Non-economists sometimes view policies widely accepted by economists as foreign and even distasteful. In my view, much of the divide can be explained by contrasting perspectives on the primacy and normativity of preferences. In standard models economists take preferences as given, while non-economists often view preferences as moral objects that are malleable. While the economic method has important explanatory and practical power, the non-economist’s approach offers imaginative and in some cases empirically relevant perspectives on ideal societies.
In non-cooperative theoretical models of behavior standard in much of economics, individuals choose actions they view as optimal given their preferences and the actions of other agents they interact with. Modeled preferences frequently capture elements beyond pure self interest. Modern approaches often incorporate into preferences the well-being of other people or desires for fairness and altruism when such tastes have meaningful predictive power in behavior. However the model specifies preferences, these preferences are typically taken as given when individuals choose their optimal actions. Such approaches have enormous positive (i.e., non-normative) power when trying to understand how the world operates. When extending the approach to make normative judgments, the standard method is to consider allocations or regulations that best accommodate these preferences, though most papers consider heterogeneity analysis that evaluates how different segments of the population have their preferences satisfied under policy counterfactuals.
In my view, much of the popular discourse views the defining challenges of organizing society not in the lens of allocative efficiency taking preferences of individuals as given. Instead, critiques of institutions are often framed in terms of failures of moral uprightness. As an example, one way to frame difficulties with dealing with climate change is that collective action is challenging when nations have their own self interests that stifle coordination for the common good. These are the constraints that economists consider when trying to address the problem through mechanism design or regulation. However, another way to frame inaction on climate change is that failure to coordinate reflects a moral failing of world leaders. If individuals, and in particular people in power, had preferences that aligned with the common good instead of their own interests or those of the constituencies that provide legitimacy to their authority, then climate change, and other global ills, would be solved. The problem is primarily people and leaders who are insufficiently morally upright and competent to resolve these collective action problems, not the intricacies of the collective action problems taking self-interests as given.
In the non-economist’s lens, social change and revolution are often viewed as movements for greater individual and collective morality. It is useful to consider twentieth social movements from this perspective. Moral and social change, both within the individual and in the collective society, were central in the political philosophy of many leaders of India’s anti-colonial movement in the first half of the twentieth century. Gandhi famously sought a radically decentralized economic system with self-sufficient communal living and curtailment of wants. He did not draw a distinction between economics and ethics, and viewed excessive consumer appetites as harmful to human dignity. The ideal society was one in which people’s desires and preferences were altered to be minimal, not the one that allocated goods most efficiently given the prevailing material preferences that existed at the time. Nehru and Ambedkar also sought fundamental changes in human relations, though they viewed a centralized state as the best means of enacting changes in behavior. Gyan Prakash writes, “Implicit in Ambedkar’s view was the project for a powerful pedagogic state, tutoring India in constitutional morality, freeing it from the inherited burdens of history, and ushering in social change.” In writing the Constitution he sought to create explicit legal institutions and state power that would alter “essentially undemocratic” hierarchical relationships that stifled social well-being.12
The experience in post-colonial India I believe is emblematic of social movements in other countries—the moral uplifting of the people was on par in importance with the specific economic policies pursued by governments and activist groups. These efforts often did result in meaningful social change. Explicit discrimination on the basis of race, gender, religion, and caste is viewed by a substantial share of the world as socially distasteful and morally abhorent. The world is not equal by any means, but the doctrines of equality taught by twentieth century social movements have affected the political, social, and economic preferences of many people. Moral views and preferences are malleable, even if the ideal state remains beyond reach.
The economic approach is in my view a highly useful one for most practical problems and for the general pursuit of science. Explaining how and why people interact as they do matters for understanding behavior and for designing policies that accommodate individuals’ incentives. Ignoring these constraints and blaming all social ills on moral failing typically lacks rigor and useful policy guidance. It is in a sense vacuous to attribute everything to insufficient morality. However, moral lobbying does matter, and in some ways is an optimistic and idealistic exercise. It imagines what humans could be through self-improvement. It considers possibilities ruled out by taking preferences as given, which matters both normatively and empirically given the variation in moral outlooks across time and space.
- From Emergency Chronicles: Indira Gandhi and Democracy’s Turning Point
- It may seem strange to refer to Ambedkar’s views as characteristic of a non-economist’s lens since he had multiple doctorates in economics. My intention is to focus on the methodological distinction between pedagogically reforming the morality of social relationships versus optimizing allocative and investment efficiency taking these moral preferences as given.