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The Political Economy of Paternalism

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  • Kai A. Konrad

Abstract

The study analyzes and predicts how individual preferences and majoritarian political decisions about the extent of paternalism in a society depend on the distribution of genuine preferences for economic activities, the distribution of information about these preferences, and the distribution of capabilities for individual decision-making. The theory explains the observed heterogeneity of preferences and suggests that citizens whose tastes differ from the mean of the population and those with high decision-making abilities favor a libertarian regime. To the extent that decision-making ability is a learnable activity, a feedback loop emerges between anticipated majority decisions about paternalism and individual investments in citizens own decision-making abilities, leading to a multiplicity of majoritarian political equilibria. Keywords: paternalism, libertarianism, autonomous decision-making, majoritarian decisions, decision skills, formation of decision capabilities.

Suggested Citation

  • Kai A. Konrad, 2023. "The Political Economy of Paternalism," Working Papers tax-mpg-rps-2023-02, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2023-02
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    More about this item

    Keywords

    paternalism; libertarianism; autonomous decision-making; majoritarian decisions; decision skills; formation of decision capabilities.;
    All these keywords.

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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