I think one thing that you gloss over a little bit is this chain of reasoning:
GiveDirectly demonstrate that extremely poor people generally spend new money responsibly
For the extreme poor, we can use this to measure purchasing choices as roughly contributing to life satisfaction
Elon Musk, who relies heavily on government subsidies to turn profits & who exclusively sells to wealthy nations, could be the most impactful person alive in WELLBY terms
Specifically, you might be extrapolating a relationship that apparently holds in poor countries to too wide of a net. I think there is good intuition behind this; people that are barely surviving are going to be far less prone to wasting a significant proportion of their income on speculative life satisfaction improvements. Whereas if you or I buy a Tesla I doubt it will have any impact on our life satisfaction at all (and not merely just a logarithmic one); similarly, if we developed a gambling addiction I’m sure that relationship would be negative.
It would be my intuition that the relationship between expenditure and life satisfaction doesn’t decay because it’s logarithmic, but because the relationship itself breaks down at higher and higher incomes.
(A smaller intuition that I have less of a clear reason for: It feels icky that a capitalist can double-dip by having a positive impact and making a monetary ROI. I suspect this hinges much more on what ideological ideas you’re bringing to the table; at the very least we can say that your method works in non-profit organisations)
I really like your accounting method, though, and I think it survives without most of the axioms you laid out. For instance, given that buying X product produces Y value, we have an exciting new method for accounting how to subdivide Y among its contributors! Then we can debate how to model Y, and for what business models this accounting method holds.
Thanks for that! And for making the ideological ickyness visible. I think a lot of people, me included, feel like this. And thanks also for acknowledging the accounting part of the framework. It does rely on a similar relationship though that money spent represents value delivered. So we would have to assume that companies are more rational in their spending choices.
If I understand you correctly, you are questioning three things 1) That there is a marginal relationship between income and life satisfaction at high incomes 2) If there were a relationship, that consumption is a good predictor of contribution to life satisfaction 3) That Elon Musk could be the most impactful person alive
2) If we accept 1), then it’s very likely that your spending will be predictive of your life satisfaction. I share your intuition that spending becomes more volatile and impulsive, but if we consider similar amounts on a percentage level, and thereby a similar level of contribution to the WELLBY measure, I think it’s fair to assume that somebody who earns $100k will be as diligent about spending $1k as a person earning $1k will be about spending $10.
3) You make the point that Elon relies on government spending. I think this is a valid one because that is far far away from actual consumer life satisfaction and the influence of each citizen and the effect on them is only very very indirect. So maybe the government just spent the money badly (I’d argue though that it’s much better spent than on NASA). If, however, he would not rely on these and make most of his money directly from consumers, I think accepting 2) would have to lead us to accept 3) unless he were in some industry that tricks our consumer choices, like the addictions you mentioned, I think he doesn’t.
Sorry, to be clear, I was contesting that you can leap from (1) and (2), which I generally agree with, to (3). And to make that point, I was proposing that at higher income levels, the relationship from (1) and (2) may not (and in my opinion, does not) hold.
I did some more research & thought about your points. Although my own experience doesn’t suggest any relationship between conspicuous consumption and life satisfaction (arguably, for me, a negative one), a handful of low-citation papers (example) seem to suggest the relationship might be causal and not merely correlative (I agree it is clearly correlative). So I agree, in principle, it is probably true that in a clear-cut case such as Jeff Bezos (providing goods and services directly to customers in exchange for money where no counterfactual service likely would’ve appeared on a similar time frame), his work might have an immense impact on life satisfaction. (I tend to agree with your point (3) on if Elon switched to a more clearly-attributable business model).
I do have to wonder, though, if conspicuous consumption is fungible in a way that survival goods (food, medical, etc.) are not. I can’t shake the intuition that everyone would be just as happy if Amazon never existed; that when all of your peers have bought iPhones it becomes a table-stakes purchase and you have to get the iPhone Pro to stand out. I will think some more.
Thanks so much for steelmanning my argument and looking for some research yourself! And I share your intuition that some consumption seems zero-sum around status. I do think though that my smartphone is giving me tons of value but that’s a different discussion probably haha
I think one thing that you gloss over a little bit is this chain of reasoning:
GiveDirectly demonstrate that extremely poor people generally spend new money responsibly
For the extreme poor, we can use this to measure purchasing choices as roughly contributing to life satisfaction
Elon Musk, who relies heavily on government subsidies to turn profits & who exclusively sells to wealthy nations, could be the most impactful person alive in WELLBY terms
Specifically, you might be extrapolating a relationship that apparently holds in poor countries to too wide of a net. I think there is good intuition behind this; people that are barely surviving are going to be far less prone to wasting a significant proportion of their income on speculative life satisfaction improvements. Whereas if you or I buy a Tesla I doubt it will have any impact on our life satisfaction at all (and not merely just a logarithmic one); similarly, if we developed a gambling addiction I’m sure that relationship would be negative.
It would be my intuition that the relationship between expenditure and life satisfaction doesn’t decay because it’s logarithmic, but because the relationship itself breaks down at higher and higher incomes.
(A smaller intuition that I have less of a clear reason for: It feels icky that a capitalist can double-dip by having a positive impact and making a monetary ROI. I suspect this hinges much more on what ideological ideas you’re bringing to the table; at the very least we can say that your method works in non-profit organisations)
I really like your accounting method, though, and I think it survives without most of the axioms you laid out. For instance, given that buying X product produces Y value, we have an exciting new method for accounting how to subdivide Y among its contributors! Then we can debate how to model Y, and for what business models this accounting method holds.
Thanks for that! And for making the ideological ickyness visible. I think a lot of people, me included, feel like this. And thanks also for acknowledging the accounting part of the framework. It does rely on a similar relationship though that money spent represents value delivered. So we would have to assume that companies are more rational in their spending choices.
If I understand you correctly, you are questioning three things
1) That there is a marginal relationship between income and life satisfaction at high incomes
2) If there were a relationship, that consumption is a good predictor of contribution to life satisfaction
3) That Elon Musk could be the most impactful person alive
Let me try to address each one
1) For this I will just defer to the studies referenced in Our World In Data: “Higher personal incomes go together with higher self-reported life satisfaction” suggests to me that also at high incomes there is a marginal relationship between income and life satisfaction.
2) If we accept 1), then it’s very likely that your spending will be predictive of your life satisfaction. I share your intuition that spending becomes more volatile and impulsive, but if we consider similar amounts on a percentage level, and thereby a similar level of contribution to the WELLBY measure, I think it’s fair to assume that somebody who earns $100k will be as diligent about spending $1k as a person earning $1k will be about spending $10.
3) You make the point that Elon relies on government spending. I think this is a valid one because that is far far away from actual consumer life satisfaction and the influence of each citizen and the effect on them is only very very indirect. So maybe the government just spent the money badly (I’d argue though that it’s much better spent than on NASA). If, however, he would not rely on these and make most of his money directly from consumers, I think accepting 2) would have to lead us to accept 3) unless he were in some industry that tricks our consumer choices, like the addictions you mentioned, I think he doesn’t.
Sorry, to be clear, I was contesting that you can leap from (1) and (2), which I generally agree with, to (3). And to make that point, I was proposing that at higher income levels, the relationship from (1) and (2) may not (and in my opinion, does not) hold.
I did some more research & thought about your points. Although my own experience doesn’t suggest any relationship between conspicuous consumption and life satisfaction (arguably, for me, a negative one), a handful of low-citation papers (example) seem to suggest the relationship might be causal and not merely correlative (I agree it is clearly correlative). So I agree, in principle, it is probably true that in a clear-cut case such as Jeff Bezos (providing goods and services directly to customers in exchange for money where no counterfactual service likely would’ve appeared on a similar time frame), his work might have an immense impact on life satisfaction. (I tend to agree with your point (3) on if Elon switched to a more clearly-attributable business model).
I do have to wonder, though, if conspicuous consumption is fungible in a way that survival goods (food, medical, etc.) are not. I can’t shake the intuition that everyone would be just as happy if Amazon never existed; that when all of your peers have bought iPhones it becomes a table-stakes purchase and you have to get the iPhone Pro to stand out. I will think some more.
Thanks so much for steelmanning my argument and looking for some research yourself! And I share your intuition that some consumption seems zero-sum around status. I do think though that my smartphone is giving me tons of value but that’s a different discussion probably haha