Saturday, October 22, 2011

The Coffee Shop Question restated

It has been too long since I restated the questions underlying this blog. Here is my take back in August.
How do we deal with abundance in the economy so we get the most of what we actually want?
I still think this is a good starting point. The different themes are marinating in my mind as I read different books and articles, but every so often they need to be brought together.
Let's break it down into separate arguments and propositions. (This is much longer than any previous entry.)

What people want


1. Most of our economic problems as a society are not problems of scarcity any more. They are problems of abundance.

We can increasingly produce the goods and services that we want for very little money. Our problem (at least in the west) is not hunger. It's obesity. It's not lack of possessions. It's where to put them.
Some things are still scarce , including energy. And much of the developing world, especially Africa, is still lacking in many essentials. But many of our instincts and ideas, developed over countless millennia of scarcity, are now wrong.

2. Problems of abundance require we have to make skillful choices about what we want.

If the "economic problem " as Keynes called it, is solved and basic necessities are taken care of, we have to think about what we want to do with our resources. Keynes thought the problem of leisure would come to dominate society, based on the bored, frustrated wealthy upper classes he saw at the time. Wealthy aristocracies in the past have generally squandered their wealth on status competition, court politics and war.

3. People increasingly want not more stuff, but more engagement, more purpose, more connection, and more meaning.

They want life to be interesting and varied and stimulating. Why do people pay so much to live squeezed in small apartments in cities like New York or Paris? Because every day is different in a big city.
People want to feel independent. They want to feel connected with others. They want to feel a sense of achievement and satisfaction with their lives.

We have a huge welfare state to provide basic incomes to people.But the recipients people are often bored, drifting, disconsolate and socially isolated. Income or monetary transfers alone are not enough to make people happy.

The failure of our frameworks

4. Most of our thinking on ethics and social science and political philosophy in the last fifty years completely ignored what we want.

Consumer preferences were taken as a given in economics. Liberal political theory stressed the neutrality of the state, and process above ends (with the exception of equality).

Psychology has offered some ideas, including, famously, Maslow's hierarchy of needs. And other issues like enviromentalism have supplied some new purposes, like sustainability. But we don't ask enough what our needs are now that basic material needs are largely satisfied.


Markets and evolution

5. The market system is astonishingly good at generating goods and services consumers want in an innovative and efficient way. But it is less relevant if most of the things we want are not goods and services.

People have a natural instinct to barter and exchange. The whole psychology of exchange has been vastly beneficial over time. Western societies have generally been much better off for being "nations of shopkeepers", rather than looking down on commercial activity as most societies did in the past.

6. The economy is also a naturally evolving system.

The market generates both variation and selection pressure. It creates more and more sophistication and complexity over time, just like natural evolution.

This does not mean we have to be socially darwinian, which has a bad track record. But we have to understand the actual dynamic nature of the economy, seeing it as more of a process than a static equilibrium as in traditional economics.


Government and controlling misbehavior

7. We need an immune system for survival.

Evolution of large creatures is always in a 'red queen' with parasites and viruses, which evolve even faster. And in the same way one of the essential things about an economic or political system is to motivate people not to exploit it or misbehave. Crime is just like a spreading opportunistic infection.

8. Not only is the market exchange and money system very efficient, it also is very good at that kind of incentive and control of defectors.

It contains an immune system of incentives and deprivation of income. But it also relies on many other social technologies to work well, like contract law and money.

9. The growth of the state in the 20th century reflected the evolution of the economy.

Many of the things we wanted as society grew wealthier were not goods and services. Democracy gre in the 19th century as a wealthier middle class wanted participation in decision-making. The welfare state grew above all to provide security (next up the hierarchy of needs).

10. But the welfare state, rights, and entitlements do not have a good immune system.

They also changed incentives in a damaging way, and ithe welfare state is rapidly becoming fiscally unsustainable in its current form. This is partly because the welfare state has trouble controlling defectors, and vested interest coalitions build up to seize a permanent stream of benefits. Liberals hate the idea of the "underserving poor", but without that redistribution is increasingly difficult and government itself is undermined. Political allocation of goods and services has limits as a social technology. Sometimes stigmas are actually functional. Culture matters.

11. As government has evolved away from public goods, it has become more controversial and inefficient.

Government was originally about defense and other public goods (such as roads, harbors or the mail). Big government was the new tool of the 20th century, to deliver income security and medical benefits. Redistribution and provision of a social safety net scaled back the operation of the market in society. Much of the political debate in the last thirty years has got stuck on the size of the state versus the market.

Employment, Jobs and Work

12. The pace of change can outrun our ability to deal with it.

Productivity is going through a major acceleration again. Much of the routine jobs in society may disappear. But social technologies take time to adapt and compensate.

13. It may also outrun our ability to create new jobs.

In the past, technological change destroyed old jobs but created many new ones. 95% of people used to work on the farm. Now in developed countries like the US less than 5% do. Manufacturing grew, and then the service economy. There are more people employed than ever.

But this latest wave of change may not create new jobs in the formal economy, because we do not want more traded exchanges. Money can't buy you love, as the song goes.

14. The new goods and services that we enthusiastically embrace don't employ many people, and are often given away free because the marginal cost is so low.

Apple is the most valuable company in the world, but does not employ many people. It employs even less if you count out the retail stores. Many people are employed producing iphones and macbooks in factories in China, but even there, the manufacturing company is planning to automate most of the production.

15. This is a major problem because jobs are the bedrock of the market economy.

We have known for decades that GDP is not closely related to happiness or social welfare or sustainability. The reason that we still persistently care about GDP data so much is because it is closely linked to availability of jobs.

Jobs are far and away our source of income, and we need income to survive. Jobs define much of people's identity and provide (at least in better jobs) much of their sense of purpose. But the whole notion of the paid job in the formal sector could be in trouble.


Income, Wealth and Assets

16. The problem is we think primarily in streams of income, rather than assets and ownership structures.

Ownership and property are both social technologies and institutions which constantly evolve. We used to have a feudal system in the west, with grants from the monarch in return for services owed. Land used to be the primary form of wealth and ownership. Communal forms such as monasteries and colleges owned much of the land. Precious metal was the primary form of liquid wealth.

But we have created new kinds of assets - joint stock corporations and equity markets, paper money, fractional reserve banking, Financial markets display far too much ingenuity for their own good creating new kinds of assets and legal structures, such as credit default swaps or esoteric options.

17. Many of the valuable things in society are increasingly intangible, with very low marginal costs.

Many of the most important assets in the economy are intangible altogether, like human capital, organizational skills and culture, or patents.

Capital is not factories any more, so much as knowledge. But knowledge is very different from tangible ownership. It needs skill and education to acquire, but it is easily replicable, transferrable and non-rivalrous.
 
18. We get confused about assets and have serious problems with asset bubbles and ownership.

The whole nature of the economy is changing as it is driven more by the balance sheet - valuation of assets - rather than the flow of income - GDP. We get increasingly serious booms and busts like the housing bubble. An asset-based economy is driven by expectations about the future, the discount rate (interest rates) of future events, emotions, risk and psychology. Our legal system is getting mired and blocked up dealing with patent litigation, copyright and intellectual property.

19. The changing nature of assets means we need to rethink what wealth is.

We need to think about what wealth is in a substantive sense rather than simply an accounting total. If you have one hundred million dollars in the bank, you are obviously regarded as wealthy. But what does it mean to your life? What can the wealth get you? How do you recognize wealth?

Of course it means the ability to buy luxuries or property. But that is less of a differentiator than it used to be. Every secretary in Tokyo can get her Hermes handbag. It is hard to recognize variations in wealth from clothing on the street any more. Everyone has access to latest technology and trinkets, like the new iphone. Wealthy people do not even necessarily have larger apartments or houses, even if the address is better. They just live in the Upper East Side or Kensington, rather than Crown Heights or Peckham.


Changing relative prices

20. Many of the historical changes in society are driven by changes in relative prices.

There are long-term variations in inflation, the price of land or commodities or labor, the terms of trade between manufactures and commodities, the price of different kinds of energy, and may others. Current economic changes are also driving deeper relative price changes.

21. Deflation is already taking care of much of the basic needs of society, with the exception of real estate, education and medical care.

The rising cost of university education in the US is squeezing the middle class, and the rising cost of medical care is having an increasingly devastating effect on other areas, including fiscal policy and disposable wages.


Time, Work and Leisure

22. The thing that is most scarce is time.

There is never more than 24 hours in a day. Yet we mostly squander it. We have deeply confused ideas about work and leisure. The relative cost of leisure compared with another hour of work rises as wages rise. This perversely means people are working more, driving up asset prices more, and have less time to use the things they buy.

23. Working hours are surprisingly inflexible.

People have little choice about the number of hours they work. The full-time job of 35-50 hours a week is still the core feature of most people's lives - all the more so as women moved into the labor force in the past fifty years. There is surprisingly little scope for trading off more income for more time. This is partly because it is often more efficient for employers to spread fixed costs such as benefits or office space over fewer people working longer hours. But it also reflects that our social institutions surrounding work have failed to evolve much.

24. You need some skills or education to make the most of leisure.

Few people find doing nothing at all attractive for long. More leisure time is not attractive for many if it just means more time slumped in front of the tv rather than more money.


What is the economy for?

25. We need a positive vision of human functioning, a teleology.

We need to go back to a more Aristotelian view, in which we can say some ends are better than others - at least for purposes of setting up society to further them. There is a common human nature, even if it is expressed in different religions or ideologies. Of course, people differ in their natural personality, traits and inclinations, So we always need much complexity and diversity and intricacy. But they differ within a range.

26. There is a great deal of common ground on what makes people flourish.

People have different ideas and wants and beliefs and ends. But modern liberalism has exaggerated the differences. There is a common core. And it is about more than just provision of basic means, like Rawl's primary goods. It is about more convergence on ends.

One of the most interesting things about recent work in positive psychology is it offers more unified, coherent evidence on what makes people satisfied, engaged and happy. We can move closer to ends, even if we do not specify them, instead of just focusing on providing general purpose means like money. We may never agree on people's beliefs, or theological systems, or particular cultural references for individualism or group cohesion. But we can agree on a core of practical things that help people flourish.

27.The purpose of the economy ought to be to stretch and engage people, to allow them to develop themselves, to offer stimulation and joy.

It already does much of that - as a byproduct to providing goods and services. The economy is steadily evolving to provide more engagement and stimulation. A city like New York is a vast buzzing kaleidoscope of stimulation. But we need that to be the primary aim, not to generate income to pay for market exchange of goods and services. Our intermediate objectives are increasingly leading us astray. We need to refocus on the goal itself.


New social technologies

28. The problems in the economy are not ones of scarcity. They are problems of worn-out social technologies.

Ways to cooperate and work together evolve, just as cars or microchips do. Over time, we generate new social technologies (or institutions in the broad sense). Development economists have come to realize that the main obstacle to growth in poorer countries is not actual technology or physical capital - like building factories or highways - but institutional flaws like corruption, kelptocratic government or poor protection of property rights. In the same way, in the developed world the main challenge is institutional. Many of our institutions and structures, like 20th century bureaucracy, traditional managerialism and the welfare state, are now obstacles.

29. Market prices do not capture many of the things we want.

The market will always be an important arena and social technology. But as goods and services become less of a primary aim, the market and monetary exchange ought to become less of a primary institution as well.

30. New social technologies are rapidly evolving. The software underlying the economy's hardware is rapidly being rewritten.

Examples include open source production of goods and services (like Wikipedia). and the astonishing availability of knowledge on google. The real significance of social networks or twitter may turn out to be they evolve into new ways of coordination, cooperation and participation.

Some actual technologies become social technologies, if only by displacement. Television is often a social technology for passivity and passing time.

Religion is a vastly important social technology. But it has come to play a much less central role in the west, which creates many social gaps.

31. We need new and better social technologies for our current concepts of income and wealth.

We need an institutional "land reform" to make the new economy work. People should have some assets as a matter of membership or citizenship. But we need strong incentives and ways to control defectors, or the system will rapidly lose all legitimacy.

That means proportionately less will flow through market exchanges. But this does not mean more should flow through government. This does not mean a "third way" 1990s style, with a mix of market and government solutions. It means something new, a rethink of assets and how we measure them.

32. We need new social technologies for the 21st century to help people flourish and stretch their skills.

We need new incentives for people to acquire skills and education and stimulation. Some may not be interested, or want to engage with anything. We need to understand people's preferences and choices when they have freedom much better.

33. We need to orient the system away from more provision of goods and services and towards more provision of stimulation and purpose and meaning.

We also need a more concrete sense of what the economy should deliver - the boundary of utopia. We need to focus on what it means for daily life. What would an ideal day be like? And how do we get more of them?

And that will do for today! The coffee is drunk, the table is vacated and I am about to press upload at home. I will gradually refine, rewrite and hone this in the future.

Friday, October 21, 2011

The future arrives

This is a fascinating look at what Apple had in mind more than 20 years ago. The article links to an Apple concept video, "Knowledge Navigator", of a university professor organizing his day in about 2011. It was produced in 1987.

He uses a tablet computer with an assistant like the new Siri, video chat like FaceTime or Skype, and knowledge search on the Internet.

It shows how long ideas can germinate before the underlying technology catches up. Apple was too early bringing out its Newton handheld device in the 1990s, which became a bit of a joke.

Nobody is laughing at the iPad or iPhone.

The video is also fascinating as an example of how we think about and imagine future alternatives for daily life. It was so far- sighted, but also so traditional. A professor in nice house thinks about his class later that day. Very ordinary.

AI may be the next major wave which sweeps through technology - again, after previous bursts of enthusiasm for it decades ago. I remember a huge burst of interest and apprehension about the Japanese "Fifth Generation" computing project in the early 1980s, which went nowhere at the time. It would seem strange to those researchers back then that we would be excited by a software assistant that can send a text message for you. But we are.

IBM's Watson project is another recent example where a computer can now interact with people - in this case, play tv's jeopardy game.

The technology may now be maturing enough to make daily AI viable, with potentially huge impact on the workplace and the economy. Siri already seems to be the first AI product to be a major mass market hit. I haven't used it yet myself. But it feels as if it may be a rubicon of sorts.

Change of Pace Photo

The TransAmerica building in San Francisco and the moon, last week.

Monday, October 17, 2011

Purpose - or engagement?

I argued here that the problem with the economy was not shortage of money or goods, but shortage of purpose. Maybe that needs to be rephrased as a shortage of engagement? Or of the right kind of stimulation and novely?

Satiation and satisfaction

I'm discussing Tibor Scitovsky's book The Joyless Economy: The Psychology of Human Satisfaction.

One of the most crucial questions to ask about our current economic situation is whether many of the needs we have can be satiated. When is enough enough?

Can these desires be satiated? One important question is whether people tended to focus on their position in the pecking order, or positional goods which by definition cannot be spread wider or satiated completely.

Scitovsky doubts this. He thinks that many kinds of desire for status and accomplishment can be satisfied, so long as it does not mean people just want to rank themselves on a one-dimensional scale. There can be many different sources of achievement and accomplishment that can bring recognition and respect from others, covering all sorts of micro-niches:


Thanks to the great multiplicity possible in such aims and the standards set for them, full status satisfaction in such form is within many people's reach. By contrast, when people seek status not in other people's recognition of their specific accomplishments, but in a general token, like income, which is supposed to express the value society places on their services, then status becomes a matter of ranking on a one-dimensional scale, and the seeking of status becomes a zero-sum game.

The big problem is we have increased the channels of stimulation, but not so much the content or the quality.


Technical progress, by freeing more and more time from work, increases man's demand for stimulation. The economy has responded by increasing our means of access to sources of stimulation, but it has failed to increase their stimulus content. For the source of stimulation and satisfaction is not the TV screen, the automobile, or the store, but the novelty to which they give access.

In many ways this is an optimistic thought. There is much scope for economic advancement and growth simply by increasing the quality and amount of genuine novelty and stimulation.

Fashion, of course, has always thrived on the right amount of novelty and proved endlessly fascinating to many women as a result, and Scitovsky sees much to praise.


Fashion mongering may seem wasteful, but the human need for variety and novelty is as legitimate as the desire to survive.

Formulaic approaches quickly get tired, however. Hollywood and the television sitcom need to come up with genuinely new stimulation and novelty, or people get bored.

Criticism of the American Way of Life

One cautionary note about Scitovsky's book, though. The psychological framework in the first part is immensely convincing. It just seems intuitively plausible. But he then goes on to a criticism of many aspects of American culture. Some of these sound dated, like his arguments that Americans do not bother to shop on the basis of price, or never complain in restaurants. Others sound to a contemporary ear a little crankily liberal. He blames America's puritan inheritance for its interest in bland food and suspicion of enjoyment.

One irate reviewer on Amazon says the whole book is a Carter-era throwback.

It isn't. It has much to say about the future. But the fact the later sections of the book are more controversial ought not to invalidate the earlier sections.

I am not wholly sure how much to rely on the psychology in a book which, after all, is more than thirty years old. I will have to look into contemporary takes on this. But what I find invigorating about this book is it unites several stands in my overall quest here.

It links time and bandwidth to larger changes in the economy and its evolution through different stages. It gives some sense of purpose and desire - people want the right balance of stimulation and comfort - and explains why. It suggests new pathways for the economy to develop, both new ways to find complexity and stimulation, new needs - more education to appreciate more kinds of stimulus - and new needs to keep stimulation calibrated at the right level. It explains some of the attraction of the arts - the right degree of bewildering novelty.

And it also explains what happens when people do not have the skills or education to benefit from these changes. People take refuge in low-skill, low-engagement activities like shopping or tv. Whenever there is a riot on tv, the reporters always seem to find youths who claim "there's nothing to do round here".

The future is new forms of flow.

The 53%

Here's the other side of the debate - "I am the 53%" (based on the percentage of the population who pay federal income taxes.) People who have worked hard and sacrificed and taken responsibility for themselves do not see why they should support hippy anarchists with their taxes.

It comes down to the old issue of the deserving versus undeserving poor. There is limited appetite in much of society to support those who did not act responsibily.

The range of people's satisfactions

I was just discussing Tibor Scitovsky's book The Joyless Economy: The Psychology of Human Satisfaction. He argues that the right level of stimulation is critical for both personal and societal satisfaction.

So how does the economy fit into this psychological analysis? Of course, the market economic system is useful because it helps ensure reciprocity in trying to satisfy people's wants through production of goods and services.


For the need to pay a market price makes the recipient of a satisfaction perform a service in exchange or otherwise contribute to the satisfactions of others ... reciprocity in the rendering and receiving of satisfactions is the main function of the economic system.

But so much lies outside the market economy - vast areas of activity which matter to people's satisfaction, but to which economists pay little attention.

Scitovsky distinguishes six main sources of satisfaction in all. We already talked about the largest one- mutual stimulation and pleasure in one another's company.

One of the other main sources of stimulation is work itself. But we do not account very well for it, Scitovsky says, neither its negative nor its positive aspects.


Those effects of work are completely missing from the economist's numerical index of economic welfare: the net national income or net national product is not net of the disutility of the labor that went into producing it, nor does it include the satisfactions of labor, if this is what work gives rise to. ...Modern economists have nothing to say on whether work is pleasant or unpleasant. "

This is just one more of the dozens of reasons why GDP measures are incomplete or misleading.

Economic quantification is attractive and useful, but we must not let it seduce us into attaching more significance to the measure of quantity and to what is quantified than they deserve. The national income is, at the very best, an index of economic welfare, and economic welfare is a very small part and often a very poor indicator of human welfare.

In fact, how much we enjoy work has immense consequences. For example, it helps explain why working hours have often got longer, not shorter, as incomes rise - contrary to the expectations of many people in the 1970s. A rise in wages raises the price of leisure, because the cost of spending an hour of leisure rather than an extra hour working becomes higher. So there tends to be a substitution effect away from leisure, unless as income rises you want to spend more of your income on it.


When work and leisure are considered the only uses of time, and both are assumed to be pleasant, there can be no income effect, because money cannot buy more time. The substitution effect, therefore, would be the only effect of the rise in earnings, which would then necessarily lead to a lengthening of the work week.

Increased specialization can often increase the boredom and monotony of work, however, so it gets complicated. Much depends on the nature of work itself. .

Non-market goods and services - housekeeping, cooking, cleaning, looking after relatives, advice to friends - are also an immense area of activity which give people satisfaction, even if they do not flow through a market transaction.

He also identifies two other categories - self-sufficient satisfactions and externalities.

The takeaway from all this is that our standard economic way of looking at things only sees a small part of the wider range of people's satisfactions. But those other stimulations and satisfactions become steadily more important, as comfort levels rise to a level where basic wants are satisfied.

"We are the 99%"

I was reading the website for "we are the 99%" earlier. Much of it is genuinely sad and moving. Many people are struggling, often through no fault of their own.

I think this general sense that things have gone very wrong even for the most sympathetic, deserving cases underlies much of the sympathy that many people feel for the idea of protesting the state of the economy. If you are young and have no job and debts, no wonder you are frustrated.

That is prior to any more fringe or anarchist tendencies there may be in specific places like Zucotti Square. In fact, I wonder whether some fringe movements will get a free ride on much more mainstream sympathies.

Based on a subjective reading , it appears the two biggest problems on the site are education costs and medical bills.

  • Education costs: the spiraling cost of education and the crushing burden of student dent associated with it. It just seems wrong that education costs have got so out of control. And the fact that student debt almost uniquely cannot be discharged in bankruptcy seems outright crazy
  • Medical bills: The lack of insurance or problems with insurance underlie the broader failure of the medical system. America has a crazy halfway house between public and private provision, which delivers out of control medical costs. Medical bills are strangling companies, federal and state fiscal policy, and wage growth

I don't think anyone can reasonably deny that there are serious problems in these sectors. But is it really the fault of the plutocratic 1%? Both sectors are heavily regulated or involved with government. Universities are renowned as fortresses of liberalism, or even outright leftism. Education is filled with union influence.

And Medicare and Medicaid dominate much of medicine.

That said, the existing US private medical system simply does not work, whatever some conservatives say. It is deeply inefficient. It encourages competition not on the basis of innovation or quality, but removing people from the insurance pool. It is riddled with excessive tests and defensive medicine. partly because liberal trial lawyers function in much the same way as tape worms on the larger organism.

Still, looking at the overall site, it does not seem to be a protest about inequality as such, despite the title, so much as distress that some absolute standards are harder and harder to maintain. The middle class and educated young are slipping.

"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?