Edited by Jan Peil and Irene van Staveren
Chapter 23: Freedom
Nicolas Gravel Freedom in economics In economics, individual freedom is examined through the formalism of opportunity sets. Any such opportunity set is interpreted as containing all options that are available for choice to the individual whose liberty is being evaluated. The budget set of standard consumer theory, which consists of all consumption bundles that a consumer can afford given her wealth and prevailing prices, is the most salient example of an opportunity set. The problem of defining freedom in that context amounts to defining what it means for one opportunity set to offer more freedom than another. Negative or actual freedom? The formalism of opportunity sets does not a priori restrict the nature of the constraints that limit the availability of options. These constraints can be physical (for example, ‘I do not have the ability to play piano like Horowitz’), economic (for example, ‘I cannot afford to own a second home’) or legal (for example, ‘I’m not allowed to sunbathe topless at the beach’). Yet some economists believe that the origin of the constraints matters for defining freedom. F.A. Hayek (1960, p. 12) is clearly one of them when he writes: [F]reedom refers only to a relation of men to other men, and the only infringement on it is coercion by men. This means, in particular, that the range of physical possibilities from which a person can choose at a given moment has no direct relevance to freedom. The rock climber on a difficult pitch who sees only one...
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