Life is a series of trade-offs

So let’s be transparent and consistent in how we make them.

It is the mantra of economics that there is no such thing as a free lunch. Even if you could eat exactly what you wanted for nothing, you would still have to give up the time it took to eat. And chances are, you would put on quite a bit of weight by eating for free. One of my main happiness tips is to listen to more music. This felt like a free lunch until a colleague told me that they had taken my advice and was enjoying a Spotify playlist so much that they missed their tube stop on the way home… by six stops in fact. They had to turn around and got home a lot later than they had planned.

When we use our time, money, or attention in one way, by definition, we cannot use it another way. There is an opportunity cost to every choice. This term does illustrate framing in the dismal science: it could just as easily be described as benefits foregone. In any case, even the richest person in the world cannot have everything he wants (it’s likely to be a man for a while yet), and he must still decide what to spend his time doing. Life is a series of trade-offs for all of us. The benefits foregone can feel especially stark and challenging at the policy level when there are so many policies that would improve overall goodness to choose from.

The issue is then the degree to which those trade-offs are (or should be) made transparent. In the absence of robust evidence to suggest otherwise, more transparency should be preferred to less. Across a range of decision contexts, we typically witness better outcomes with more transparency than with less. We observe more volunteering and charitable giving when we can observe who’s behaving well. We observe less cheating and corruption when we can observe who’s behaving badly. So, we should seek, so far as possible, to flush out the trade-offs that are being made between different attributes of value in decisions made at various levels by individuals and institutions.

Moreover, the trade-offs made in one decision context should be consistent with those made in another. Consider the case of healthcare in the UK, where the value of new medicines is expressed in terms of the number of quality-adjusted life years (QALYs) generated. The public purse is considered deep enough to fund interventions that have a cost-per-QALY of up to around £30,000. It would be bad policy if that threshold could be increased by the vagaries of any one decision context, where pressure might be applied by an advocacy group pleading a “special case”, for instance. Once we have established the social value of health gains, we should stick to it, at least until such time as technology and/or public preferences change.

This is not to say that context should never be considered as relevant. The social value of a QALY is somewhere around £50,000 for treatments in the last couple of years of someone’s life. This is justified on the grounds that we would all value a given QALY gain more highly when we have very little health and time remaining. There are serious questions about the robustness of this assumption, and also about whether the benefits foregone elsewhere in healthcare are worth it. But at least the end-of-life context is dealt with transparently, and somewhat consistently, thus making it clear where it fits within the general rule.

Just because context matters to human behaviour does not mean that it ought to matter that often in policymaking. Philosophers are fond of coming up with exceptions to rules. They are often very clever exceptions, but sometimes contrived. Even when they’re not contrived, they are often infrequent and/or not very impactful. Only frequent and/or impactful violations of a rule should lead to the rule being dropped. Special cases are rarely a good basis upon which to make rules for decision-making in general. To be clear, I am referring here to the rules to be used in applied and practical policy settings. In the philosophical debates in the academy, it is probably better for the advancement of science if rules are dropped with greater alacrity. But by and large, policymaking at any given moment in time would be better if it was not so buffeted around by the winds of context.

So, whether you’re working out how to spend your own time and money, or doing so on behalf of other people, I suggest that you are always transparent and mostly consistent in how you do that. Economics may be the dismal science of death and taxes, but it can also be liberating too. When you start to flush out the value of the trade-offs you make in how you use your scarce resources (your time and money, attention and energy), you can begin using them in ways that generate more happiness for yourself and those around you. There’s nowt dismal in that.