ANOTHER EXPLANATION—“ETHICAL INVESTMENT ACCOUNTS.”

ANOTHER EXPLANATION—“ETHICAL INVESTMENT ACCOUNTS.” Julian Baggini offers another explanation for why green consumers might misbehave—and this is a theory that I think might have broad application. Baggini introduces the concept of ethical investment accounts: “Doing the right thing by the planet earns us credit in our ethical investment accounts that we can then spend by dumping on our fellow human beings.” Kids, this is a theory that would appeal to somebody who is used to seeing economic models where an individual is optimizing subject to a budget constraint (for example, buying the most pleasing house for a fixed amount of money or allocating one’s annual income in the most satisfying way). Assume that I have only a fixed amount of virtue or goodness in me and I have to allocate it over all my decisions. If I spend my virtue on one thing, I don’t have it for some other purpose. I can manage my stock of virtue by thinking that if I spend it on one thing, I can credit that amount to an imaginary account. If I spend more virtue than I have, I can indulge myself by being unethicai elsewhere. Matthew Engel wrote about the green consumer experiment in the Financial Times (March 20-21) and also argued that most people have a fixed amount of virtue. He said that he had held this view for a long time and had given it a name: “Engel’s Theory of Finite Niceness.” The same kind of thinking can apply to diets, where I indulge in ice cream because I have skipped a meal. I posted here on the notion that we have a fixed amount of will power to allocate, a willpower budget. You can think of this theory in terms of virtue budgets.