Crossing the Rubicon
Economists tend to assume that preferences are given and stable. This assumption is central to their research because it allows them to explain changes in behavior largely in terms of variables such as changes in income and relative prices, and more generally in terms of incentives and disincentives. However, sociologists and psychologists have shown that preferences are formed during the socialization process and continue to be reformulated during adulthood through methods like persuasion, leadership, and advertising. Hence when one compares behavior at two points in time, one must take into account changes in preferences that may well have occurred during the given period. The challenge manifested in both perspectives is that there is no consolidated theory of what factors drive preferences. “Crossing the Rubicon;” that is, breaking the wall that separates economic and non-economic disciplines in order to understand preference formation could engender a new and more complete framework for policymakers.
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