Its Contribution to Economic Growth, Well-being and Rationality
Chapter 10: True Preferences, Metapreferences, and Actual Preferences: A Socio-economic Model of Preference Formation
10. True preferences, metapreferences and actual preferences: a socioeconomic model of preference formation Desire and aversion, though powerful, are but habits. And we can train ourselves to have better habits. Epictetus, Manual for Living: A New Interpretation by Sharon Lebell INTRODUCTION Should government discourage cigarette smoking? What about advertising aimed at women and promoting dieting to become super slim? Mainstream economists have, with few exceptions, taken the position that governments ought not to intervene in matters relating to people’s subjective preferences. After all, in these economists’ view, the essence of rationality is choosing in line with one’s well-deﬁned, stable wants (McPherson 1984: 237). Many would presumably agree with Tollison and Wagner (1992: 158) who argue that ‘individuals who are observed to make particular choices are necessarily maximizing their individual welfare.’ Further, these authors contend that cigarette smokers are entirely rational and not addicted, the cigarette smoking being entirely under their control (pp. 158–60). Accordingly, Tollison and Wagner argue strongly against any attempt to change smokers’ preferences and against the idea that there is anything ‘wrong’ about smoking. The socio-economic model of preference formation developed here is based on some radically diﬀerent ideas concerning preferences and rationality, and thus leads to very diﬀerent conclusions concerning the desirability and inviolability of people’s preferences. The model is a multiple utility or multiple self model that integrates economic insights with many noneconomic ones. It might legitimately be called a ‘New Age’ model because it brings to bear perspectives from humanistic...
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