Tibor Scitovsky (3 November 1910-1 June 2002) lived a varied life, both in the private sphere and in his public activity as an economist.

Born into a rich Hungarian family of aristocratic origins, he was raised in a pre-capitalist society, in which money flowed freely and was there to be spent, not saved. His father, Tibor de Scitovszky Senior was a senior civil servant and banker, becoming Minister of Foreign Affairs for the ultra-conservative government of Count Istvan Bethlen (1924-25), and then president of one of Hungary’s largest banks.

His mother, Hanna, was related to the noble La Rochefoucauld family, and her Thursday-afternoon “at homes” were a meeting place for Budapest’s political and artistic elite, occasionally being attended by such notable guests as Paul Valery and Thomas Mann, Cardinal Pacelli (later Pope Pius XII) and the provocative Colette.

Having enrolled in the Faculty of Law at the University of Budapest, in 1928 Scitovsky was seized by the desire for emancipation from a family he found suffocating, and obtained permission to continue his studies abroad. Arriving at Cambridge in October 1929, and looking for a field of study more interesting than international law, he switched to economics. Thus he met Maurice Dobb and Joan Robinson. He would later thank the latter for encouraging independent thought and a critical spirit:

I had just started on economics a month earlier and did not even know there was a theory about money.... Joan read [my paper] while I watched her and waited with bated breath for her to deliver the verdict. There was no harm, she said, in listing what other people had to say about money but she looked in vain for my theory about it. So she suggested that I write the paper again, this time presenting my own ideas on the subject. (Scitovsky n.d.: 40; hereafter Memoirs)

Under Lionel Robbins and Friedrich von Hayek at the London School of Economics (1935-38), Scitovsky advanced further in his studies. He would later remember being impressed by “the elegant logic of the perfectly competitive model’s self-equilibrating mechanism, but equally disturbed by its unreality and apparent uselessness” in explaining crises and unemployment (Memoirs: 54).

He first arrived in the USA in the fall of 1939 on a Leon Travelling Fellowship, and stayed there until 1943. These were the most trying years, with cultural integration proving difficult. Thus he wrote to Nicholas Kaldor: “It seems to be primarily the long tradition of culture which makes life so very pleasant in England and in France and it seems to have less to do with the particular form of government than I thought. I feel very home-sick for England” (letter from Scitovsky to Kaldor. 11 December 1939, King’s College Archives, Cambridge University). His position in the USA during this time was precarious. He did not have a job and, for a time, had to depend for support on his new wife. Having been arrested on the suspicion of being a “premature anti-fascist”, that is, a communist (Memoirs: 68), he escaped deportation by being drafted into the US Army (1943-46) and, as a result, being granted citizenship. Thanks to his good knowledge of German and French, he was first sent to Europe as a truck driver in a team along with J.K. Galbraith, E.F. Schumacher and his friend Kaldor. There he was involved in the capture of a dozen leading Nazis, including Hermann Goring and Albert Speer. Later he worked on the US Strategic Bombing Survey.

At the end of the war, he decided to stay in the USA, first receiving an appointment at Stanford, where he began teaching the new macroeconomics of Keynes, and was

awarded tenure in 1949. He spent most of his career at Stanford (1946-58, 1970-76 and 1978-81), with an interim decade at Berkeley (1958-68), and appointments at several places, including the London School of Economics (1976-78). While at Berkeley, he was visiting professor at Harvard (1965-66) and research fellow at the Organisation for Economic Co-operation and Development in Paris (1966-68). Scitovsky went on teaching after his retirement at the University of California, Santa Cruz until the mid-1980s. He remained intellectually active to the end of his life, publishing articles on economics throughout the 1990s.

He died in 2002, in Palo Alto, California.

Theoretical Contributions

For much of his life, Scitovsky worked on subjects related to welfare economics. His most famous and universally praised work was “A note on welfare propositions in economics” (1941), which contained what later came to be known as the “Scitovsky reversal paradox”: that is, an economic policy innovation designed to redistribute wealth can, even if giving rise to a Pareto optimum, lead the individuals to be worse off to give money to those benefiting from the redistribution in order to persuade them to return to the original allocation. Among the other articles worthy of mention are “The political economy of consumers’ rationing” (1942a) and “A reconsideration of the theory of tariffs” (1942b). The first explained the reasons for wartime rationing, which led James Tobin of Yale to write a dissertation on the subject; the second, which was reprinted and translated in foreign languages, pointed out the difference and relations between tariffs and producers’ profit margins. With the publication of Welfare and Competition in 1951, Scitovsky’s international reputation as standard welfare economist was established. Beginning in the early 1950s, however, and especially with the security of a permanent post, his publications progressively began to reflect a growing personal interest in ethical and cultural questions.

In “Ignorance as a source of oligopoly power” (1950), he claimed that the increasing complexity of consumer goods, caused by technological progress, leaves the majority of their buyers unable to judge the quality of the products, something that favours the formation of oligopolies. “What price economic progress?” (1959) deals with Erich Fromm’s concept of alienation in a mass-consumption society in order to show the political implications and effect on human well-being of the growing specialization of knowledge, and “A critique of the present and proposed standards” (1960) elaborates on Galbraith’s mistrust of the judgement of the consumer as guide and arbiter of resource allocation, in order to develop a critique of the conventional theory of consumer choice.

In “On the principle of consumer sovereignty” (1962), it is asserted that the increasing neglect by the mass production system of an informed minority’s preferences might have undesirable effects upon the development of majority preferences as well.

It was only shortly before retirement that Scitovsky wrote The Joyless Economy (1976), his successful, though controversial, monograph, which summarizes his inquiry into the sources of human satisfaction. The first part of the book presents a simple account of the theories of arousal by the motivational psychologists Donald O. Hebb (1955) and Daniel E. Berlyne (1960). These theories relate feelings of pain and pleasure to the physiology of the brain, showing paradoxically that the absence of pain, that is, comfort, leads to pain in terms of boredom, and that pleasantly stimulating activities, undertaken for no particular reason other than recreational ones, were major sources of satisfaction. The second part moves from individual psychology to social analysis, documenting the excessive demand for comfort in the American lifestyle and showing how mass production and the Puritan work ethic combine to deprive people of the skills and tastes necessary for the enjoyment of creative leisure.

If Scitovsky’s earlier theoretical contributions were well received, the same cannot be said of The Joyless Economy (see Aufhauser 1976; Friedman 1976; Peacock 1976; Zikmund 1977). First, it contained too much psychology for the average economist of the time. Although Hebb’s and Berlyne’s theories on the origins of behaviour were well received in their own discipline, economics in the 1970s was simply not ready for such innovative change. Secondly, by emphasizing the distinction between pleasure and comfort, in keeping with the psychological theory of arousal, Scitovsky was distancing himself from the hedonistic-utilitarian perspective and thus criticizing the neoclassical theory of consumer behaviour. Thirdly, Scitovsky’s analysis of modern consumer choices represented an open attack on a value system based on conspicuous consumption, on a vestigial Puritan ethic and on an educational philosophy that favoured technical specialization over the cultivation of the liberal and performing arts.

The book’s popular style, too, saw him lose status among academics.

It took an almost 20-year lapse, and the publication of the second edition in 1992, for The Joyless Economy to be praised. By then, thanks to the experimental work on rational choice theory by behavioural psychologists Daniel Kahneman and Amos Tversky (1979), economics was slowly opening itself to interdisciplinary research, and, thanks to the investigations of Richard Easterlin (1974), the economics of happiness was now beginning to be viewed as a new, promising approach to the study of welfare. Scitovsky is now cited as a forerunner of happiness studies in economics (Frey and Stutzer 2002; Easterlin 2003) and listed among the precursors of behavioural economics (Angner and Loewenstein 2012). However it must be noted that the appropriation of Scitovsky as precursor by the behavioural economists overlooks significant differences between them. Whereas Kahneman sought to modify the rationality axioms in the light of empirically observed systematic deviation, Scitovsky implicitly rejected the theoretical edifice of axiomatic rationality. His proposed revision of economics called for an entirely different conception of economic behaviour, one informed by psychology of a different kind. Furthermore, and different from the behavioural economists, Scitovsky’s recourse to experimentation stopped with his appropriation of the psychological findings. Once he had drawn on Berlyne and Hebb in elaborating his theory, he offered no obvious further role for experimental investigation. With regard to the economics of happiness, Scitovsky was critical of Easterlin’s emphasis on the effect of ranking in the income scale, or relative consumption, on reported well-being, implying that it overlooked the main basis of true happiness, namely, what Hannah Arendt (1958) described as the “productive life”, or vita activa. If Scitovsky’s influence on the economics profession has been diffuse, it has been more substantial in the literature of consumer sociology, informing the work of contemporary critics such as Juliet Schor, author of The Overworked American (1991).

Viviana Di Giovinazzo

Tibor Scitovsky (3 November 1910-1 June 2002) lived a varied life, both in the private sphere and in his public activity as an economist.

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