Rich People’s Gain is Worth Less Than Poor People’s Pain

A new way to think about utilitarianism, courtesy of the Office of Management and Budget.

A faded, halftoned image of the US Capitol Dome, surmounted by a balance scale. The lower part of the scale is weighed down by a towering Oliver Twist figure, porridge-bowl extended in supplication. He is raising up a scale holding a fan of caricature drawings of a business-suited plutocrat with a dollar-sign-emblazoned money-bag for a head.

Utilitarianism — the philosophy of making decisions to benefit the most people — sounds commonsensical. But utilitarianism is — and always has been — an attractive nuisance, one that invites its practitioners to dress up their self-serving preferences with fancy mathematics that “prove” that their wins and your losses are “rational.”

That’s been there ever since Jeremy Bentham’s formulation of the concept of utilitarianism, which he immediately mobilized in service to the panopticon, his cruel design for a prison where prisoners would be ever haunted by a watcher’s unseeing eye. Bentham seems to have sincerely believed that there was a utilitarian case for the panopticon, which let him declare his sadistic thought-experiment (thankfully, it was never built during Bentham’s life) to be a utility-maximizing act of monumental kindness.

Ever since Bentham, utilitarianism has provided cover for history’s great monsters to claim that they were only acting in service to the greater good.

Think of Larry Summers’ infamous 1991 memo where he, in his capacity as chief economist of the World Bank, proposed dumping toxic waste in poor countries:

The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

Translation: people in poor countries are already sick, and will not feel the additional health burdens from toxic waste as keenly as hale, well-fed rich people will.

Summers later claimed that this was sarcasm, saying it was “never intended in any way as a serious policy recommendation,” and “no sane person favors dumping toxic waste near where anybody lives or thinks that places could be made better off with more toxic waste.”

But Summers’ signature on that memo was no aberration: under the World Bank’s tender ministrations, postcolonial nations were often required to relax their antipollution rules, and the Summers memo is best understood as “saying the quiet part aloud.”

Much of utilitarianism’s appeal lies in quantifying squishy, qualitative factors. It lets us create measures like the quality-adjusted life year (QALY), which is used to decide how much resources should be allocated to preserving someone’s life.

The underlying question the QALY seeks to clarify is an important one: do you want to (for example) undergo a year of painful, debilitating cancer treatments in order to prolong your life by slightly more than a year? Or would you rather forego the cancer treatment and instead manage your pain and have a final year of relative comfort in which to make your goodbyes and wind up your affairs?

For a beautiful mediation on this subject, see Atul Gawande’s brilliant book Being Mortal, or listen to the BBC Reith Lecture he gave on the subject. One thing Gawande’s book makes clear is that the “utility” of different courses of action are intensely personal, and there’s no way to assess them in a mathematical vacuum. Quantizing the qualitative elements of that decision is a lossy process, one with potentially catastrophic consequences, as anyone who’s ever grappled with a private health insurer’s decision to reject a treatment recommended by your doctor can attest.

Like “realism,” utilitarianism is often code for “being a selfish jerk.” Think of “longtermism,” which concerns itself with a hypothetical future containing trillions of synthetic, simulated humans living inside computers. Making each of those synthetic people very slightly happier will produce a gigantic aggregate benefit.

Even a very small amount of additional happiness multiplied by trillions of imaginary people adds up to more happiness than all of the people currently alive can ever experience. By that reasoning, there’s no amount of misery one could inflict on today’s living people that would outweigh even the chance of bringing a dollop of joy to those far-future sims.

For the selfish, utilitarianism works best when it provides a justification for making themselves better off at others’ expense. At first blush, longtermism militates for everyone to don hairshirts in support of the happiness of those trillions of future sims.

But longtermism is an offshoot of “effective altruism” (whose leading spokescriminal and financier was Sam Bankman-Fried), which offers an ingenious solution to this problem: earning to give.

Earning to give” is the utilitarian, effective altruist notion that one should take the highest-paying job one can get, even if that job involves inflicting untold misery through pollution, inequality and exploitation — provided that you eventually give all the gains away to good causes that outweigh the harm you did while earning them.

And since succeeding as (say) a high-powered investment banker requires that you wear the finest clothes, drive a showy car, live in a fancy home, fly first class and eat at Michelin-starred restaurants, all of these comforts can be explained as utilitarian necessities one must endure on the path to earning enough to give away so much that you make lots of people better off.

This is utilitarianism as unintentional self-parody, but it’s also another example of “saying the quiet part aloud.” The greatest monsters of history —men like Andrew Carnegie, JP Rockefeller, Henry Ford and Andrew Mellon — lived lives of cruel mass-exploitation, only to rehabilitate their reputations at the ends of their lives, or posthumously, by endowing charitable foundations that do genuinely good works, while plastering those monsters’ names on every tangible expression of those works.

Our modern crop of monsters are pursuing the same path: from Bill Gates to Warren Buffett, monopolist wreckers devote considerable energy to making their names synonymous with charity, not the cruelty by which they won their fortunes (the Sackler opioid family tried this gambit, but failed, thanks to tireless activism from their victims and their victims’ families).

The Gates/Buffett pitch is just “earning-to-give” by another name: “Yes, these men destroyed countless lives to enrich themselves, but they plan to give (most of) the booty away to make other lives better, wiping away their sins.”

An intellectually honest utilitarian would trade place with the poorest, most abused person if it resulted in a net gain to the world’s supply of happiness. But these honest utilitarians are few and far between.

Here’s a daring litmus test for honest utilitarianism, courtesy of the US Office of Management and Budget (OMB), the agency charged with weighing federal programs to determine whether they represent value for money.

In a draft circular, the OMB proposes that these calculations should be weighted to account for the “marginal utility” to the beneficiaries of each program.

This may sound complex, but it’s quite straightforward. Here’s John Quiggin’s summary:

A project that delivers a dollar of benefits to each of a group of poor people is worth more than a project that delivers a dollar of benefits to each of a group of rich people.

This relies on a simple and irrefutable utilitarian observation: an additional dollar does less for someone who can afford all the necessities of life than it does to someone who has to choose between, say, buying groceries and paying the rent.

If you’ve got a million dollars in the bank, the additional dollar only causes the number in your bank balance to rise by one. You might experience a brief, warm glow when this happens, but that’s nothing compared to the difference that a poor person experiences if the same dollar makes the difference between eviction and homelessness, and staying put in their family home.

These marginal utility calculations are a well-understood, widely accepted economic fundamental, and we can use them to calculate the multipliers that the OMB could use to estimate the value of each program based on its beneficiaries.

Kevin Drum did just that, with an accompanying chart:

Kevin Drum’s chart showing “the value of a dollar at different income levels,” ranging from 15.25X for households earning $10,000 or less to 0.02x for households earning $1 million or more.
Kevin Drum

As Quiggin explains, this method would produce some pretty startling policy recommendations:

If a policy halved Elon Musk’s income, while doubling the income of a single randomly chosen US household, it would be evaluated as neutral. If the policy doubled the income of two households, it would be beneficial.

In a thread dissecting the circular, Noah Kaufman writes, “this isn’t just an assumption tweak. It’s an entirely different approach to cost-benefit analysis.”

Both Quiggin and Drum assume that this will face stiff opposition and likely fail to become policy (Drum: “the usual suspects will have something to say before long. I predict that they will be very pissed off.” Quiggin: “it is almost certain to be killed off”).

But as Quiggin points out, the underlying utilitarian logic is impeccable. Any self-styled utilitarian who doesn’t have a good answer for why this method shouldn’t be the default forfeits their much-vaunted claim to rationality.