Economic choice theory is built on utilitarian foundations. The purpose of this paper is to explore whether a foundation of virtue ethics might be more consistent with human…
Abstract
Purpose
Economic choice theory is built on utilitarian foundations. The purpose of this paper is to explore whether a foundation of virtue ethics might be more consistent with human nature.
Design/methodology/approach
The paper focuses on utilitarianism vs virtue ethics as foundations of economic choice theory.
Findings
Economic choice theory describes consumer choice in terms that are inconsistent with findings from recent research in behavioral economics, neuroeconomics, and psychology. The consumers' dynamic optimization problem, as outlined by traditional theory, is unsolvable in the sense that it contains too many unknowns. This means that the consumer must approach the problem in a different manner than is usually suggested by the literature. Moreover, new psychological theories of well‐being suggest that we can, to some extent, choose what we want to want and that true happiness is based on our character as much as it is based on our consumption of goods.
Practical implications
The idea that human choices may not be based on consistent preferences calls into question the policy suggestions of the literature on revealed preference and welfare economics. In particular, we cannot rely on past choices to draw inferences on people's preferences.
Social implications
To maximize social welfare, society must value and promote the development of virtue and character.
Originality/value
The paper highlights some of the differences between utilitarian and the virtue ethics perspectives on choice.
Details
Keywords
Starts out with a survey of various formal theories that have focused on discrimination in the labor market. Argues that Becker’s traditional taste for discrimination model, the…
Abstract
Starts out with a survey of various formal theories that have focused on discrimination in the labor market. Argues that Becker’s traditional taste for discrimination model, the various statistical discrimination models and the new cultural communication cost models ultimately yield analytically and observationally equivalent predictions. In particular, these models all imply that we may find occupational segregation across firms. This, in turn, suggests that it is not easy to identify the true causes of discriminatory wage differentials in the labor market and thus that we may have a very hard time sorting out which of these models applies best. Finally, speculates, in the context of Kremer’s model of economic growth, about how changing technologies and structure of production could possibly exacerbate the inequalities predicted by these models of discrimination in the labor market.