8 February, 2017
Putting a Price on Consciousness: do the Benefits Square with the Costs?

In the United States, president Ronald Reagan first proposed the cost-benefit calculus for policy efficacy. Drawing inspiration from Benjamin Franklin, who famously advised us all to put the good in one column and the bad in another, creating the proto-pro/con table, the Reagan White House went to work determining net positive or negative valence. Today, the modern version is Value of Statistical Life (VSL) which aggregates our understandings human decisions—say, an association between risk and pay—to settle on a total value of life. No one would relinquish their life for $9 million, roughly the current VSL1, but the average person would pay $90 to eliminate a 1 in 100,000 chance of death.

In Happiness and the Law, John Bronsteen, Christopher Buccafusco, and Jonathan Masur attempt to improve this valuing process with findings from psychology. If prison is less severe than we might assume, with some who acclimate, and time after prison more so, with limited labour market access and a perilous process of reintegration, then the difference between 5 and 10 years incarcerated is not so vast. The express purpose of this book is to recalibrate Cost-Benefit Analysis with considerations for well-being. Their proposal, perhaps unsurprisingly, is Well-Being Analysis, and the distinction between the former and latter is nuanced. Generally, WBA is the conversion of monetary value into units of well-being—an inversion of VSL.

The central tenet of Happiness and the Law is simple: the human mind responds to apparently objective variables—one more dollar, one fewer migraine—in evidently subjective ways. Deaton and Kahneman’s concave curve of happiness, showing that gains from wealth taper off after around $70,000 in income, was an early brush stroke on this canvas; various other studies provided detail. Habituation, the process by which we become accustomed to a new circumstance and one oft-studied component of life satisfaction, is particularly salient: where and when we habituate, and where and when we do not, are important considerations in any proposal. Moreover, some studies suggest that we suffer from forecasting errors, failing to account for habituation and thus exaggerating either pleasure or pain.

This is the crux of Happiness and the Law. When a person pays for something, be it reduction of risk or the production of happiness, they are making a prediction—that this thing will have the intended effect on their life. If Cost-Benefit Analysis hinges upon willingness to pay, and these predictions are routinely off the mark, then the entire metric collapses.

A story about Angus Deaton, a winner of the Nobel Memorial Prize in Economics services this idea. Daniel Kahneman, a fellow Princetonian, explained in a recent conference that Deaton hates the concept of a cigarette tax on the grounds that the government is telling the poor—who disproportionately smoke—how to weight their future in the present. It is an imposed paternalist discount rate. Perhaps they are intentionally or rationally discounting what is an uncertain or undesirable future, Deaton might say. More relevant here is that without including relevant studies, a proper discount rate will remain hidden—to all parties involved.

The paths of planes, according one study, play a role in depression in people living below. An interesting facet of the data, however, revealed that above a certain level, noise failed to predict increased depression: a healthy resident effect wherein only the most robust stick around. Much like the healthy worker effect, when the sick select out of a sample, that sampling differs from the general population. Data also shows that younger people are less sensitive to noise, while older people are simply less bothered by it. Insights like this show the multifarious effects of any given development.

A plan to shift flight paths, affecting new neighbourhoods, might appear at first strictly indifferent to the existing paths—one simply changes the pattern of planes far above. Without understanding the full effects of two policies, we are Buridan’s Ass, presented with identical options. With Cost-Benefit Analysis, equal populations will be equally impacted, having equal willingness to pay to remove flights above. What if one population is younger, less sensitive to disturbances, or if new flight paths will force some from their homes—as per the healthy resident effect. Rather than picking carelessly, we can apply findings like this in order to differentiate—and choose.

Regardless, the authors of Happiness and the Law put forth an important meta-proposition. “Sometimes a new discovery in social science reveals things about human life that weren’t known before. When that happens, it may show that the law hasn’t been interacting with people’s lives in the way that was assumed.” We can include planning and building regulation under that legal umbrella. What Amartya Sen calls “sledgehammer reasoning”—or reasoning free from consequences—might seem appealing to urban planners and designers, to say nothing of the developers operating within planning policy, but revisiting best practices is for the best2. As Cass Sunstein relays in a related book, ‘there are only two alternatives: issuing the regulation and not issuing the regulation’. The science of conscious cities brings needed detail to the debate of this Hamletian question—to regulate or not to regulate.


1 In the US, values vary year-by-year, with the VSL for 2013 set at $9.1 million, $9.3 million in 2014, and $9.4 million in 2015. A general inflation of life’s face value might undermine the measure.
2 The identikit planner in this, the great sledgehammer of 20th-century urbanism was surely Robert Moses, who saw point A and Point B as the only important points of consideration.

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