Institutional Economics and the Formation of Preferences

Institutional Economics and the Formation of Preferences

The Advent of Pop Music

New Horizons in Institutional and Evolutionary Economics series

Wilfred Dolfsma

The formation of preferences is an elusive subject that many social scientists, and especially economists, have tended to avoid. In this original new book, Wilfred Dolfsma combines institutional economics with insights from the other social sciences to analyse the way in which preferences are formed in a social context.

Chapter 3: Consuming Symbolic Goods

Wilfred Dolfsma

Subjects: economics and finance, evolutionary economics, institutional economics


It is culture which constitutes utility. (Marshall Sahlins (1976, p. viii)) The question we face now is the same, although more specific, as the one Campbell (1987, p. 49) addresses in his eloquent study: how do goods take on meaning and value and what consequences does this have? How does the want or desire for a novel product develop? In less abstract terms: what meanings does pop music have, and how have these emerged? How have people developed a preference for pop music? Campbell (1987) observes that economic theory cannot explain levels and patterns of consumption (see also Falk 1994). From his position as a sociologist, Campbell discusses three possible explanations for the way in which items may become meaningful for consumers, all of which he finds to be inadequate. There are three accepted views on the sources of tastes, he surmises, none of which is adequate in explaining modern consumer behaviour. These may partly overlap with the views on consumption I discussed earlier. Both the instinctive and the manipulist views of the emergence of preferences assume that the consumer is passive and cannot explain change in patterns or differences between patterns. People do not have innate desires that can be satisfied in only one specific way. Hunger can be satisfied in many different ways: how can instincts account for the fact that people in India eat chapatti and people in the Netherlands eat bread? Moreover, there are acquired desires as well. Decades ago people did not know about washing-machines...

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