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If I Had a Million Dollars…

I’m just finishing up Tyler Cowen’s Good and Plenty: The Creative Successes of American Arts Funding. The book sympathetically describes both “pure economic” and “pure aesthetic” approaches to assessing the value of culture, and goes a long way towards reconciling the two. It’s an insightful and easy read because the author is both a careful economist and an enthusiast for many of the cultural forms he’s describing (ranging from Rothko to rock music). Still, there’s one statistic in the book that sticks in my mind, and that appears to undermine the economic approach a bit more than Cowen’s willing to let on.

Early in the book, Cowen notes that “A survey [in 1992] indicated that 46 percent of Americans would be unwilling to give up television for the rest of their lives in return for a million dollars.” This statement shocked me. Perhaps I’m too risk averse, but I’d aver that one would only rationally forego an offer of a million dollars if, say, one had about a million dollars in the bank already. I have heard that about 9 million Americans are millionaires (i.e., have assets over and above principal residence that are worth over a million dollars). That’s about 3% of the US population. So, going back to our survey, at least 43% would be choosing TV over an immense advance in their material well-being (and, if they are at all charitably minded, over others’ well-being).

There’s a couple directions one could go with such data. One might become very skeptical of “willingness to pay” surveys–i.e., any self-reported estimation of what people would be willing to pay for a given product, service, or state of the world. But I’m tempted by a more radical viewpoint, which is to question the aggregability of price-measured estimates of utility in general.

Consider a fine of $300 for two individuals–millionaire B and “working poor” A. To B, that $300 may just be the daily interest on his bonds, while for A, it might be the difference between shelter and homelessness (as David Shipler movingly documents). The fine has vastly different meaning for each individual, as Finland recognizes.

So to get back to that survey figure–I think it’s basically meaningless. We can ask people at different income levels whether they would give up TV for a million dollars, but we can’t give any statistic for people generally. Just consider the chart on the last page of this document. Given that the median net worth of the top 10% in the U.S. was $833,600 in 2001, and that of the bottom ten percent is below $7,900, Americans live in very different economic worlds.