Monday, October 17, 2011

"The Joyless Economy" and the right level of stimulation

I want to talk about another take on the economy. This one is an older classic. Tibor Scitovsky was a well-known and respected economist, especially in the field of welfare economics. I knew the name from college, but I'd never read (or been aware of) his book  The Joyless Economy: The Psychology of Human Satisfaction, which he pubished in 1976, until I came across it a few weeks ago. 

I think the book has been regarded as an interesting (if eccentric) curiosity in mainstream economics, an early attempt to incorporate psychological insights into the discipline. But its wider influence on the  subject was minimal. 

The book is fascinating, however. He focuses on peoples' motivation and drives, arguing that a need for stimulation, pleasure and comfort explain much of consumer behavior - and have been completely ignored by mainstream economics. The mainstream, as we have seen, pays little or no attention to consumers' preferences.  

Scitovsky argues that instead of economics' sweeping assumption of rationality, psychology has real, substantive, experimentally-validated scientific evidence. Psychology is more scientific. So the psychology of human motivation and satisfaction is where he begins.

The central idea is that people have an optimum level of arousal of their mental activity. Too much stimulation and we become anxious and nervous. Too little and we become bored and irritable. 

Indeed, psychologists postulate the existence of an optimum level of total stimulation and arousal, one which is optimal in the sense that it gives rise to a feeling of comfort and well-being.  

This can be grounded in neurophysiology, he says. 

Interestingly, in many ways he anticipates here what Milhaly Csikszentmihalyi later says about "flow", the mental state where you are challenged in a task at exactly the right level, so that you are absorbed and often lose track of time altogether. Much of the satisfaction of work comes from those moments of flow, according to more recent positive psychologists. 

It isn't just a matter of individual satisfaction, either. Scitovsky in fact thinks optimal stimulation is even more important to society as a whole. Indeed, 

Civilization consists in originating stimulating activities other than violence and back-breaking labor, developing the skills needed to exercise and enjoy those activities, and making available the education needed to learn the requisite skills and discipline.

There is one other central element in his psychological account. Changes in the level of stimulus is extremely important, as well as the level. "Comfort" is the level.

We saw that while comfort hinges on the level of arousal being at or close to its optimum, pleasure accompanies changes in the level of arousal toward the optimum.  

This is a familiar story to everybody. Undertaking a task, playing a game, or confronting a problem  produce increasing tension, and then achievement of the goal resolves  the tension. 

It also means that too much comfort can mean little or no pleasure. Some measure of discomfort or effort must usually precede pleasure. 

There are some other consequences of his analysis. It means people have only so much ability to process the new and unfamiliar before the stimulus/arousal level gets uncomfortably high. So there needs to be a certain amount of redundancy (i.e. familiarity) in new information for people to enjoy it. Too much unfamiliarity produces bewilderment or irritation, not pleasure. 

That is why so many sources of stimulation need some education or skill. Enjoying a game of tennis requires being able to play at a reasonable level, and with a well-matched opponent. The ability to appreciate art or literature or most music requires knowing a little about them first.  

This is why the uneducated and the poor find it so difficult to deal with boredom, and often incline, he says, to alcohol or violence or aggression to seek stimulus. 

But it is not just the poor who have difficulty finding things to engage their attention, either. Americans in general love time-saving devices. Yet much of the time saved in recent years goes to watching television - which people report generally does not engage them very much. 

In fact, I find this idea of optimum stimulation very persuasive. Often come Friday, I feel "brain-fried" with limited ability to take even more stimulus after a week in the city.  It takes a glass of wine and a few hours down before we are ready to go again. 

It also explains why we find the city so alluring. He argues for the importance of novelty.

The yearning for new things and ideas is the source of all progress, all civilization; to ignore it as a source of satisfaction is surely wrong.  

And here is where what he says is so directly related to the questions underlying this blog.

What does an organism do when all its needs are satisfied, all its discomforts eliminated? The original answer, nothing, is now generally recognized to have been wrong. Perfect comfort and lack of stimulation are restful at first, but they soon become boring, then disturbing. At that stage the organism actively seeks stimulation.  

In an affluent society, most basic needs and wants - food, shelter, even air-conditioning when it is hot and humid - are taken care of. The level of comfort is high.  

So most people's satisfaction comes from stimulus, not comfort . Indeed, we know from other psychologists that we tend to get habiutated to a certain level of comfort, or particular circumstances. 

But what is the main source of stimulus for us?  It is other people.

Stimulation comes from change, variety, surprise, novelty-and most of these originate in human action and imagination. Moreover, we are most stimulating to others when we are stimulated by them.  

And stimulus is not necessarily scarce, either. It is generally, Scitovsky says, a non- exclusive or shared satisfaction. It actually benefits from participation of more people.

So what does this mean for the economy and future growth?

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