Why incoherent preferences do not justify paternalism
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A variety of recent arguments emerging from behavioural economics claim to undermine the credibility, and even the conceptual coherence, of the economist’s traditional rejection of paternalism. Indeed, some suggest that the incoherent nature of preferences inevitably implies a form of paternalism, since some basis for officiating between expressed preferences is required, and some preferences will be over-ridden in favour of others. This paper reviews and contests these arguments. It argues that markets operate according to a normatively defensible and non-paternalistic principle of mutual advantage, and that this principle does not require preferences to be coherent.
KeywordsPaternalism Preferences Behavioural economics
I thank Ben McQuillin and Richard Thaler for comments on previous versions of this paper. My work has been supported by the Economic and Social Research Council of the UK (award no. RES 051 27 0146).
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