On Ethics and Economics

146 Pages·1991·15.37 MB·English

by  Amartya Sen

ON ETHICS
& ECONOMIC
AMARTYA SEN
On Ethics and Economics
Copyrighted material
The Royer Lectures
Series Editor: John M. Letiche
University of California, Berkeley
On Ethics and Economics
Amartya Sen
Blackwell
Publishing
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©1987, 1988 by Amartya Sen
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First published 1987
First published in paperback 1988
Reprinted 1990, 1991, 1992, 1994, 1995, 1996, 1997,
1998, 1999 (twice), 2002, 2003, 2004
Library of Congress Cataloging- in-Publication Data
-
Sen, Amartya
On ethics and economics.
1. Economics—Moral and ethical aspects
L
174'.4 HB72
ISBN 0-631-16401 -4 (pbk)
A catalogue record for this title is available from the British Library.
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To Ken Arrow
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Contents
Foreword by John M. Letiche ix(cid:9) (cid:9)(cid:9)(cid:9)(cid:9)
Preface xv(cid:9) (cid:9)(cid:9)(cid:9)(cid:9)(cid:9)
1 Economic Behaviour and Moral Sentiments (cid:9) 1
Two Origins 2 (cid:9)
Achievements and Weakness (cid:9) 7
Economic Behaviour and Rationality (cid:9) 10
Rationality as Consistency (cid:9) 12
Self-interest and Rational Behaviour (cid:9) 15
Adam Smith and Self-interest (cid:9) 22
2 Economic Judgements and Moral Philosophy (cid:9) 29
Interpersonal Comparisons of Utility (cid:9) 30
Pareto Optimality and Economic Efficiency (cid:9) 31
Utility, Pareto Optimality and Welfarism (cid:9) 38
Well-being and Agency (cid:9) 40
Valuing and Value (cid:9) 41
Agency and Well-being: Distinction and
Interdependence (cid:9) 43
Utility and Well-being (cid:9) 45
Achievements, Freedom and Rights (cid:9) 47
Self-interest and Welfare Economics (cid:9) 51
Rights and Freedom (cid:9) 56
3 Freedom and Consequences (cid:9) 58
Well-being, Agency and Freedom (cid:9) 58
Plurality and Evaluation (cid:9) 61
Incompleteness and Overcompleteness (cid:9) 65
Copyrighted material
Contents
Conflicts and Impasse (cid:9) 68
Rights and Consequence (cid:9) 70
Consequential Assessment and Deontology (cid:9) 74
Ethics and Economics (cid:9) 78
Welfare, Goals and Choices (cid:9) 80
Conduct, Ethics and Economics (cid:9) 88
References (cid:9) 90
Author index (cid:9) 123
Subject index (cid:9) 129
Foreword
This small book is a 'treasure-chest' for economists,
philosophers and political scientists interested in the
relations between contemporary economics and moral
philosophy. Written in a clear. crisp and stimulating style,
Professor Amartya Sen provides more than a terse
synthesis of the relevant literature on ethics and economics.
In the sense of being substantially new, he shows the
contributions that general equilibrium economics can make
to the study of moral philosophy; the contributions that
moral philosophy and welfare economics can make to
mainstream economics; and the harm that the misuse of the
assumption of self-interested behaviour has done to the
quality of economic analysis.
Sen demonstrates that there has occurred a serious
distancing between economics and ethics which has brought
about one of the major deficiencies of contemporary
economic theory. As he persuasively argues. since the
actual behaviour of human beings is affected by ethical
considerations, and influencing human conduct is a central
aspect of ethics, welfare-economic considerations must be
allowed to have some impact on actual behaviour and,
accordingly, must be relevant for modern logistic economics.
But while logistic economics has had an . influence on
welfare economics, Sen points out that welfare economics
has had virtually n.o influence on logistic economics.
He shows that both the ethics-related origins and the
logistic-based origins of economics have cogency of their
Copyrighted material
Foreword
own. The logistic approach of modern economics, he
emphasizes, has often been extremely productive, providing
better understanding of the nature of social interdependence
and illuminating practical problems precisely because of
extensive use of the logistic approach. The development of
formal 'general equilibrium theory' is a case in point, and
Sen illustrates its application to critical problems of hunger
and famine.
The foundation of Seri's arguments rests, however, in the
view that economics, as it has emerged, can be made more
productive by paying greater and more explicit attention to
the ethical considerations that shape human behaviour and
judgment. With illuminating brevity, he analyses certain
departures from standard behavioural assumptions of
economic theory that may arise from distinct ethical
considerations. They may arise from intrinsic evaluations
and from instrumental ones, either individually or from the
group. Sen draws attention to the various causes from
which they may arise, causes that give credence to the
instrumental role of contemporary social behaviour. Such
behaviour may go against each person's apparently
dominant strategy, but group-rationality conditions of a
specified type often influence actual behaviour without
involving any defect in people's knowledge. In consequence,
Sen discusses the ways in which welfare economics can be
enriched by paying more attention to ethics; how des-
criptive economics, prognosis, and policy can be improved
by making more room for welfare economics in the
determination of individual and group behaviour; and how
the study of ethics can, in turn, benefit from a closer
contact with economics.
Understandably, though Sen is critical of economics as it
stands, he does not think that the problems raised have
been adequately dealt with in the ethical literature.
Therefore, it is not a problem of merely incorporating the