Happiness and Relational Goods: Well-being and Interpersonal Relations in the Economic Sphere

Veneza, June 11-13, 2009

Relational goods at work, identity and capabilities

Abstract

Helena Lopes*; Luísa Veloso; Gabriela Pereira

This communication develops the relational goods approach launched by Gui and Sugden (2005) and applies it to the sphere of work. We begin by examining the nature of relational goods which we argue are a strong driver of behaviour at work. Two types of goods associated with social interactions are distinguished: relational and moral goods and we contend that both types constitute instances of common goods. We then address the identity-generating property of interpersonal relations and explore the cross-fertilisation of the relational goods and identity approaches. We conclude by drawing some normative implications related to the internal organisation of firms. The main points of our argument will be illustrated with data drawn from European Surveys.

At the end of the 19^th century, Marshall defined goods as "all desirable things" but restricted the use of the term to things with a direct business value. Although Marshall recognised that affections are important elements of well-being, he would not recognise them as goods because he thought that economists' primary goal is to increase material wealth and reduce poverty. This would in turn allow the development of those human faculties "which are the source of the highest happiness" (Marshall, 1966/1890: 2). The disconnection between relative prosperity and life satisfaction put forward by economics of happiness challenges Marshall's expectations and impels economists to redefine the domain of their discipline. This has led to the analysis by some economists of the role played by the "relations between men", discarded from economics by the marginalists, in explaining economic behaviour and outcomes.

Following Gui (2005), we define relational goods as intangible entities that emerge from interpersonal interactions. These entities deserve to be called goods as they can be valued by the worker along with ordinary economic goods. However, we find it important to look beyond the conventional hedonic approach (with its emphasis on the measurement of cardinal utility) and highlight instead the eudaimonic character of interpersonal relations. "Good" jobs, and in particular positive relationships at work, might powerfully enhance workers' capabilities and self-development prospects, that is, their actual functionings - what they are actually able to be and do - and their opportunities set.

Relational goods emerge from personalised interactions through the psychological mechanisms of sympathy, namely fellow-feeling and correspondence of sentiments (Sugden, 2005). These psychological dispositions lead to the formation of judgements of approval/disapproval of own and others' behaviour, that is, to the existence of moral norms and values - moral goods. In contrast to relational goods, moral goods involve impersonal valuation and provide reasons to act that go beyond the specific circumstance and the particular persons involved. This distinction between the nature of the two types of goods partly reproduces Sen (2002)'s distinction between sympathy and commitment.

The main feature of relational and moral goods, not yet acknowledged in the literature, is their commonality. They are common goods - goods that are shared and recognised as beneficial to the members of a given community. In contrast with preferences, which are individually held and may be solitarily enjoyed, relational goods are goods because and only if they are commonly experienced.  Likewise, the value of moral norms depends on their being commonly shared and valued. Their normative appeal derives precisely from the individual's consciousness that a given norm is shared with others. However, while relational goods solely exist within given interactions, moral goods have an existence of their own. They are mutually-held intangible entities constitutive of the "common world", a world publicly rather than privately appropriated. This perspective on relational and moral goods epitomises a break with the strict separation between the private and the common and with the individualistic utility-maximising framework. It endorses a view of the individual as a social being whose dynamic constitution depends on the interactions with others.

There is overwhelming evidence that our perceptions of interpersonal and social interactions play a crucial role in our well-being (e.g., depression is highly associated with not being treated with respect). But this is so not just for "hedonic" reasons. Rather, interpersonal relations - and commitments in particular - are crucial for the building of a positive identity, which is one of the most vital human capabilities (Sen, 2002). One's relation-to-self is intersubjectively constituted: the possibility of a positive relation-to-self emerges solely with the experience of being recognised by others (Honneth, 1995). It is only through the interactions with others that a person can come to see him/herself as an individuated and valuable being.  According to this perspective, relational and moral goods play a crucial role insofar as they may (not) provide the social recognition needed for a healthy development of the workers' capabilities. It is to be noted that this perspective on personal identity partly differs from the one developed in recent literature in economics. For Akerlof and Kranton (2000; 2005), for instance, individuals maximising their utility functions acquire personal identities by creating self-images through their identification with others. Personal identities do not appear as the result of the interactions themselves but as the outcomes of preference-based choices. In contrast, our view breaks with the atomistic tradition and emphasises not the struggle for self-preservation but rather the struggle for the establishment of relations of mutual recognition, as a precondition for self-realisation.

The analysis of interpersonal relations at work constitutes a privileged domain for the development and testing of this analytical framework. It also provides the opportunity to draw normative implications. Work environments should be designed with the aim of offering opportunities for reciprocal recognition, which require the development of appropriate relational and moral goods.

         Although no data is available that would allow a thorough empirical support of our arguments, data from the European Working Conditions Survey and the ESS will be used to illustrate our main points.  Indexes will be built that represent relational and moral goods and possible relations with global well-being and capabilities indicators will be investigated.

References

Akerlof, George and Rachel Kranton (2000): Economics and Identity, Quarterly Journal of Economics, 105:3 pp. 715-753.

Akerlof, George and Rachel Kranton (2005): Identity and the Economics of Organizations, Journal of Economic Perspectives, 19:1, pp. 9-32.

Gui, Benedetto and Robert Sugden (ed.) (2005): Economics and Social Interactions - Accounting for Interpersonal Relations, Cambridge, Cambridge University Press.

Honneth, Axel (1995): The Struggle for Recognition - The moral grammar of social conflicts, Cambridge: Polity Press.

Marshall, Alfred (1966/1890, 8^th ed.): Principle of Economics, London, MacMillan.

Sen, Amartya (2002): Rationality and Freedom, Cambridge: The Belknap Press of Harvard University Press.

*Corresponding author: Helena Lopes (Dep. of Economics/ISCTE and DINAMIA), Helena.lopes@iscte.pt