Tyler Cowen — Which happiness results are robust?

Tyler Cowen comments on a paper, and Barkley Rosser, who is not an author of the paper but is interested in the issues, responds in the comments. (Ignore the trolls in the comments.)

I agree with Barkley Rosser. Social phenomena are difficult to measure and subjectivity greatly complicates this. However, it doesn't invalidate all models any more than similar issues invalidate modeling in economics.

Where problems arise lies not so much in modeling and modeling decisions as in misinterpreting the implications of a model owing to unstated presumptions and hidden assumptions, or exceeding scope and confusing scale. Of course, choice of parameters, operational definition, etc., although there are many issues involved that can invalidate a model. Inadequate measurement protocol also can do so. 

Formal modeling complements conceptual modeling, which tend to be fuzzier. But conceptual modeling is also needed to encompass the full scope and deal with issues of scale, for example, by avoiding fallacies of composition. Moreover, formal modeling focuses on quantity, while conceptual modeling is also able to handle quality. Quality is often difficult to quantity.

Cognitive-affective bias and ideology also have to be considered, as some point out in the comments.

This discussion is particularly important from the economic point of view in that economics has traditionally been about "utility," which is a code word for satisfaction, with satisfaction related to happiness. Bentham's Utilitarianism is about not only individual good (micro scale), but also "the greater good of the greatest number" (macro scale).

Marginal Revolution
Which happiness results are robust?
Tyler Cowen | Holbert C. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center

J. Barkley Rosser — The Overhyping of _The Happiness Curve: Why Life Gets Bettere After 50_

Jonathan Rauch of the Brookings Institution has just published The Happiness Curve: Why Life Gets Better After 50, which seems to be getting a major media push from a bunch of completely uncritical reviewers and commenters, some of whom really should know better. It is not that this book is totally wrong or bad, but that it way overstates its case, cherry picking data and the views of people he has interviewed, with only the slightest of caveats.

A typical sophistic argument runs from presuppositions (hidden assumptions) to stated assumptions and then reasoning to conclusions "proving" the presuppositions.

Actually, if Aristotle is correct in Nichomachean Ethics, one should get happier as one ages as along as one also gets wiser. For genuine happiness (Greek: εὐδαιμονία)  is a by-product of human excellence (Greek: ἀρετή), where excellence is defined in terms of unfolding one's potential as a human being and an individual. But apparently that is not what the book is about.

Econospeak
The Overhyping of _The Happiness Curve: Why Life Gets Bettere After 50_
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

VOX.eu — Origins of happiness: Evidence and policy implications

Understanding the key determinants of people’s life satisfaction will suggest policies for how best to reduce misery and promote wellbeing. This column discusses evidence from survey data on Australia, Britain, Germany, and the US which indicate that the things that matter most are people’s social relationships and their mental and physical health; and that the best predictor of an adult’s life satisfaction is their emotional health as a child. The authors call for a new focus for public policy: not ‘wealth creation’ but ‘wellbeing creation’.

Bringing down Bentham's utility calculus based on material satisfaction. that can be measured in terms of economics rather than psychological well-being.

VOX.eu
Origins of happiness: Evidence and policy implications
Andrew Clark, Sarah Fleche, Richard Layard, Nattavudh Powdthavee, George Ward

Terry Flynn — top economists fail basic literature review shock horror

Promoted from the comments here at MNE on "Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference." by Daniel J. Benjamin, Miles S. Kimball, Ori Heffetz, and Nichole Szembrot.

Terry Flynn, PhD
top economists fail basic literature review shock horror

Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference — Daniel J. Benjamin, Miles S. Kimball, Ori Heffetz, and Nichole Szembrot

More Weekend reading.

Abstract

This paper proposes foundations and a methodology for survey-based tracking of well-being. First, we develop a theory in which utility depends on “fundamental aspects” of well-being, measurable with surveys. Second, drawing from psychologists, philosophers, and economists, we compile a comprehensive list of such aspects. Third, we demonstrate our proposed method for estimating the aspects’ relative marginal utilities—a necessary input for constructing an individual-level well-being index—by asking ~4,600 U.S. survey respondents to state their preference between pairs of aspect bundles. We estimate high relative marginal utilities for aspects related to family, health, security, values, freedom, happiness, and life satisfaction. 

Keywords: happiness, life satisfaction, subjective well-being, stated preference, well-being index

NCBI
Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference
Daniel J. Benjamin, Miles S. Kimball, Ori Heffetz, and Nichole Szembrot

Noah Smith — "The Case For Mindless Economics", 10 years on

This is a mindless argument. There is no rule about choosing assumption for modeling other than the usefulness of the model. A model might a heuristic or a thought experiment not designed or represented as realistic. However, models that are offered as being realistic face the test of evidence.

The best explanation is the one that satisfies the traditional four criteria — consistency, correspondence, simplicity, and usefulness — more fully than others.

Often there is not a best explanation in that meets all criteria, but any model that claims to be representational of reality must pass the correspondence test in terms of evidence in terms of what speaks for it and what speaks against it.

At the same time, it is possible that the currently best explanation, even though it is not terribly representation of reality, might be the best explanation available given the criteria, that it, it is consistent and relatively simple. It may be that it's just not very useful to rely on predictively.

Anyway, Noah sets forth the issues.

However, if a highly predictable model were ever generated in finance, that would be the end of a lot of financial transaction unless fools were taking the other side of the trade.

Noahpinion
"The Case For Mindless Economics", 10 years on
Noah Smith | Assistant Professor of Finance, Stony Brook University

Peter Dorman — Utility and Happiness

The question, after all, is whether the economic choices people make maximize their well-being. To test this we go out and gather various independent measures of well-being. When we find out they diverge in significant ways from revealed preferences, it is weird to use this as a demonstration that the evidence can’t really show what it seems to show, since our hypothesis about utility maximization has to be right. And for “weird” you can also substitute “ideological”.

Rational choice based on utility maximization is essentially the same as Ludwig von Mises axion of human action. It's a priori and unfalsifiable.

Among logicians, the economic definition of utility is called a circular definition. It provides no useful information.

From Wikipedia/Utility:

Cambridge economist Joan Robinson famously criticized utility for being a circular concept: "Utility is the quality in commodities that makes individuals want to buy them, and the fact that individuals want to buy commodities shows that they have utility"[9]:48 Robinson also pointed out that because the theory assumes that preferences are fixed this means that utility is not a testable assumption. This is because if we take changes in peoples' behavior in relation to a change in prices or a change in the underlying budget constraint we can never be sure to what extent the change in behavior was due to the change in price or budget constraint and how much was due to a change in preferences.[10] This criticism is similar to that of the philosopher Hans Albert who argued that the ceteris paribus conditions on which the marginalist theory of demand rested on rendered the theory itself an empty tautology and completely closed to experimental testing.[11] In essence, demand and supply curve (theoretical line of quantity of a product which would have been offered or requested for given price) is purely ontological and could never been demonstrated empirically. 

Another criticism comes from the assertion that neither cardinal nor ordinary utility is empirically observable in the real world. In the case of cardinal utility it is impossible to measure the level of satisfaction "quantitatively" when someone consumes or purchases an apple. In case of ordinal utility, it is impossible to determine what choices were made when someone purchases, for example, an orange. Any act would involve preference over a vast set of choices (such as apple, orange juice, other vegetable, vitamin C tablets, exercise, not purchasing, etc.).[12][13][14] 

An evolutionary psychology perspective is that utility may be better viewed as due to preferences that maximized evolutionary fitness in the ancestral environment but not necessarily in the current one.[15]

Rational choice based on maximizing utility simply states that people choose based on what motivates them to choose but gives no empirical or operational way of determining this, which is required in technical definition in the sciences. It's like the Latin terms  medieval philosophy and medicine that were meant to impress rather than inform, which were roundly satirized after the Renaissance. Conventional economics is stuck in that rut, and conventional economists are too stuck other themselves to realize that look like Scholastic theologians and philosophers. The new Latin used to impress while concealing vacuity is math.

Of course, it is possible to construct formal models of cardinal and ordinal utility as neoclassical economists and game theorists have done, but the question is whether such models are representational, and that requires hypothesis formulation and testing, which in turn requires interpreting the model wrt to what is modeled. That's what technical definition does. Without anchoring a model to what it purportedly represents, it is unfalsifiable.

The Empirical Evidence Against Utility Maximization
ABSTRACT
Current Economics Textbooks and Economists justify a theory of consumer behavior based on utility maximization on a priori grounds. This methodology follows Lionel Robbins’ idea that economic theory is based on logical deduction from postulates which are “simple and indisputable facts of experience.” Strong evidence has emerged from many different lines of research that these “simple and indisputable facts of experience” are contradicted by human behavior. In this article, we summarize some of main contradictions between predictions of utility theory and actual human behavior. Efforts to resolve these contradictions continue to be made within orthodox frameworks, but it appears likely that a paradigm shift is required.

In addition, a model that purports to be causal must demonstrate a basis of causality in terms of some transmission mechanism.  Utility theory says no more than that rational choice is motivated but not how it motivated, which is the issue. Saying that rational choice is motivated just distinguishes the meaning of "rational choice" from say, a whim. It's about the model and not what is modeled.

Econospeak
Utility and Happiness
Peter Dorman | Professor of Economics, Evergreen Stat College

K. A. Hamid and A. Duraiappah — The GDP-Wellbeing Gap

The link between economic growth and human wellbeing seems obvious. Indeed, as measured by gross domestic product, economic growth is widely viewed as the ultimate development objective. But it is time to rethink this approach. 

In fact, there is a rising disconnect between countries’ per capita GDP and their citizens’ wellbeing, as rapid output growth exacerbates health challenges and erodes environmental conditions. Given this, people increasingly value non-material wealth just as highly as monetary wealth, if not more.

But persuading policymakers and politicians of GDP’s limitations is no easy feat. After all, it is far simpler to defend a well-understood, long-accepted framework than it is to champion a new worldview.

Again, quantity versus quality.

Project Syndicate
The GDP-Wellbeing Gap
Zakri Abdul Hamid, a member of the UN Secretary-General’s Scientific Advisory Board, Science Adviser to the Prime Minister of Malaysia, and co-chair of MIGHT, and Anantha Duraiappah, Executive Director of the International Human Dimensions Program on Global Environmental Change, hosted by UN University in Bonn

David Ruccio — Political economy of happiness

My colleague Benjamin Radcliff, author of the Political Economy of Human Happiness, argues happier people live in countries with strong social safety nets and labor unions. 

The relationship could not be stronger or clearer: However much it may pain conservatives to hear it, the “nanny state,” as they disparagingly call it, works. Across the Western world, the quality of human life increases as the size of the state increases. It turns out that having a “nanny” makes life better for people. This is borne out by the U.N. 2013 “World Happiness Report,” which found Denmark, Norway, Switzerland, the Netherlands and Sweden the top five happiest nations.

Conservatives may be equally troubled to learn that labor unions have a similar effect. Not only are workers who belong to unions happier, but the overall rate of happiness for everyone — members and nonmembers — increases dramatically as the percentage of workers who belong to unions grows, reflecting the louder political voice that organization gives to ordinary citizens. 

Take it a step further and we can conclude that people will be able to have richer and more rewarding lives when the social surplus is used to support the welfare of the majority of the population and when workers have a democratic say in how that surplus is produced.

Political economy of happiness

David Ruccio | Professor of Economics, University of Notre Dame

Chris Dillow — Happiness Vs Options

Utility is not the same as happiness.

In Book I of Nichomachean Ethics, Aristotle asserts that every rational agent acts for an end and humans generally agree that this end is happiness. He goes on to observe that people disagree over what happiness is. He then consider various options, including what we now call utility, and rejects them as insufficient to meet his criteria because they engage only a partial aspect of human capacity.

Aristotle then elaborates his own view: While happiness is desired as an end, that is, for itself and not for anything else, it cannot be sought directly because it is a byproduct of excellence in living, that is, unfolding  human potential over the course of one's life by perfecting one's inherent capacity as human being, as well as one's individual talents.

The view of perennial wisdom is similar, but it includes only Aristotle's first criterion, that of perfecting one's capacity as a human being by realizing the full potential of consciousness, the outcome of which the abiding happiness of transcendental bliss. It is said to be "transcendental" because it is of the nature of consciousness and is not dependent on mind, body, or environment.

This view was expressed in a similar vein but more in terms of personal experience by Socrates in describing the method his teacher, the priestess Diotima, had taught him in the famous "ladder of love" passage in the dialogue called The Symposium  210a-212b.

Stumbling and Mumbling

Happiness Vs Options

Chris Dillow | Investors Chronicle (UK)

Buddhist monk declared world’s happiest man

As he grins serenely and his burgundy robes billow in the fresh Himalayan wind, it is not difficult to see why scientists declared Matthieu Ricard the happiest man they had ever tested.

The monk, molecular geneticist and confidant of the Dalai Lama, is passionately setting out why meditation can alter the brain and improve people’s happiness in the same way that lifting weights puts on muscle.

“It’s a wonderful area of research because it shows that meditation is not just blissing out under a mango tree but it completely changes your brain and therefore changes what you are,” the Frenchman told AFP.

Ricard, a globe-trotting polymath who left everything behind to become a Tibetan Buddhist in a Himalayan hermitage, says anyone can be happy if they only train their brain.

Neuroscientist Richard Davidson wired up Ricard’s skull with 256 sensors at the University of Wisconsin four years ago as part of research on hundreds of advanced practitioners of meditation.
The scans showed that when meditating on compassion,

Ricard’s brain produces a level of gamma waves — those linked to consciousness, attention, learning and memory — “never reported before in the neuroscience literature”, Davidson said.

The scans also showed excessive activity in his brain’s left prefrontal cortex compared to its right counterpart, giving him an abnormally large capacity for happiness and a reduced propensity towards negativity, researchers believe. 

Research into the phenomenon, known as “neuroplasticity”, is in its infancy and Ricard has been at the forefront of ground-breaking experiments along with other leading scientists across the world....

Much more of interest in the full article.

The Raw Story
Buddhist monk declared world’s happiest man
Agence France-Presse

Kind of undercuts the assumption of "pursuit of happiness" in terms of maximum utility based on measurement of units of consumption, and the scarcity thinking on which neoclassical economics is based.

Chris Dillow — Freedom, Well-Being & Capitalism

Food for thought for the philosophical.

Read it at Stumbling and Mumbling
Freedom, Well-Being & Capitalism (short)
Chris Dillow | Investors Chronicle

Marx called it "alienation." Alienation is also a sociological, existentialist and psychological term for a modern maladie.

Nic Marks — Measuring what matters: the Happy Planet Index 2012

Interesting project, only in the beginning stages. Check out the Happiness Index as it is constructed so far, as well as country rankings.

Read it at NEF — New Economics Foundation

Measuring what matters: the Happy Planet Index 2012
Nic Marks | 
Founder of the centre for well-being

Michael Norton — How to buy happiness

TEDxCambridge — Michael Norton: Money can buy happiness

Harvard Business School professor Michael Norton's counterintuitive talk challenges the way we think about money. If you think money can't buy happiness, maybe you're not spending it right.

TEDxEast Dr. Michael Norton: What to do with your money?

Dr. Michael Norton shares his research from behavioral economics about ways to spend money to increase happiness. Hint: it is not about buying more for ourselves...

Bhutan's happiness index goes global

...the then king of Bhutan Jigme Singye Wangchuc declared his aim of not just increasing the gross domestic product of his country, but also the "gross national happiness". That year, 1972, had the same numbers as the year 1729 when Bhutan was given its original governance code that declared: "if the government cannot create happiness for its people, there is no purpose for the government to exist." [emphasis added]

Read it at Asia Times Online
Bhutan's happiness index goes global
By Raja Murthy

This is turning into a big deal as a counter to neoliberalism. It's going to be a rising trend as the emerging nations step onto the stage and confront the neoliberal powers that be of the West. It is also a rising trend in the progressive element of Western societies.

World Happiness Report 2012: Scandinavian Countries Are Happiest On Earth

Denmark has taken the top spot on the United Nation's first ever World Happiness Report, followed by Finland, Norway and the Netherlands.

The 158-page report, published by Columbia University's Earth Institute, was commissioned for the United Nations Conference on Happiness on Monday in order to "review the state of happiness in the world today and show how the new science of happiness explains personal and national variations in happiness."

The rankings in the report were based on a number called the "life evaluation score," a measurement which takes into account a variety of factors including people's health, family and job security as well as social factors like political freedom and government corruption. It also looks at measurements from previous reports on happiness from the Gallup World Poll (GWP), the World Values Survey (WVS), the European Values Survey (EVS), and the European Social Survey (ESS).

In the introduction to the report, co-editors John Helliwell, Richard Layard and Jeffrey Sachs explain that the report aims in part to evaluate happiness based on a more comprehensive measurement system that can be used to inform policy-makers. As the Atlantic explains, previous reports on happiness have linked personal contentment to income, but that correlation has been challenged in recent years by economists who have argued that the happiness of a nation is determined by far more than its Gross National Product.

"While basic living standards are essential for happiness, after the baseline has been met happiness varies more with the quality of human relationship than with income," the report read. "Policy goals should include high employment and high-quality work; a strong community with high levels of trust and respect, which government can influence through inclusive participatory policies; improved physical and mental health; support of family life; and a decent education for all."

Read it at The Huffington Post
World Happiness Report 2012: Scandinavian Countries Are Happiest On Earth

Japanese economic minister — requirements for a new growth model

At the individual level we have seen unambiguous signs that the economic climate is contributing to discontent. Public sentiment has undergone a distinct shift, and we can be far less certain that a return to previous levels of economic growth can erase this dissatisfaction. Through the Occupy Wall Street movement and other demonstrations, we have heard not only a message of anger at the current situation, but the desire for something else; for something more. The search is underway, particularly among the young people of the world, for a new model of growth.

A fundamental assertion for any new growth model, that is, dynamic and inclusive growth, is that three basic elements -- the economy, society, and the environment -- are each integral and must all contribute to overall improvement. Such thinking is not superfluous or a luxury that can only be afforded during periods of strong economic performance. It is critical to recognize that we must seek to provide not only prosperity, but also leave behind a healthy social and natural environment for future generations.

The new growth model must, in other words, impart more than economic gain. In recent years governments around the world, including Japan, have quietly turned their attention to research into the question of happiness and quality of life. How do we measure, or even define, such a concept? What factors contribute? In an era when so many people face stark economic challenges, does it even matter? Fundamentally, how do we meet the needs of society, and of future generations?

Research and, one could argue, the message from demonstrations around the world, would indicate that the contribution made by society and the environment play an integral role in ensuring our citizens realize their personal goals. Such factors are therefore critical to both prosperity and sustainability; an important part of the new growth model.

Read it at The Huffington Post
The Search for a New Growth Model
Motohisa Furukawa | Japanese Economic Minister

Looks like at least some of the TPTB are listening to the voice of protest and getting the message that globalization is not working based on the model in terms of which it is being applied.

Furukawa also talks about introducing quality rather than only considering quantity, which is border on superstition for most mainstream economists.

He also introduces the economy, society, and the environment as macroeconomic trifecta requiring resolution instead of only the traditional growth of production, employment, and price stability.

Jeff Sachs picks up and runs with the economics of happiness

The concept of an economics of happiness rather than an economics of growth is picking up steam as Jeff Sachs throws his weight behind it.

It's a short post and cuts to the chase.

The mad pursuit of corporate profits is threatening us all. To be sure, we should support economic growth and development, but only in a broader context: one that promotes environmental sustainability and the values of compassion and honesty that are required for social trust. The search for happiness should not be confined to the beautiful mountain kingdom of Bhutan.

Read it all at Project Syndicate, The Economics of Happiness.

UPDATE: Jeffery Sachs at Huffington Post, America and the Pursuit of Happiness

Happiness Economics: A Report

Happiness is, in the end, a much more complicated concept than is income. It is also a more ambitious and laudable policy objective. The fact that it is seriously on the table reflects what a parameter-shifting moment it is in economics and in policy debates more generally. Indeed, at a time when so many of our public and political debates are divided and contentious, exploring new parameters and metrics that provide tools for evaluating the wellbeing of our citizens rather than emphasising the roots of their divide is a welcome change. For those of us studying the topic, this change provides great impetus to get the nascent science right.

Read the whole post at VOX: Happiness economics: Can we have an economy of wellbeing?

This is a good short summary of the state of the field and the principle issues. I suspect that this is going to be a burdgeoning field of research in the future and one in which economists will work cooperatively with other social scientist and social philosophers.

Thought for the Day: The Pursuit of Happiness

What is the American Dream?: Dueling dualities in the American tradition by James Gustave Speth at New Deal 2.0 examines a key philosophical and normative fundamental that is central to the conception of economics, especially as it relates to policy formulation. It is worth a read in entirety. I intend to address these issues in future posts, since it involves the philosophical foundations of economics.

The American Dream is summarized in the Declaration:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.

This is elaborated in the Constitution, and summarized in the Preamble:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

It is evident that both national security and a legal system based on order and justice are prerequisites preserving life and liberty, and that a democratically elected government responsible to the people is required to ensure that the benefits of good government are extended to all.

But the meaning of "the pursuit of happiness" is less clear. Speth lays out the different visions of happiness that have shaped political interpretation of it.

This is key for macroeconomics, especially, since it deals with government as a key economic factor. Accordingly, the conception of the purpose of both life and government underlie the assumptions of a macroeconomic theory, since macroeconomists shape their theories with an eye to policy formulation. Economic theories and especially macroeconomic theories can be viewed as providing the rationale for policy proposals that are normative through and through, in spite of being disguised as being entirely positive, e.g., neoliberalism.

Therefore, economics presupposes views of metaphysics as the study of what is, epistemology as the study of what we can know about what is, ethics as the study of what we ought to do about what is, and aesthetics as the study of how we should feel about what is, in addition to using science as an empirical method of testable explanation of how things stand and change state, and what this may imply causally.

Without a critical approach to economics through the philosophy of economics as a method for clarification of assumptions and other aspects of thought and language that remain implicit, economic reasoning is not only unclear but can also be misleading.

For example, there is growing interest in examining the assumption that growth is an adequate criterion for economic progress when it may not be related to happiness. Happiness is an ambiguous concept, so it must be clarified first. On examination, Speth shows, growth as an economic criterion is based on a conception of happiness that well-defined in terms of the survival of the fittest. Therefore, "growth" as a criterion can be determined by GDP change, regardless of distribution. This is the neoliberal assumption that has become conventional wisdom.

The problem with this is that the US has the largest GDP globally, but it is the lowest in many key social indicators that involve happiness considered as "utility," i.e., relative material satisfaction. On many measures, the US is not the happiest nation on earth, "American exceptionalism" notwithstanding.

A key concept of Modern Monetary Theory is public purpose. Certainly, this must relate to the founding documents, and in particular to key statements from those documents cited above.

How then should MMT define itself wrt "the pursuit of happiness"?

The neoliberal view is that maximum utility is the criterion of action, presuming homo economicus to be a rational actor pursuing self-interest and capable of being modeled econometrically in terms of a representative agent. This is presumed to be self-evident, but it is contradicted by research in both cognitive and social science, as well as having been dismissed as actually irrational by thinkers for millennia because it overlooks the inherently social nature of human beings.

Maximum utility is based on methodological individualism. It is called "methodological" because the assumption of self-interest as the guiding principle of human motivation is a methodological presumption. However, this presumption is often if not generally presumed to be ground in ontological individualism, that is, that individualism is constitutive of human nature. Some economists leave this implicit, while others, especially the Austrian School, make it explicit.

Others claim that such presumptions ignore society as a complex web of relationship, involving interdependence in modern societies, and now global society. This is called "community," and it is the meaning of "fraternity," in the Enlightenment political ideal of "liberty, equality and fraternity." Now "fraternity" is called "solidarity in Europe.

Modern Monetary Theory based itself on a broader view of methodological individualism than neoliberalism or Austrian economics, in that it agrees that individuals are the elements in complex social system, and explanation must be ultimately grounded in causal mechanisms that stem from individual action. However, it accepts that other factors are at work in shaping individual decisions other than rational self-interest as generally conceived by methodological individualism that presumes ontological individualism. Ontological individualism is an oversimplification of human complexity.

According to MMT, the purpose of government is public purpose, that is to say, government is to serve the public interest rather than dominant private interest groups. The public interest is distributive. Economic happiness is only one aspect of human happiness and it involves prosperity.

Microeconomics is about prosperity of households and firms, whereas macroeconomics is concerned with the prosperity of entire societies and in the age of globalization, with global prosperity. At the macro level, prosperity is necessarily distributed. Public policy is about achieving this distribution through government pursuit of public purpose, which complements the pursuit of private purpose by individuals and interest groups, such as firms.