Does the Fact that Individuals Discount Entail the Existence of a Social Discount Rate?

In my last post, I discussed the idea of discounting as it relates to cost-benefit analysis. I reached the conclusion that discounting treats future people's interests as if they were less significant than our own, and that if cost-benefit analysis aims to make people the best off, then this seems like a bad practice. I received a reply from a fellow with the handle of TokyoTom, which said the following:

Donny, I don't think that you've at all demonstrated that we don't discount - viz., that we try to make decisions on the basis that the preferences of people who do not exist today should weigh as much as our own.

I would disagree with that conclusion myself. Clearly individuals act on the basis of their own preferences, which preferences may take into consideration the supposed preferences of others, including future generations. These others simply don't have a vote on what my preferences are - and is the collective actions of billions of individuals alive today that similarly make decisions that bring about tomorrow.

Tom (at least I assume his name is Tom) is absolutely right to say that individuals clearly act as though value in the future is worth less than the equivalent value today. If I were trying to argue that people actually do make decisions as if future people matter just as much as they do, I would be easily refuted. In fact, I would be hard pressed to believe even that people behave as though future people matter very much at all, never mind as though their interests were equal to their own.

But I never argued that individuals don't discount (in fact, I specifically acknowledged that they do), or that individuals consider future individuals to be just as important as themselves. Rather, I argued that discounting future damage in cost-benefit analysis is unjust. What's the difference? I'll try to illustrate with a series of examples.

Let's say that we're trying to decide whether to put a garbage dump in a neighborhood populated exclusively by an ethnic minority (say, Hmong folks). We perform a cost-benefit analysis to see what we should do. In the first scenario, let's say the Hmong folks in the neighborhood would prefer not to have the garbage dump in their neighborhood, and the folks who live outside of the neighborhood would prefer to have it there (not because of any malice, but rather because they would gain use from it). If (once we equalize for different valuation of money and all that) the cost-benefit analysis shows that the outsiders would be willing to pay more to have the dump than the Hmong folks would to not have it, then we'd say that there's a net benefit to putting the dump in; it's worth doing. And as far as we ignore all the problems with cost-benefit analysis (that is, we don't care what we do to the Hmong people as long as it represents a net gain, and we're okay with treating a single metric as properly representing the wellbeing of these people), then that's all there is to it. The cost-benefit analysis has worked exactly as advertised.

But now let's say that the outsiders didn't want the garbage dump because they would benefit from it, but rather because they're evil hillbillies and they despise the Hmong people. The benefit to them is not a self-interested benefit, but rather a benefit derived from the cost to others. Perhaps if we give this kind of benefit equal standing, the garbage dump goes in. But that seems like the wrong conclusion. We might say the same if the garbage dump doesn't go in because the Hmong people don't want the outsiders to get any benefit, even though they wouldn't really mind the dump being there. That's why most people who advocate cost-benefit analysis try really hard to ensure that the costs and benefits they're measuring reflect only the costs and benefits to the individuals they're surveying.

Accordingly, we wouldn't want to say that the importance of future individuals' wellbeing can be accounted for in cost-benefit analysis by seeing how present people value their wellbeing. What matters is how much they value their wellbeing. Once we recognize this, then it becomes clear what we do when we discount their costs and benefits compared to current people's costs and benefits. What we do is to say that their costs and benefits are less significant than those of present people. And it is this practice which I claim to be unjust.

Cost-Benefit Analysis, Discounting, and Climate Change

I wrote a paper last semester on the notion of discounting future damage (I'll explain what this means below), and I wanted to revisit the issue now that I've done a little more research, to see if I still agree with what I wrote then. Basically, my paper examined how our views of the proper role of discounting are dependent on our views about what social policy is trying to achieve, and what kind of problem climate change poses. Rather than putting my whole paper online and critiquing it, I'm going to split it up into pieces and post each separately. In my paper I examined four paradigms: (1) The goal of social policy should be to allocate resources to their most efficient uses, and climate change represents a challenge to accomplish this task in a changing world; (2) The goal of social policy should be to maximize the overall good, and climate change represents an obstacle in the way of achieving this goal; (3) Climate change represents an externality, and the goal of a climate policy should be to internalize the externalized costs; (4) Climate change represents an overenclosure of the commons, and the goal of a climate policy should be to remedy this injustice. In this post, I will first go over what I mean by "discounting future damage," and then I will address the first paradigm listed above.

So how does discounting play into discussions about climate change? The most significant impacts of climate change will not occur for a significant amount of time: we're talking decades or even centuries. The issue is how important that damage is compared to the equivalent amount of damage today. In his essay, "Global Climate Change: A Challenge to Policy," Kenneth Arrow wrote that the dispute "...surrounds the appropriate value for the social rate of time preference. This...allows for discounting the future simply because it is the future, even if future generations were no better off than we are. The Stern Review [a report released by economist Nicholas Stern discussing the effects of global climate change on the world economy] follows a considerable tradition among British economists and many philosophers against discounting for pure futurity. Most economists take pure time preference as obvious." So when we talk about discounting future damage, what we're concerned with is whether or not it's acceptable to treat future damage as being less important, just because it's going to occur in the future.

So with that in mind, let's look at the paradigm of cost-benefit analysis: policy should allocate social resources in the most efficient manner, and climate change just represents a challenge for doing that. In its most rudimentary form, cost-benefit analysis is a tool which allows decision makers to allocate resources in the way that best matches some relevant set of preferences. For social decision makers, the relevant set of preferences would clearly be those of society as a whole. Since groups are composed of individuals, advocates of the cost-benefit approach feel that it is reasonable to extrapolate society's preferences from the preferences of individuals. This view is implicit in the position taken by economist Jerry Taylor, who favors discounting future damage at a rate of 5% per year, because it "...matches the return on Treasury bills - or, put another way, [it is] the figure people apply themselves when considering the value of money today versus the value of money tomorrow."

Because the simple cost-benefit perspective considers society as if it were a single decision maker, needing only to allocate its own resources according to its preferences, it is immediately clear why discounting would seem obvious. The existence of a preference for value sooner rather than later is a basic economic assumption which is rooted in cold empirical fact. From this mindset, the question is not whether to use a discount rate, rather what discount rate to use. Some, like Jerry Taylor, use the discounting practices of the current marketplace. Others, like economists Richard Newell and William Pizer, try to predict how market discounting practices will vary over the discounting period, suggesting a plausible range of 2-7%. But to debate the validity of using discounting practices at all would be like asking a banker whether she thought she should charge interest on a loan, or asking an investor whether he cared about getting a return on his money.

So if we accept the view sketched above, it's clear that discounting is not only acceptable, but almost obvious. But what should we think of this view? I want to offer a few objections. First, cost-benefit analysis doesn't properly account for the individuality of its subjects, and does not take into consideration the idea that individuals should not be sacrificed for the sake of others. Second, cost-benefit analysis supposes that all harms can be quantified according to a single metric, which doesn't seem right. Third, even if we ignore the first two problems, it seems like discounting is problematic when you consider the goals of cost-benefit analysis. Let me flesh these out a little.

The first objection is basically taken from Anarchy, State, and Utopia, where Nozick writes, "...there is no social entity with a good that undergoes a sacrifice for its own good. There are only individual people, with their own individual lives. Using one for the the benefit of others, uses him and benefits the others. Nothing more. What happens is something is done to him for the sake of others. Talk of an overall social good covers this up...To use a person in this way does not sufficiently respect and take account of the fact that he is a separate person, that his is the only life he has. He does not get some overbalancing good for his sacrifice, and no one is entitled to force this upon him..." I think Nozick is absolutely right here; we can't weigh future people's interests and current people's interests as if they were all held by the same person. Some notion of proper respect for each group as ends in themselves seems necessary, and the paradigm discussed here clearly lacks that.

The second objection, that a single metric is a suspicious way to evaluate wellbeing, is taken from an essay, "Values in the Economics of Climate Change," where Michael Toman wrote, "One other critique of climate change economics as a guide to policy involves the use of a single-dimension new benefit measure for evaluating different outcomes. This reflects the standard assumption in economics that all costs and benefits are commensurable and interchangeable once expressed in a common metric (a monetary metric as a representation of unobservable utility). There may be serious measurement problems in implementing such a reductionist metric, but as a concept the notion of full tradeoffs and thus full potential compensability of losses from climate change is ubiquitous in the economic model. This view differs from alternatives that see different kinds of values as less commensurable, e.g., some losses of natural beauty or function simply cannot be compensated by other welfare gains." Personally, I tend to think that these latter kinds of views are probably closer to being right. For example, if the Hindus of India are forced to abandon the Ganges as a result of climate change, what kind of compensation could we reasonably expect them to be satisfied with?

But even if we ignored the fact that the cost-benefit model is ethically suspect, and that comparing every harm according to the same metric is methodologically suspect (never mind the fact that we could probably never conduct the kind of calculation necessary), there would still be another problem. The third objection arises from the fact that calculations of "costs and benefits" are supposed to reflect utility, and therefore social preferences. The problem is that, as we discussed earlier, the cost-benefit model is perfectly comfortable with the idea of discounting. In his essay, "Environmental Risk, Uncertainty and Intergenerational Ethics," Kristian Skagen Ekeli pointed out that "To discount the future implies that current interests and preferences count for more than those of future generations." When we say that future damage should be discounted, what we're basically saying is that "society," which is supposedly neutral between its individual members, prefers current people to be happy over future people, simply because they live earlier. How this makes sense is beyond me. It seems that if we were trying to allocate resources to impartially reflect their most efficient uses, we would need to weigh people's interests as being equally significant.

So hopefully those objections demonstrate two things. The first is that cost-benefit analysis is a really crappy way to deal with the issue of climate change. But if we use it anyway (which I suspect people will do, because that's how economics is done nowadays), then we shouldn't discount future damage. To do so would treat future people as if they mattered less than present people, and that seems obviously unacceptable. I am, of course, conspicuously ignoring the Non-Identity Problem completely, and I want to deal with that issue, but I guess I'll leave that for later.

Can Dead People Have Rights?

So I've been discussing whether or not future people can have rights, and I've started considering the possibility that they don't. But an interesting parallel occurred to me the other day when I was talking to one of my TA's (not the one from the Glue Man debate). Perhaps we could learn a lot about our relationship with future people by thinking about our relationship with the deceased. There are, of course, obvious differences, but in a lot of ways, the questions that we face when thinking about the deceased are very similar to the ones that we face when we think about future people.

For one thing, it's hard to see how we can really harm the deceased. Ignoring the possibility of their souls existing in some other realm, where they would be able to see what we did, it seems like we could fairly say that people who are deceased no longer exist as persons (that is, as beings with moral standing). And very significantly, they will never exist in the future (this is even stronger than what we face when we talk about potential future people). So really, to say that we do anything to them seems shaky at best.

So, then, if we can't do anything to the deceased, can we really say that they have rights? In his essay, Original Rights and Just Redistribution, Hillel Steiner argues that the answer is no. He writes, "...although we undoubtedly do have serious moral duties with regard to dead and future persons, these are not correlative ones. Dead and future persons have no rights." By "correlative," He elaborates, saying, "...in arguing against the notion of a right to bequeath, I don't commit myself to the view that there cannot be utilitarian or interest-based accounts of the practice of bequest. There clearly can be. And insofar as there are, these will go some way to justifying enfranchisement of the dead."

What Steiner has in mind is that we might not respect duties regarding the dead because of rights held by the deceased individuals themselves, but rather because of some other kind of consideration to which we attribute moral significance. For example, a "utilitarian" reason of the sort Steiner is talking about would be the fact that people might be more productive and lead better lives if they believe that after they die, their wishes will be honored. If this were true (and I think it's quite obvious that it is), then it seems like we would have a good reason to think that we are morally obliged to respect the wishes of dead individuals, that reason being that we want our own wishes to be respected after we die.

This kind of reasoning is seemingly dependent on the notion of a veil of ignorance approach to morality (or some essentially similar substitute). In his essay, "Does Reason Tell Us What Moral Code to Follow and, Indeed, to Follow Any Moral Code at All?," John Harsanyi explained this way of choosing between moral codes: "...Taking an impartial point of view, that is, disregarding what your own social position would be in either society, would you prefer to live in a society governed by the first moral code or in a society governed by the second?" And this seems like what some people have in mind when we say that we should respect the wishes of the dead. We would prefer to live in a society governed by a moral code such that the wishes of the dead were respected, because such a society would likely be a much better place to live.

The thing to think about, though, is whether or not it would be unjust to ignore the interests of the dead. That is, whether we would be justified in using coercion against someone who was going to do it. If so, then that seems like it would be very important for my discussion of climate change; it might lead us to a way of denying that climate change infringes on any rights while simultaneously supporting the permissibility of coercion to prevent people from contributing to it. But I'll pause for now and get back to this later.

The Glue Man, Part II

My TA responded to my Glue Man example with the following counterexample: "Imagine that there is a very low probability that while playing touch football you could make a catch so amazing that it causes an epileptic man to have a seizure and drop his baby. I don't think it is therefore impermissible for you to play touch football, nor do I think that it is impermissible for an epileptic man to go to a park where people are playing touch football just because there is such a chance." I disagree that this counterexample demonstrates anything about the ethical status of tearing away from the Glue man, and I'll attempt to show why with a modification of the Glue Man scenario.

Let's say that Linda's pleasurable activity, instead of simply spinning around the darkened room with her arms outstretched, is firing a rifle in a random direction. Let's suppose that instead of the Glue Man being located in the room with Linda, there is instead a Glue-Man shaped board on one of the walls which can detect the impact of a bullet strike. In another room, the Glue Man himself is suspended above the floor in his unanimated state, and suspended from the ceiling above him is a grand piano. Suppose that the pressure sensitive board in the dark room is hooked up in such a way that if it is shot, the glue man will be released from his suspended position, and will land on the ground below. As before, the impact will jar the glue man to life, giving him full moral standing as a person, though he will be stuck to the floor because of the glue. A few seconds after this, the grand piano would be released from the ceiling, crushing the glue man to death.

It seems like this would be a case similar to the touch football example. The relevant question would be whether Linda would be permitted to fire her rifle randomly if she knew that there was a chance that she would hit the board, and this sequence of events would occur, resulting in the death of the glue man. To be honest, I'm not sure what to say about this. But I don't think that this is a good analogy to abortion, and I'll illustrate why by repairing the scenario to fit much more closely with abortion.

Let's say that just like before, Linda is in the dark room with her rifle, the board is set up somewhere along the wall, the glue man is suspended above the ground, and the piano is hanging over him. If Linda hits the board, the glue man will still drop, come to life, and be stuck to the floor (though the glue will eventually wear off). But this time, instead of the piano being released automatically after a few seconds, a lasso connected to the piano fires out of the wall and wraps around Linda's waist. As soon as the rope is secure, the mechanism that was originally holding the piano up releases, and Linda is left holding the piano up (we can suppose that the leverage in the system is such that Linda can support the weight of the piano, but it's an inconvenience to her). Linda could untie the lasso if she wanted to, but doing so would cause the piano to fall and crush the glue man.

It seems that this scenario is very different from the initial one, where the piano just dropped automatically. I agree that it seems somewhat worthwhile to ask whether Linda's shooting the rifle would be morally permissible in either case, and whether the moral status of that choice differs between the examples. My TA seems to be committed to the stance that in the first case, we would be able to construct the scenario in which the chances of Linda killing the glue man were small enough that she would be justified in shooting the rifle (perhaps the room is large enough that the chances of hitting any particular patch of wall are tiny). For my purposes, it won't be important to question whether this is true or not.

All that I want to suggest is that Linda's moral situation changes fundamentally from the first example to the second. We might think it permissible for Linda to fire the rifle in the first example, or we might think it impermissible. The answer seems to depend on how we deal with the concept of risk in our moral theory. But to be certain, if Linda kills the glue man, it will be the direct result of her choice to fire the rifle.

In the second example, on the other hand, the glue man's life is in no way put directly at risk by Linda's choice to fire the rifle. Rather, by firing the rifle, it seems like Linda enters something of a moral lottery. If she misses the pressure sensitive board, the glue man doesn't even come to life; Linda can go about her business without any real guilt. But if she hits the board, then the glue man gains moral standing, and Linda must make a choice: she can either deal with the inconvenience of being attached to the piano (until the glue wears off and the glue man can escape from underneath it), or she can untie the lasso, killing the glue man. It seems that whatever we want to say about the morality of Linda shooting the rifle (thereby "entering the lottery") in the first place, we would want to treat this outcome as morally distinct. And if Linda hits the board, it seems to me that we might very well say that she takes on the obligation to hold up the piano.

In the same way, I wouldn't want to say anything about whether or not it's moral to have sex if you don't want to get pregnant. But if we grant fetuses the same moral status as humans (which we agreed to do earlier), and if someone ends up pregnant in the same way that Linda ends up attached to the piano, then it seems like we might have reason for saying that abortion would be impermissible, just like it might seem impermissible for Linda to crush the glue man by untying the lasso after she had put herself and the glue man in their respective positions by shooting her rifle randomly. Does that make sense?

The Glue Man

So I was talking to one of my TA's the other day about the ethics of abortion. To be honest, I really don't like this issue, because it forces me to acknowledge things like "I'm honestly not sure I can give you any good reason that killing extremely young babies is wrong; if you were from a culture that thought it acceptable to do it, I don't think I could give you any reason to think that you were wrong. I mean, none of the things that I think are morally relevant apply to babies, and if you pointed that out to me and called me irrational, I don't know how I could respond." But in the class which sparked this discussion, we've been making a really interesting assumption (because the authors we're reading grant it): we've taken as given that fetuses are persons. The question, then, is whether abortion would be permissible if we assumed this.

I won't get into the entire discussion, because we've been talking about it for about a week. But one interesting example is Judith Thomson's "violinist," in her essay, "A Defense of Abortion." In this example, a very important violinist has kidney failure, and the only way to save him is to hook him up to a person with the same blood type, so that his blood can be filtered by their kidneys. Unfortunately, his blood type is extremely rare, and you're the only one who has it. In order to save the violinist, a group of music lovers kidnaps you in the middle of the night, while you're asleep, and hooks you up to the violinist. The question is whether, when you wake up, it would be unjust for you to unhook the violinist, resulting in his death. Thomson thinks that the answer is clearly yes; though it would be nice of you to allow the violinist to use your kidneys, you are under no obligation to let him do so, and it would be perfectly justified of you to unplug yourself.

Obviously, the violinist example isn't such a good analogy for abortion in most cases. We might think that it lines up well with a case in which a woman is raped, but it certainly has critical differences regarding a case in which a woman voluntarily has sex and gets pregnant. So as I said, I was talking about this with my TA, trying to figure out a way to repair the thought experiment in order to properly get a handle on the issue at hand. The product was as follows (if you're wondering, I'm posting this because he asked me to write it up for him, and I figured I might as well put it on here while I'm at it).

Imagine that a man, Clarence, has a very large, dark room in his house. Somewhere inside it, completely motionless and undetectable, there stands an unconscious, unliving human-shaped object. Essentially, the object is completely human, except it is not actually alive, and therefore can't be considered to be a person. Its skin is completely soaked in a very strong glue, which has penetrated deep into its skin. The object also has very thin blood, like a hemopheliac, and so if something were stuck to the glue on the object's skin, and then pulled free, the human-shaped object would bleed dry (however, the glue will wear off after some time, so something that gets stuck to the object is not permenantly attached). But if something strikes the object, it will suddenly come alive, achieving the status of full personhood.

So to recap the critical features of this object: Initially, it is not a person. If something strikes it, then it will come to life, becoming a person. But if the thing that struck it is subsequently torn off, it will bleed to death.

Now imagine there's a woman, Linda, who wants to use Clarence's room so that she can spin around in circles with her arms held out parallel to the ground, moving aimlessly about the room in a state of sheer euphoria. Linda knows that the human shaped object is in the room (or should know), and knows what will happen if she accidentally strikes it, but she spins anyway. Suddenly, her hand catches onto the object, and it comes to life. Linda can't believe her bad fortune; here she is with this person now stuck to her hand until the glue wears off.

Would Linda be justified in tearing her hand away, causing the person to bleed to death? Keep in mind, I'm not arguing that this case is analogous to abortion. What I will say is that if we grant fetuses personhood, then this case does seem to be pretty analogous. It needs to be modified somewhat to describe rape, sex with contraceptives, etc. But as far as voluntary, unprotected sex is concerned, it seems like this is pretty much the same kind of case. And to be honest, I'm feeling like Linda would be acting unjustly if she pulled her hand away.

[Read the second part of this conversation here]