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Distinguished Lecture on Economics in Government: Public Policy, Values, and Consciousness

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  • Henry J. Aaron

Abstract

Economists should pay more attention to value formation in economic analysis. First, preferences are not stable in any operationally meaningful sense. Any estimated micro behavior that does not take account of the consequences of the behavior on underlying preferences is incapable of serving as a guide to future action. Second, the economist's model of human psychology is inaccurate and misleading. Third, most analyses of complex social behavior start from models incapable of producing empirical results adequate for useful structural analyses. The paper suggests avenues for making progress on each of these issues, beginning with a different approach to utility maximization.

Suggested Citation

  • Henry J. Aaron, 1994. "Distinguished Lecture on Economics in Government: Public Policy, Values, and Consciousness," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 3-21, Spring.
    • Handle: RePEc:aea:jecper:v:8:y:1994:i:2:p:3-21
    Note: DOI: 10.1257/jep.8.2.3
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.2.3
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    References listed on IDEAS

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    Cited by:

    1. Lorenz Kueng & Evgeny Yakovlev, 2016. "Long-Run Effects of Public Policies: Endogenous Alcohol Preferences and Life Expectancy in Russia," Working Papers w0219, New Economic School (NES).
    2. Mandy Ryan & Fernando San Miguel, 2003. "Revisiting the axiom of completeness in health care," Health Economics, John Wiley & Sons, Ltd., vol. 12(4), pages 295-307, April.
    3. Ashworth, John & Heyndels, Bruno, 2000. "A schema-theoretic approach to politicians' definitions of tax issues," Journal of Economic Psychology, Elsevier, vol. 21(1), pages 21-41, February.
    4. Isabel V. Sawhill, 1995. "Distinguished Lecture on Economics in Government: The Economist vs. Madmen in Authority," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 3-13, Summer.
    5. Philippos Louis & Matías Núñez & Dimitrios Xefteris, 2022. "The Virtuous Cycle of Agreement," The Economic Journal, Royal Economic Society, vol. 132(641), pages 326-360.
    6. Samuel Bowles & Sandra Polania-Reyes, 2011. "Economic incentives and social preferences: substitutes or complements?," Department of Economics University of Siena 617, Department of Economics, University of Siena.
    7. Karl-Heinz Schmidt, 2001. "“Staatswirtschaftslehre”—A Component of “Staatswissenschaften” Today and Tomorrow," European Journal of Law and Economics, Springer, vol. 12(2), pages 135-143, September.
    8. Tomer, John F., 1996. "Good habits and bad habits: A new age socio-economic model of preference formation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(6), pages 619-638.
    9. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A preference-Based Lucas Critique of Public Policy," UMASS Amherst Economics Working Papers 2009-11, University of Massachusetts Amherst, Department of Economics.
    10. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo.
    11. Elliott, Catherine S. & Hayward, Donald M., 1998. "The expanding definition of framing and its particular impact on economic experimentation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 27(2), pages 229-243.
    12. Heberlein, Thomas A. & Wilson, Matthew A. & Bishop, Richard C. & Schaeffer, Nora C., 2001. "Rethinking the Scope Test as a Criterion for Validity in Contingent Valuation," Western Region Archives 321695, Western Region - Western Extension Directors Association (WEDA).
    13. Ashworth, John & Heyndels, Bruno, 1997. "Politicians' preferences on local tax rates: An empirical analysis," European Journal of Political Economy, Elsevier, vol. 13(3), pages 479-502, September.
    14. Samuel Bowles & Sandra Polania-Reyes, 2012. "Economic Incentives and Social Preferences: Substitutes or Complements?," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 368-425, June.

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    More about this item

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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