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The Welfare Economics of Adaptive Preferences

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  • Carl Christian von Weizsäcker

    (Max Planck Institute for Research on Collective Goods, Bonn, Germany)

Abstract

In this paper I demonstrate that a reasonable welfare theoretic concept of "progress" can be made consistent with the assumption of endogenously changing preferences as long as these preference changes correspond to the pattern of "adaptive preferences". The main theorem of the paper shows that under certain additional conditions "adaptive preferences" imply the existence of a complete pre-ordering of the consumption space in terms of "improvement paths" which allow endogenous preference changes. It is then shown that welfare economics of "improvement paths" is also possible with interpersonal influences on preferences. A conjecture is developed that results of recent empirical and experimental research into human economic behaviour corroborate the hypothesis of "adaptive preferences".

Suggested Citation

  • Carl Christian von Weizsäcker, 2005. "The Welfare Economics of Adaptive Preferences," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2005_11, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2005_11
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    References listed on IDEAS

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    1. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics.
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    Cited by:

    1. Mattauch, Linus & Hepburn, Cameron & Stern, Nicholas, 2018. "Pigou pushes preferences: decarbonisation and endogenous values," INET Oxford Working Papers 2018-16, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    2. Vanberg Viktor J., 2014. "Evolving Preferences and Welfare Economics: The Perspective of Constitutional Political Economy," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 328-349, April.
    3. Paul Anand & Laurence S. J. Roope & Anthony J. Culyer & Ron Smith, 2020. "Disability and multidimensional quality of life: A capability approach to health status assessment," Health Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 748-765, July.
    4. Mattauch, Linus & Hepburn, Cameron, 2016. "Climate policy when preferences are endogenous – and sometimes they are," INET Oxford Working Papers 2016-04, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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    More about this item

    Keywords

    Welfare Economics; Endogenous Preferences; Adaptive Preferences; Interpersonal Influences on Preferences; Improvement Paths; Bounded Rationality;
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