade change their behaviors in response to those price changes.

This is a common error. I see it all the time in politics especially. That is, to only consider one side of a trade and ignore the other. Or worse, vilify the other.

Todd Kreider
May 21 2019 at 3:06pm

1..I can’t see an economics professor telling students that they should maximize getting stuff. They also talk about services, a topic not mentioned (or briefly mentioned) in this discussion, and the trade off between work and leisure. I took my first economics course in 1988 and the last page of the first chapter of Baumol and Blinder’s text stood out. It emphasized there were all sorts of possibilities in an economy at the same GDP level that depended on aggregate values.  Some societies at one moment may care a lot about education whereas others may not invest as much into that. Some societies might put more emphasis on leisure than work, etc. The emphasis was  away from just goods.

2. On leisure:

Mary Hirschfeld: … The irony is, way back in the 1930s, John Maynard Keynes thought we were about to arrive at a place where we had solved the economic problem. And his concern was: What are we going to do with all this abundant leisure?  …

Russ Roberts: We showed him.

Keynes was predicting a hundred years into the future in 1930 so technically out to the year 2030. There are still ten years to go as A.I. keeps getting better and better. Roberts and Hirschfeld might be surprised at how much leisure time opens up for the typical worker then…

 

 

Bob
May 21 2019 at 4:34pm

Getting away from models and utility-maximizing assumptions (etc) is possible while preserving the economic way of thinking and economic laws.  The stuff that Russ and his guest dislike about the sterile nature of economics?  That’s largely econometrics, not sound economic science.  Read “Human Action” by Ludwig von Mises and “Man, Economy and State” by Murray Rothbard.  The core of sound economic science is purely descriptive and avoids the pitfalls you are both concerned with.  The folks who follow in that economic tradition are very concerned with separating clear economic thinking (a real descriptive science) from psychology and ethics and so on.

Implicitly you are both concerned about the popular mainstream conceptions of economics, not sound economic science itself.  There’s no value judgement in the the law of markets, the law of diminishing marginal utility, etc, these laws all proceed naturally (and deductively) from the fact that humans use (scarce) means to attain ends.  Baked into the very nature of human action and the reality of scarcity are economic laws and much of the economic way of thinking.  Once you study some Mises and Rothbard and really understand praxeology you will never look at the world the same way again.  Cheers!

Andy McGill
May 22 2019 at 8:04pm

Regarding the discussion about the Israeli day care center.  I think both speakers missed the obvious economic answer.

At the daycare center where my twin nieces stayed for years, the center charged a cash fine of $1 per minute per child for late pick up.  The fine payment then went to the staff person who stayed late.

Problem solved.  The staff people no longer cared if parents were late.  In fact it made for a GREAT day for them when two kids stayed a half hour late — $60 for 30 minutes work. They made maybe $12 per hour, so that was ten times normal pay.  Most staff wanted to be the person who would stay late.  Of course if you end up with no staff wanting to stay late, then raise the fine until you do.

 

jwhite
May 22 2019 at 9:47pm

I’m a simple rube who places Russ in the same pantheon as Thomas Sowell or Walter Williams (ie people who have taught me the logical and philosophical principals of economics that simple macro and micro classes did not)

But, on this episode, Russ could’ve used the example of our plasma market that feeds the world as a push back to the talk of kidney markets…and that people react to positive incentives differently than the negative incentives of the fines Mary spoke about in the daycare example. I don’t know though if economics places a different value on incentives v disincentives, but our society does. A penny saved is not a penny earned to the majority of our culture…quite the opposite.

On a side note, as a carpenter and a person who has worked in the trades for years. Perhaps a public university employee landscaper doesn’t make much next to a professor but I can tell you that talented blue collar workers easily earn $60K and up and that I know more millionaire roofers than I do intellectuals. Just for a little anecdotal data going forward.

Cheers.

 

 

 

 

 

Sam Price
May 24 2019 at 10:08am

Russ,

It seems you guys are confusing Econ and philosophy. Understanding that your relationships and health are the most important thing in life is a philosophical understanding. she seems to think that people’s poor ability to prioritize suggests to an error in our economic thinking… WRONG… these people who can’t prioritize obviously don’t study philosophy. That’s their own fault. Not the fault of economics.

Tom Selman
May 24 2019 at 10:36am

I’m a new listener and enjoy the podcasts but Mary H. left me cold. It’s one thing to say that homo economus is a sterile model for human behavior. I tend to libertarianism but wouldn’t want to live in a world of libertarians. But she asserted in the podcast that the model has influenced behavior so that too many people are materalistically driven.  Her examples don’t prove that. The student who chose Phd in econ over elementary school teaching might have done so for the prestige, not the money. Who chooses a Phd in econ for the money?  And it’s a misconception to think that two incomes are necessary for parents to survive, but I’m not sure that most women choose to work merely for the money as opposed to the prestige and the desire to effect their professional training.

Arde
May 24 2019 at 10:39am

Very good episode. Very interesting and wise guest. I will vote for this episode as one of the 2019 favorites.

Jim Bang
May 24 2019 at 1:05pm

Russ,

You’re right that norms are not the same as incentives. They are “rules of the game” in the parlance of North, which serve as constraints on maximizing behavior. There’s all sorts of discussion of rationality and norms and culture in the institutional economics literature (North, Williamson Ostrom).

Ezekiel Baye
May 25 2019 at 8:13pm

Of all the topics discussed, the “knowing the help” talk really came off as lazy. First, it reeks of virtue signalling. You can name all of the little people to show all your friends you really care. Second, it commandeers their time. I work in a building with probably close to 100 people per floor. The trash guy or girl comes along once a week to empty our trash cans. If they had to have a conversation with every cube dweller they would be put behind on their work and have to rush to catch up. Third, it assumes they want to talk to you. Not everyone is an outgoing people-person. In fact, some take jobs to specifically NOT interact with people. Yet there seems to always be the assumption that we all want to chat, ask how the kids are doing, yada, yada, yada.

I know this is not a real big issue. But as an introvert myself, I’m just so sick of people proposing their extraversion as a known good. Talk to the help, your neighbor, the librarian, whomever and however you choose. Build your own relationships and world as you see fit. But don’t look down on the quiet that simply go about their business.

Paula Cassin
May 29 2019 at 4:39pm

Thinking about this episode, I gathered:

We undervalue things we cannot measure (integrity, love, kindness, relationships, respect…power? influence? status?)
The focus on measuring and expressing things in dollar terms (in economics) amplifies our desire to grow the pie, always get more.
It moves our society’s focus towards goods that do not maximize human flourishing.

But what are solutions? It’s sort of a diagnosis with no proposed cure other than talking.

I am a grown up, and like Mary, am very much aware that defining my life by how much money I make or the status I reach or how good I look or what I buy are not going to lead to long term happiness. I am also aware that it’s hard work to leave these 4 mindsets behind – they’re pervasive.

We are seeing a big shift away from money being a driver already, no??

Young people are being taught in university and now high school:

a) our society is broken, corrupt and irredeemable. It’s built on power and exploitation.

b) it’s noble for you to become a social activitist, force change and break everything apart that you feel is wrong (regardless of what you know or understand, regardless of what people already learned, have tried before, and those that have gone before you).

I would prefer that we told them to make the world better through voluntary, inclusive means that honor everyone rather than treat them as adversaries.

Start a for-profit or non-profit, solve problems for a particular group, make the world better.

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DELVE DEEPER

This week's guest:

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Additional ideas and people mentioned in this podcast episode:

A few more readings and background resources:

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AUDIO HIGHLIGHTS
TimePodcast Episode Highlights
0:33

Intro. [Recording date: April 10, 2019.]

Russ Roberts: My guest is Mary Hirschfeld.... Mary and I both have Ph.Ds. in economics, and both have become a little disenchanted with the underlying framework of modern economics. And, I like to frame my disenchantment through the ideas of Adam Smith; and Mary recently through the ideas of Thomas Aquinas--the 13th century philosopher, theologian, and scholastic. Today's conversation is going to be based on Mary's new book, Aquinas and the Market: Toward a Humane Economy.... In the standard economics paradigm, human beings try to maximize their wellbeing--often called 'Utility,' the 'capital U'--subject to the constraints of limited income. What's wrong with that approach?

Mary Hirschfeld: Well, it depends on what you want to do with it. If you mean for it to be a description of how people behave, it's still probably not perfect, but it probably picks up some features of how a lot of people act. But, if you ask the question, 'Should we pursue our happiness by trying to maximize our utility subject to constraint?' there I think the answer has to be No. It's actually an actively bad idea. So, why do I think that? Part of the key problem of pursuing happiness or developing as a wise human being is figuring out which goods are worthy of pursuit. And, it shouldn't take too much reflection to realize that the goods that make up a meaningful human life are the sorts of human goods that aren't necessarily subject to constraint by income or time. So, the pursuit of justice, or of developing close relationships with your family, things like that, for Aquinas a lot of this gets picked up in the term 'virtue'--trying to become an excellent version of a human being. But that has a wide range of these higher goods associated with it. And the key point about these higher goods is that they are not constrained by income. So, yeah--so, when we think in terms of pursuing happiness as maximizing subject to constraint, what we inevitably end up doing is substituting into the, or thinking of the utility function as being primarily premised on these lower goods that do seem to be scarce or subject to constraint. So, material goods. And that seems to shape our whole idea of what happiness is about. And I think that's very misleading.

Russ Roberts: Of course, you could make the opposite argument, that human beings are as they are. They care about stuff. Maybe they should; maybe they shouldn't; but they do care about it. And, I guess one way to frame this challenge to your challenge is to ask: Do people wish they had more stuff? A lot of people act as if they do. They seem to pursue stuff. In many ways, I would argue the utility-maximization framework produces almost nothing of scientific or predictive value other than that people have to make tradeoffs. Right? So, at a given level of income, the essential insight--it's so essential, it's so bland and uninteresting--but it's an insight that I think every human being is aware of: You can't have everything you want. As the Rolling Stones said so well. And so, you have to make tradeoffs. And so that's all that's really there. You could argue that. Do you agree?

Mary Hirschfeld: Um, do I agree? Yes and no. Um, again, I think in terms of key features of human behavior that economics picks up, that would be one of them. And it's true: A lot of people think you can't always get what you want, because you always want a little bit more, and so you have to make these tradeoffs. But, what Aquinas helps you to see is that there's another way of thinking about human happiness that is ultimately more fulfilling and more sustainable. And, that's one where you think--where you just pause. You put the whole project on pause, and you think, 'What do I want my life to look like? What are the goods that I want to have in it?' And, if you do that, you are going to see that the amount of material goods, the amount of stuff you need, is actually finite. So, for me to live out a good life, pursuing the higher goods I try to pursue as a professor of trying to engage with my students, share knowledge, to share my ideas with the public through my writing, to participate in my various communities and all of that--requires a certain standard of living in order to carry that out well. And I actually happen to have that amount of money. So, for me, there really isn't scarcity. I don't need any more stuff. And, I think Aquinas, and Aristotle on whom he draws a lot, would say that, if you don't order your material desires to these higher goods in such a way that you know how much you need, roughly speaking, you will end up treating those lower, material goods as the thing that your life is really about. And, they have good arguments about why that's not a good, not likely to be ultimately fulfilling in the deepest sense possible for humans.

6:07

Russ Roberts: Well, Adam Smith would agree. Maybe we'll get into that later. But, I want to rephrase the critique that I started us with. And some of the--you know, my suggestion was that this vision of human activity as maximizing something, is sterile. In the sense that it only teaches us that there are tradeoffs. It leaves out a bunch of stuff. I think that a more serious critique would be that--and Robert Frank and others have made this suggestion--that if you teach people that this is the definition of rationality, they start to think that more stuff will lead you to happiness. Greater happiness. Which, I think, with you, I agree, is a, um, a bad way to look at the world. But I think the deeper point that you are suggesting is that the stuff that isn't in our utility function, as economists--belonging, friendship, love, justice--those things often conflict. They are not just left out. They conflict with the economists'--it's something of a straw man. I wish it were something of a strawman. I don't think it is. But, let's call it the textbook version of homo economicus--the economic human being--as maximizing utility depending on stuff. A lot of times, taking that new job with the higher salary that allows you to have the bigger house, the nicer car, and more stuff, means less time for your family, your community, your pursuit of French, playing the flute, whatever it is that is not commercially oriented. And I think economists, not intending it, but they become blind to those tradeoffs.

Mary Hirschfeld: Very much so. I mean, in principle, they are going to tell you that they can put all those things into a utility function. The: a). there's real questions about whether this works of goods that could be modeled, as though, 'Oh, I want justice on the one hand and more pizza on the other.' But, b). in practice, they don't. And you're right. And the critique by Frank is a concerning one. This gets taught to lots and lots of students, who then think that it's rational to pursue life in terms of maximizing your utility function subject to constraint. Which in turn means that you really want more income to loosen up those constraints. And, people do end up making these decisions that subordinate the real goods that--if you ask them they would say that the real goods that they care about, but they end up subordinating them to the economic concerns. The whole idea that economic concerns are independent, should have independent weight, independent of these higher goods, is itself a symptom of this disorder. The last thing I want to say is--it just broke my heart. I was teaching some of this material in one of my classes, and I had a student who just said, 'You know, my heart's desire would be to be a First Grade Teacher. That's really what I would like to do. But I can't do that because it wouldn't be rational.' And, what she meant was, 'because I wouldn't make enough money.' And, yeah. So, it really is ubiquitous in the culture, and I do think the economic way of thinking just supports that. And, that's part of what I try to talk about in the book.

Russ Roberts: And you are honest about it. I mean, I don't think--neither you nor I are suggesting that people are happy being poor--

Mary Hirschfeld: Oh, no--

Russ Roberts: We're not talking about poverty. We are not talking about a life as an aesthete, of just living as a--in poverty. But I think that example is, as you say, it's poignant in its--I've counseled a number of young people to take jobs that they are uneasy about. Maybe I shouldn't. But I've counseled them to do the thing they love. Often because--you don't need infinite amounts of stuff. And it's great to spend 8 hours a day doing something you love. And that's precious beyond--in so many ways, obviously. And, in particular, teaching. I've told people to go into high school and lower levels of teaching because it makes the heart sing. And that counts.

10:30

Russ Roberts: So I think it's a fascinating question. I'll just add, on the last day of class I always tell my students, 'Don't take the job that pays the most money.' Unless--unless, of course, you are lucky and it happens to be the job that you love, also. But there is a tradeoff there. And the fact that people have trouble seeing that tradeoff, to me, is a serious piece of valuable information. So, I want to suggest that behavioral economics, its critique of economics is actually, has its own level of sterility. Which is, 'Oh, people aren't that rational. They don't make calculations. They have biases.' Yeah, but that's just such a small part of the problem. And I think the inability--let me make a speculation and you can respond to it. I think when you talk about stuff all the time--the demand for shirts and beer and whatever it is that you put on your blackboard as a college professor--you end up, you can't help but end up thinking less about these other things. And yes, you'd wave your hands and say, 'Oh, we can put them in the utility function.' 'Oh, of course they matter.' 'Yeah, yeah, yeah.' But I think when you do that all day long, year after year, you start to forget about them. It's like the drunk looking for the keys under the lamppost. And so, I think, the stuff that can't be measured--dignity, respect, agency--all those important human experiences just get forgotten.

Mary Hirschfeld: Yeah. And, what I'm calling for really is just to completely reverse it. So, when we think about economic life, we should think, first, it of dignity, agency, those kinds of human goods. And then second, how does economic life support, enhance those things. But, yeah. It distorts our thinking, just massively. Like, once I started seeing the world this way, you just start to see it, really, everywhere. Things like, we say with a straight face, that we can't afford to have--every household needs to be a two-income household nowadays in order to make ends meet. We say that with a straight face. We're the richest people who have ever lived. We should have more leisure, not less of it. And we're unable to see these things happening as irrational, which in some sense they clearly are.

Russ Roberts: Right--of course, if two people want to work, it's no problem. But if one of them doesn't want to work--

Mary Hirschfeld: Oh. Sure.

Russ Roberts: for whatever reason--they have--to do childcare, or to volunteer, or to work on a hobby, and take a lower standard of material wellbeing, that's all to the good. And yet, we talk about it as if it's "impossible."

Mary Hirschfeld: Yeah. The irony is, way back in the 1930s, John Maynard Keynes thought we were about to arrive at a place where we had solved the economic problem. And his concern was: What are we going to do with all this abundant leisure? So, whatever this thing is--

Russ Roberts: We showed him.

Mary Hirschfeld: Yeah. Julia Schor has picked it up in The Overworked American and The Overspent American, two different books talking about this phenomenon. Because it does suggest that the culture is getting worse on this dimension, like over the decades; and it comes to seem more and more normal to us. And the real tragedy is we are so very rich, and yet we don't--because the flip side of this is if I keep pursuing more and always feel that I have scarcity in my life, somehow I'm not seeing how much I do have. I'm not actually fully present to or enjoying the material goods that are right here in my living room. And, so, that's also part of, to me, the tragedy. We're missing the higher goods; and I think we're also not fully enjoying the lower goods that we actually have. Because there's something in this maximizing mentality that means you are always looking for the next step. And, so you are missing happiness on multiple levels when you try to pursue your life this way.

14:26

Russ Roberts: So, if someone was listening in on this conversation and didn't know anything about you or me, they'd say, 'Oh, well these are obviously two Leftists who hate capitalism. Who think that we need a commercial sector based on people, not profit; and, obviously, greed is a sin and we need to put the commercial world in perspective. And most of that kind of talk comes from either the Left or the Far Left.' And yet, I am not on the Left or Far Left. And I don't think you are, either. How do we understand that? And, how do we reassure our listeners?

Mary Hirschfeld: Yeah, well, I do try to spend time in my book, and I might end up writing a follow-up about it. I love markets. I think private property is an institution that's absolutely fitting to human nature. And I think if you take this lens of thinking about life in terms of these higher goods and then economic life in service of it, you come up with a really compelling case for, like, what does it--'For the good of business.' Like, it's really good for the baker to set up shop: they're exercising their human talents; they're providing bread and other items to the community; they're building relationships. All these things are really, really good. And they are making a living. And, markets coordinate all of this so they end up being interdependent. It opens up a beautiful view of how markets work, in a way that's compelling in its own right. The only switch is to say that the goods that we're pursuing are, you know, are finite--not this infinite desire for more. And I go on to talk about--and this just comes from Aristotle--that once we want an infinite amount of more, you're going to end up corrupting those real goods that markets actually can and should produce. So.

Russ Roberts: Adam Smith says the same thing. Right?

Mary Hirschfeld: Mmmhmmm.

Russ Roberts: Adam Smith says 'Man naturally desires not only to be loved but to be lovely.' And, by, 'loved,' Smith means not just romantic love but paid attention to, respected, admired, praised, etc. Mattering--I say it's all about mattering. It's an ugly word; I need a better way to say it. But, people want to matter. They want to have some reason to be. They want people to understand and see them as a value. It doesn't have to be physically, and making stuff. It could just be socially and supportively as a friend. And, so that's what makes us happy--says Smith. And yet, Smith says, there's two ways to get there. One of them is to be rich, wealthy, and famous. And let's just stick with wealthy. So, wealthy people tend to get a lot of attention paid to them. Not just by advertising, but by the people around them. People look up to wealthy people. People want their opinion. People want to dress the way they dress. And so on. And Smith says: That's a fool's game. Pursuing that is not going to really make you happy. You are better off--echoing Aquinas--Smith says you are better off being virtuous. You are better off being wise. You are better off accumulating wisdom. And being respected and honored and praised for that rather than money, fame, or power. And, I think that's really good advice. I think there's a separate question of whether, how people actually behave. Right? That's--you and I are both, I think, blurring what economists call the 'positive' and 'normative' distinction--the distinction between 'positive,' which is how the world is, and 'normative,' versus how it ought to be or how we'd like it to head. And I think it's an open question whether people really do pursue more and more and more. So, I think, you know, that's, that's--one defense of the economists' world view is, 'Well, you know, sure, stuff doesn't make you happy. But people act like it does. So, that's what we should treat them.'

Mary Hirschfeld: Yeah. Although, I will say: There actually are significant numbers of people who pursue lives where they do pursue the calling that matters to them regardless of status or wealth. So, they are more like Smith people pursuing, you know, the goods of virtue and character and community. And, um, they exist. And the economic framework just can't always handle that very well. And so maybe in the aggregate there's enough that are pursuing more wealth or whatever that their models work out well. But I think I remember a piece by Tyler Cowen where he suggested that there are a lot of people who are income-satisficers. You know--there are people teaching first grade, for example. There are people who go to work as a nurse. And they are not making a lot of money. But they chose that occupation because it was meaningful. So, but, the positive/normative distinction--it is blurry. So, just to repeat something we've already been talking about: When economists model people as pursuing more wealth, and calling that rational, they are also, I think, shaping or at least endorsing these cultural trends that support that path to happiness that probably is not the best one.

Russ Roberts: So, if you said--

Mary Hirschfeld: So--Go ahead.

Russ Roberts: Well, if you said that to me 25 years ago, I would have said, 'That's ridiculous. That's absurd. You are telling me that economists, through their little Econ 101 classes, are shaping our commercial culture?' Doesn't that strike you as a bit absurd?

Mary Hirschfeld: People always do push back on me about this. And I don't mean that economists have single-handedly created this catastrophe. But I do think they amplify it. So, I think part of the reason why economics looks like a sensible approach is because it's picking up on things that are already there. So they are reflecting back what's going on in the culture. But then, they slap on labels like 'this is rational.' They teach their students how to teach this way. Uh, and that just reinforces it. So, if you tune into a podcast like Planet Money, or if you read a book like Freakonomics, they are just, again, amplifying the sort of message. And I do think that--well, it certainly makes it harder to try to persuade people that there's another approach to happiness that's better. But I do think it's shifting the culture. I think it's Michael Sandel who says, 'The word incentivize is metastasize, in the last 2 or 3 decades.' Just, as a measure of the spread of this economic way of thinking. And his book, What Money Can't Buy I think is a lamentation of, as we shift towards this way, this economic way of thinking, we are forgetting a lot of these other modes of thought that used to come more naturally to us.

21:21

Russ Roberts: Well, I--I want to--let me, though I mostly agree with you, maybe even more than mostly, entirely agree with you. I don't think--I don't find the Sandel critique as persuasive as perhaps you do. I don't think there's anything wrong with incentivizing people. I don't think there's anything wrong--maybe I just haven't come far enough along with the critique. But, I don't think there's anything wrong with realizing that people respond to incentives, and to structure public policy in certain ways to take advantage of that or to do that with that understanding of that reality: that people respond to incentives. I think--I've always thought that the--the deepest--there are really only 3 principles in economics: People respond to incentives; there are tradeoffs--that's Number 2, opportunity costs, same idea; and Number 3 is when people interact with each other in what we call markets, more generally in emergent orders and in complexity. It's complicated. The things that are going to happen are not as straightforward as you think. And that gives you the unintended consequences. And it gives you the appreciation that many things work better--not everything--many things work better when they are undesigned and unregulated and not created from the top down. And I think the critics of economics on the Left miss that last point. But, to take the Sandel point about incentivizing: I think the deeper point isn't that incentives have problems. I think it's when you use incentives only for the things that matter--that are measurable. Excuse me. And you ignore the things that don't matter. That's a legitimate critique. But, to argue that there are things that you can measure, that incentives matter, that seems pretty--like a good idea to know about that.

Mary Hirschfeld: Yeah. No. And I certainly don't mean to suggest, by any stretch, that policy-makers should ignore incentives and the fact that they shape human behavior. What I'm more worried about--so I think there's an important role for economics to play, precisely because they do understand this. The point I want to make, though, is it's not the whole picture. And you need to remember that it's not the whole picture. And I think Samuel Bowles, and I'm not going to remember the name of his book but it's mostly just one, talks about his. So, incentives shape behavior. But insofar as incentives also suggest that more is better, they also might undermine some of these other norms or other higher goods. And so, a policy-maker needs to be careful about balancing them. And I actually, we said I think[?] we are saying the saying the same thing. It's not that we should ignore incentives or not use them. It's that when we come to think about public policy exclusively in terms of incentives, we risk forming people in a way that thinks more is better and undermining the commitment to higher goods that often generate good behavior on its own. Um, so, from my point of view, a really good economist has to do this careful balancing act between how do we structure policy so that, yes, we use incentives, but we don't thereby also undermine the deeper goods that we are trying to aim at.

24:38

Russ Roberts: I want to push back a little further. Against [?] policy. If I can get you to agree. So, more isn't better. But, I would argue more kidneys are better than fewer kidneys for people who have kidney failure. And we don't have very many kidneys donated in the United States, through just the incentive of altruism. And so, there's an argument to be made that we should let people donate their kidneys for money. Now. I think you'd get more kidneys. I could be wrong about that, obviously. But I think you would get more kidneys. You'd get kidneys from different people, once you said it was up for monetary donation rather than just a pure altruism. And, I think, you could argue that that would be a better world than the world we live in, where people are dying or stuck on kidney dialysis machines that are credibly life-diminishing and incredibly expensive; paid for by usually other people. So, I think that's where the rubber hits the road in this kind of argument. Now, would you argue that it's immoral to monetize the donation of a body part?

Mary Hirschfeld: I'm worried about it. So, I'm not prepared to endorse or condemn. But I am worried about it. So, for me, that's an open question. But let's say for the sake of argument that I don't have a problem with monetizing it. There's still a real question about whether paying people--I mean, giving up a kidney seems like a major sacrifice, like, a hard thing to do. And maybe you get more of it if you pay people. But, maybe you get even more of it if you somehow socially acknowledge it as a heroic, noble, lovable sacrifice. And that, to the degree that you monetize it, then it becomes, 'Oh, she just did it for money.' And you may actually have an adverse effect where you get fewer kidneys and not more. And, [?] points to a few studies on smaller issues like the Israeli day care center where, when you bring in incentives you actually get the perverse effect that you get less of what you were trying to get, because you also inadvertently undermine the norms. I don't know if you need me to spell out that particular example. But, there was a day care center; parents were coming late. They were getting irritated so they just decided to start charging the parents for coming late. And it turned out that parents came even later. And what seems to have happened is, once you convert coming late into something you can buy, people just buy more of it. And, you have thereby undermined the norm that says, 'Out of respect for the daycare workers, I should come pick up my kid on time.' So--

Russ Roberts: I'm glad you mention that example. Because it is the single most frequently-mentioned example that I despise. And really dislike. So, let me give you my reaction to that. When I say it's the most common: It gets quoted--so, Sandel quotes it. I think you quote it in your book, right? Did you mention it in the book? I think you did.

Mary Hirschfeld: Yeah, I did. And Bowles does.

Russ Roberts: Bowles does. And Dan Pink does: we talked about it--I think it was Dan--one of the times I've interviewed him. And I just want to say a couple of things about it, and then I'm going to--I'll give you a little bit of agreement, for what it's worth. So, I think, if they had picked a large enough fine, they wouldn't have seen an increase in people being late. They would have seen a reduction. So, I don't think you want to say, one should say as a general principle that substituting money for norms is counterproductive. I think it depends on whether you pick it correctly. I think the fundamental claim of the paper, which is just a hypothesis that when you convert something to money you reduce the impact of the norm, could be true. You know. But, you just need to pick a bigger one. The more fundamental point, which is made by Ariel Rubinstein, the Israeli game theorist--and I think we talked about it in his EconTalk conversation, because I just found his critique so entertaining, is that, he says: The people who did that study, he says two things about it. One, the actual researchers weren't on the ground. They had graduate students or research assistants collect the data. Which is a little bit weird, because you don't know exactly whether it was collected correctly. That's number one. Number two, he said, 'If you think you can make an Israeli pay a fine at 5:07 when they were supposed to show up at 5, and they are charged so many pounds--Israeli currency--for being late--one ninth of an hour,' he said, 'You're crazy. No Israeli would pay that fine. It just ain't happening.' To the daycare center. So, he expressed some cultural skepticism of this fact. Now, having said that--it's just my pet peeve about that study--having said that, I could imagine--I like your first point. I agree with that 100%. Rather than quote, 'Oh, it's easy. We just have to raise the return, in a financial sense,' you do have an alternative, of creating a social reward: honor, dignity, pride. There are other ways to motivate people. And I don't--I think economists do tend to ignore that. So, I'm with you on that.

Mary Hirschfeld: Yeah. And, I will say, neither Bowles nor Sandel lean exclusively on that one example. They pick out other ones. But, I think all you need to see, to see their point, is: Certain goods which clearly would be mutated if you think about them in monetary terms. I mean, there's a reason why we think prostitution is different from marriage. Right?

Russ Roberts: Yep.

Mary Hirschfeld: So--but then the trick would be to go into each particular case and ask, 'How does this balance out?' And sometimes you are absolutely right: Incentives are going to be the easiest, most obvious, intuitive way to handle it. The warning is just not to think exclusively in terms of incentives.

Russ Roberts: No, I think the incentives are crucial. I just think that monetary incentives are not much different from non-monetary incentives. If you have a norm that says the right thing to do is to give up your kidney for a friend--of course, I salute Virginia Postrel, who donated a kidney to Sally Satel. And we've had conversations with both of them, as well as conversations about the market for kidneys. So, we'll put up links to all of those. But I think norms and--well, norms are sort of a kind of incentive. I think it may be important to make a distinction between a monetary incentive that makes you better off, versus, 'doing the right thing,' that makes you better off--what Adam Smith called 'propriety.' And the certain expectation that there's civilized ways of behaving and interacting with others. Maybe there is an important distinction there that I shouldn't inflate[?].

Mary Hirschfeld: Yeah. And I would really like to see Social Science move more in the direction of thinking through how to balance out these things, or what's involved in these norms. Because I do think there's something--like, we all want to be able to look ourselves in the mirror at the end of the day. Those kinds of--if there's a social calling for me to be a certain way, it's going to be easier for me to step in to do that. And, there is in a sense a higher calling to make, to getting more. And that's what worries me about the heavy weight on incentives that currently characterizes our culture.

32:44

Russ Roberts: Yeah; I was just thinking about tipping. Tipping--I think people tip in restaurants because it's the right thing to do. It's a norm that has evolved. And some people don't like that norm--recently have criticized it. But I do think it's different than the economists' way of looking at tipping in the standard model. Which is: 'Well, there's a chance you might be back there again, with that same waiter.' That's clearly technically true; but it's not why people tip!

Mary Hirschfeld: Right. Right. It's a way of saying 'Thank you.' And 'thank you' is not just to try to get you to be nice to be later on. It's to express actual gratitude. So, although, it begs the question why that service seems to call forth a desire to express gratitude. And, there's interesting reflections on why, that it is a norm; and so I have to say, 'Thank you' that way. And I usually mean it. I mean, I usually genuinely feel gratitude.

Russ Roberts: No; I agree. And I've told the story in here before about leaving a large tip at a lodge in a national park, and my housekeeper returning my wife's diamond earring. It wasn't my plan. It wasn't an insurance policy. I just got--it was a lagniappe; it was a bonus; it was gravy. But I like tipping. As you say--I get pleasure from the expression of gratitude. But it is a little bit complicated. I do think it's an interesting question, whether norms and propriety have become less important in American society.

Mary Hirschfeld: I mean, that is a concern Sandel expresses, and I clearly share. Whenever you substitute money, you are saying that the norms aren't what matters. Because, nobody--like I've already said--nobody thinks you rise in character, improving character, by doing whatever it takes to get more money. So, I do think there's a systematic substitution. And I would hope that people would start thinking about that more thoroughly. Because, Sandel, you know, shoots from the hip. And it seemed to me to be more a gateway to a question that should be explored more deeply.

Russ Roberts: At the same time, though, I think, other institutions--and as you concede, it's not just economics and economists--other institutions that used to teach what I would call virtue, such as our public schools, definitely do not do that any more. They teach a different kind of virtue: they teach tolerance and self-esteem, which are the wrong--I think those are not necessarily the right--they both have positive aspects to them. But honesty, courage, duty, honor, etc. have fallen into disfavor, I think, in American society, to some extent.

Mary Hirschfeld: Yeah. No; absolutely. A little self-discipline would go a long way. The [?] what bothers me about the whole self-esteem push--again, it's good to feel good about yourself; and as you already said, that's, we're built to want to feel good about ourselves. But if it's without content, you end up not feeling good about yourself at all. That's--I think that's one way to identify when you've taken a lesser good and put it up too high, is that when you pursue it as an ultimate good you actually lose all the good or all the value that was there in the first place. It corrupts it. And self-esteem is a perfect example of that. I think it's a disaster that we've pushed that so hard in the schools.

36:09

Russ Roberts: Let's talk about economic growth. You mentioned Tyler Cowen. Tyler was on here in the past talking about economic growth as a virtue. Do you see it as a virtue, as something public policy should aim for?

Mary Hirschfeld: Definitely not something public policy should aim for. Caveat: When we are talking about already-developed Western economies. So, economic growth is clearly very good for impoverished countries coming out of poverty. The question is whether we should pursue further economic growth in the United States and Europe and Japan and places that have already in some sense arrived. And, I do not, because I think that just feeds into the solution[?] that more is better; and it keeps people scrambling off into this elusive, whatever is the next thing, and not--failing to see the goods that are around them and failing to cultivate these higher goods. So, I worry about that a lot. That said, the ideal economy, in my picture[?]--if I got to my Utopian vision of what the economy should be like where we are pursuing our economic lives in service of these economic goods, I think it would create a healthy, flourishing society. And, healthy, flourishing organisms tend to grow. So I would expect growth as a byproduct of pursuing these goods. And I would welcome that kind of growth. But I think when you pursue it as an end in itself, you end up--devaluing, not valuing enough these higher goods. And you end up with a lot more stuff and lot less genuine human flourishing, genuine human meaning, genuine human purpose.

Russ Roberts: So, let me ask you a tougher question. Some people believe that economic growth has not been shared widely over the last 40 years. I disagree. As long-time listeners know, I think a lot of people have gotten more materially improved than the data suggest for a variety of reasons. However, there is a reasonable amount--excuse me--there is a substantial amount of inequality at any point in time. Which, you could debate whether that's good or bad. But, do you think we should devote our policy space to bringing up people at the bottom rather than improving the economy as a whole?

Mary Hirschfeld: Uh--neither. I want to go off the menu on that one.

Russ Roberts: Fair enough.

Mary Hirschfeld: So, if you just look at material goods, and the point that you make, that, you know, a growing economy has clearly raised the material standard of living for the poor, and people who worry about income inequality are missing that fact; and you are exactly right about that. But what I think you might be missing is that the real problem with income inequality is the social meaning it has. And--and that's a different question. Although, once we start worrying about these inequalities that I think are rising in our culture, when we start thinking about them in economic terms it invites the response that you'd want to give, which is if you care about the material wellbeing--if you care about how much money people have, then you have to take into account the fact that the people at the bottom tend to have a little more than they did 50 or a hundred years ago. It seems to be[?] that what both people on both sides of the debate are missing is that what matters is the social meaning of the inequality. And I do think that's been shifting in character over time. So, you can imagine a world where, say, you are at a university and you have a professors and you have secretaries and you have gardeners. And it would be natural for a lot of reasons for the professors to be higher paid because they spent more time doing education--educating themselves. And because maybe the community wants to celebrate the good of the university which is represented by what professors do. So there's lots of good reasons to pay a professor more than a gardener at a university. That said, you can imagine one good kind of university, where the professors go to work, and they admire the gardening that's been done; and they are friendly with them. They have full respect for and value the contributions of everybody, even though they are being paid differently. And so there's a sense of community. Right? So that would be one vision. And then another vision is: Well, my economic wellbeing is a marker. My status if I make more than you, I'm better than you. And I use these invidious distinctions. And I think there's a real argument to be made that we are increasingly using our economic wealth to make these invidious distinctions. Indeed, I at least entertain the hypothesis or possibility that part of the reason why we're so frantically searching after more wealth is because these invidious distinctions have gotten more and more pronounced over the decades. Um, so anyway, I just--I think economic inequality is a topic that really could benefit from rethinking in a way that thought it through in terms of not just the economic characteristics, but of what the whole human picture of economic inequality means.

Russ Roberts: So that's lovely; and I'm sympathetic to it. But how would that change the actual wages? Would you suggest that--well, you conceded that professors should earn more than gardeners, they shouldn't probably earn as much more as they actually do now. Right? In terms of that status and change and comparative respect. But, so, if you shrink that gap, you are going to either have an excess supply of gardeners, or a shortage of professors? Right? The market forces are going to punish you. Do you want to change that?

Mary Hirschfeld: No. Not really. The market forces are going to set things the way they do. Certainly not at the level of professors and gardeners. I'm not--I'm not such a libertarian that I'm unilaterally opposed to, you know, taxing the rich more or whatever, that just might be a social signal that, you know, while we think distinctions are relevant and matter, that there should just be a cap to them. But I am far more interested in this book and in my whole project--is to let other people sort out: How much should we have of the State due to correct these things. So, I really want to shape the culture, such that the people at the top end who are pursuing their wealth, they are not going to be trying to maximize it. Right? So, they will, ideally, they would voluntarily identify a standard of living that marks out whatever they've accomplished. And then the rest would be available--either through higher taxes or through charitable donations, or whatever, to make community needs; to meet the needs of people who have fallen behind. And, we have examples of this. So, Warren Buffett, for example, still lives in Omaha, Nebraska--

Russ Roberts: Yep--

Mary Hirschfeld: in his old neighborhood. It's a nice house. I'm sure his life marks out that he has been successful. But he doesn't need a 65,000 square foot mansion, right, with 20 acres, and fencing--

Russ Roberts: In Seattle, say, hypothetically.

Mary Hirschfeld: Hypothetically. [More to come, 43:30]


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