What do you owe the world, and what does the world owe you?

This post is long-ish and quite out of character, but do read on it should be worth the while.

Landsburg, Harford, Rodrik, Cowen. The nominal subject is whether *we* should be compensating the losers from trade; here's the conversation:

Landsburg: Hey, without trade we'd still be jumping from branch to branch, banana in hand. Trade brought economic prosperity and got everyone rich in the first place - now why are the losers complaining?

Harford: Don't really know, but people who lose out from trade shouldn't receive better treatment than people who lost out due to other causes.

Rodrik: The idea of compensating those who lose out because of globalisation is not absurd, and in any case economists are not the people to ask - our tools are only helpful for positive, not normative, analysis.

Cowen: As economists and policy advisors we have a responsibility to think about ethics deeply. No, I don't think that an economist's core education covers these issues, but other disciplines do and economists have an obligation to study those too.

And your host:

I'm not so interested in trade itself or other stuff that create economic 'losers', my interest lies in fairness. Just two remarks in passing:
a) indeed, from a 'positive ethics' point of view, compensating losers from trade differently than you would losers from technological growth (etc, etc) does not really make sense.
b) where do we owe the immense wealth we enjoy today? Mostly economic/ technological growth, for which we have our ancestors to thank (whether that's Einstein or the guy who first thought of wearing shoes). Very little of these guys' social contribution was captured as private rents passed on to their children; for most part, they were scantily compensated for their efforts. These guys are dead now; it would only be right if we spread the wealth we inherited from them equally. Given our current level of wealth, everyone should be able to go through life without ever having to work to meet basic (and some not-so-basic) needs; those who wish to expend effort and take the whole enterprise further should only be rewarded at a level over and above that.

To the point now. Fairness is important because it is an integral part of politics. Not only the capital P variety but the small p too: without group ('social') notions of fairness very little mutual co-operation could ever ensue, and our civilisation could never have existed in the first place. There are too many prisoner dilemmas in any real-life group to allow an agent economicus to survive as a species for long (no, repeated games can only account for some of the observed co-operation).

By the way, maybe we need the concept of evolution-consistent rationality to be introduced to economics? In other words, individuals can only be as rational as would be consistent with survival.

Your homo economicus would struggle to coexist in a group and survive in modern day New York (or for that matter the Savanna) for a day, let alone deliver you the truly amazing world we enjoy. Message for economists: why don't we apply the trusted *positive* tools we have to analysing and predicting society's *normative* preferences? Come on, economics needn't refuse to dwelve into the origins of preferences (especially social preferences), don't be such cowards.

Are we worth our salt as policy advisors when we have not tried to predict in any systematic way which policies are 'fair' and popular? (no, asking people whether they are pro-trade doesn't cut it, I want a theory, I want to know why. I want a systematic approach to this dammit)

Think of Becker's model of crime and Acemoglu's work on the political process. Modelling perceptions of fairness (yes, there's no such thing as fairness, only perceptions of it) as a way of supporting survival-consistent equilibria should be extremely rewarding (and while I'm at it, don't forget to throw a bit of information modelling in there; group notions of fairness are nothing if not efficiency-improving informational shortcuts).

I've been planning to have a go at a formal model of perceptions of fairness myself and will be doing so soon; stay tuned.