Preference Pollution: How Markets Create the Desires We Dislike

by David George

Overview

Seldom considered is whether markets do an adequate job of shaping our tastes. David George argues that they do not, and that the standard economic definition of efficiency can be used to demonstrate that the market ignores people's desires about their desires. He concludes that markets perform poorly with respect to second-order preferences, thus worsening the problem of undesired desires. The book further investigates changes in perceptions and public policy toward such activities as gambling, credit, entertainment, and sexual behavior.
David George is Chair and Professor Economics, LaSalle University.

Product Details

ISBN-13:	9780472023493
Publisher:	University of Michigan Press
Publication date:	10/27/2009
Series:	Economics, Cognition, And Society
Sold by:	Barnes & Noble
Format:	eBook
Pages:	216
File size:	528 KB

About the Author

David George is Professor of Economics, LaSalle University.

Read an Excerpt

Preference Pollution

How Markets Create the Desires We Dislike

---

By David George

University of Michigan Press

Copyright © 2004 David George
All right reserved.
ISBN: 9780472089499

---

CHAPTER 1 - Introduction
The Widening Scope of the Market
When historians look back upon the final quarter of the twentieth century, the spread of market capitalism will likely stand out as the period's truly defining event. And while it is the private ownership of the means of production that a century ago stood as the central symbol of market capitalism, it is the free market that has come to best represent such systems in more recent years and the free market that has gained the most followers.
As recently as the 1970s, to be "competitive" was to "try hard." To speak of a sports team in such a way said little about success and was often a polite way of describing those teams that suffered through particularly bad years. Coincident with the rise in markets, competitive has been liberated from any connection with failure, and has even begun to be used as a synonym for successful. While it remains impossible to be too rich or too thin, it has become nearly as impossible to be too "competitive" or too "market oriented."
The United States has been in the vanguard of the move toward markets but byno means alone. Nor have "for-profit" businesses been the only ones defining their success through their ability to compete. Enterprises that remain firmly nonprofit have not been reluctant to define themselves anew as sellers in the market. Hospitals and universities that only a few years ago would have resisted any suggestions that they advertise or market their services today follow procedures indistinguishable from the profit sector. Just as surely, professionals who traditionally saw themselves as only tangentially related to the market—doctors, nurses, lawyers, teachers, professors—are throwing off their inhibitions and looking at themselves as market participants with "customers" standing where once there were students, patients, and clients.
Market forces have not always enjoyed such popularity. Though the critiques have been many, two in particular stand out, one usually associated with the political Left, the other with the political Right. Consider first the often-heard complaint coming from the liberal side. While the market may be remarkably adept at fulfilling the wants of the financially secure, goes this argument, it is far less able to adequately fulfill the basic needs of a sizable portion of the population. The market thus comes under attack for devoting large segments of land to the production of food for the pets of the well-off while the children of the poor go hungry and for channeling the energies and equipment of medical providers to cosmetic surgery for the affluent while the basic treatable illnesses of many are ignored.
While the liberal argument views market forces as insufficiently sensitive to those in the bottom half, conservatives tend to see precisely the reverse. A fear of a steadily sinking "lowest common denominator" forms the organizing point for their dissatisfaction. The relatively lower-paid and less educated segment of society is perceived to be gaining influence in the marketplace as a result of their rising incomes, and standards are seen to be endangered as a consequence.
There are problems with each of these criticisms of markets. The first—that they ignore the desires of the poor—is not really a complaint about markets in general. Rather, as mainstream economists have rightly pointed out, it amounts to dissatisfaction with the outcome of labor markets, and it thus follows that there is in principle a solution that does not interfere with the market's dominant role in determining output. Redistributing purchasing power from the haves to the have-nots is all that would seem to be required to ensure that discretionary spending could not occur unless the basic needs of all had been satisfied.
The conservative argument similarly does not hold up well if closely examined. For the "dumbing down" complaint would really only pertain to a very limited set of mass-produced items, a set that appears to be shrinking in an age of targeted markets that the information revolution has made possible. In short, though a highbrow sensibility may lament what lowbrows consume, their choices are not themselves as directly influenced by the lowbrow decisions as might once have been true.
In addition to these shortcomings, the liberal critique and conservative critique share a feature that makes them contingent in nature. Though differing in their interpretation of what segment of society suffers from the market's workings, each presupposes income inequality. For the conservatives, the choices made by those at the lower end have negative effects upon those at the top. For the liberals, the choices of those at the top wastefully exhaust resources and by so doing unfairly curtail the range of choices that are possible for those at the bottom. And thus for each, actions to increase income equality, whether seen as justified or not in their own right, would be actions yielding as a fortunate by-product the lessening of the perceived problems with market forces.
Though recent years have brought rising income inequality, this has not been the main focus of liberal "equalization" efforts. Since efforts to achieve greater economic opportunities for previously excluded segments of the population have brought results, liberals have been directing more of their attention to economic innovation and growth and less to distribution, and the attractiveness of the market has been correspondingly growing. Among conservatives, the libertarian strain that values freedom to choose and rejects elitism has similarly been more "classically liberal" and inclined to accord ever greater respect to market outcomes. To be sure, there have been regrets expressed on both sides over these developments. Writing in the conservative periodical Commentary, Adam Wolfson describes approvingly nineteenth-century America, when "choice itself was tightly constrained by moral and civic considerations, by custom and by local legislation," with "[p]rofane and blasphemous speech . . . proscribed, pornographic materials . . . censored, [and] gambling . . . prohibited" (1997, 49). Wolfson goes on to observe, with regret, that the " 'right to choose' is something which not only upper-middle-class liberals but all Americans take for granted" (49).
Todd Gitlin, writing in the liberal journal Dissent, puts an entirely different interpretation on the hegemony of "free choice." For him, it is not conservatives parroting capitalism's critics that has resulted in a shared embrace of choice. Rather, it is an emerging left-wing culture, well represented in academia by "cultural studies," that has altered the Left's outlook in a way that makes it more compatible with conservative libertarian perspectives. A cultural critic following a cultural studies perspective, by treating the choice made by the average consumer as more indicative of worth than the opinion of the critic, "purports to stand four-square for the people against capitalism. The consumer sovereignty touted by a capitalist society as the grandest possible means for judging merit finds a reverberation among its ostensible adversaries" (Gitlin 1997, 80).
To sum up, "freedom to choose" is the zeitgeist of the era, a first principle on which groups having otherwise little in common can agree. Abortion advocates have long been most comfortable with phrasing their position as a "woman's right to choose," and more recently cigarette companies have responded to the mounting opposition to their product by seeking to focus attention on a person's right to choose to smoke. But to invoke "freedom to choose" is not to trump one's opponents, as the continuation of the abortion wars and the cigarette wars attests. For the public recognizes that one person's choice can on occasion unjustly restrict another's opportunities. Thus the foes of abortion view the fetus as indeed a person and see a woman's choice of abortion as precluding the fetus's future potential choices that becoming a full human would allow. And thus those contesting the right to smoke speak on behalf of those who will be unable to exercise their right to breathe clean air.
As these examples should suggest, opposition to the exercise of choice in modern society is often based on the infringement of someone else's "right to choose." It is thus not surprising that when no third parties suffer spillover costs (or when the existence of such effects is contestable), the case for restricting the "freedom to choose" is greatly weakened. And thus it is that the opposition to the "classic vices" has lost such support in just those years when the market model has been so ascendant. To the extent that prostitution, gambling, and the use of drugs cannot be shown to impose costs on bystanders, what possible basis can there be for restricting the freedom of others to choose these activities?
The Widening Grasp of Addictions
Whether or not "addictions" in the sense that the experts use the term are on the rise is one question. Whether or not the word itself is on the rise is another. And as any survey of popular magazines and newspapers will reveal, there can be little doubt about the popularity of this word. For it is now being used in contexts where it would not have appeared only a few years ago.
The mental health professionals are more circumspect than the public in describing an activity as addictive. In the Journal of Addictive Behavior over a five-year period, fifty-six of the articles dealt with smoking, fifty-three with alcohol, fifty-three with substance abuse, and twenty-nine with eating disorders. Together these four themes accounted for all of the articles dealing with specific addictions. When used by the lay public, the uses of the word addiction are much richer indeed, and it continues to appear in ever more novel contexts. Besides the classic addictions, one finds claims of addiction to gambling, addiction to sexual activity (of all different sorts), addiction to the Internet, and addiction to one's work.
There appear to be two features that set the experts' examples of addictive activities apart from the public's broader class of examples. First, in every case of a professionally recognized addiction there is a "smoking gun," usually in the form of an object that is in some form or other ingested into the body, and as a result there are physically observable changes that can be linked to the use of the substance. Second, in most every case of such addictions, it is an accepted fact that use of the substance causes physical harm and shortens life expectancy. Here we have a feature that to professional psychologists and the lay public alike appears to render use of the substance "irrational." As economists rightly note, however, shortened life expectancy is not a convincing criterion for questioning the rationality of an agent's choice. For there are plenty of things that people voluntarily do that lessen life expectancy but that would be very odd to describe as irrational. To drive in excess of what is absolutely necessary for the acquisition of life's basics is to increase the risk of serious injury or even death, but few have any problem with preferences for such travel. To be close to other human beings raises one's chance of untimely violent death. Clearly, while the fact of physical harm or risk of harm may tempt us to declare a voluntary action as irrational, the reasoning is thus highly problematic.
Operating as closet "subjectivists" or "mentalists," the general public is more willing to allow a person's word speak for him, and to treat a person's declaration that he is addicted to something as sufficient evidence that he in fact is. This is not the place to resolve the long-standing debate between empiricists and mentalists, nor is it the place to resolve more recent disagreements over whether or not a verbal report shall be classified as a "behavior." It is, however, the place to note a problem with both the professional and popular description of the state of being an addict. As described in an editorial appearing on the very first page of the very first issue of Addictive Behavior, "[A]lcoholism constitutes a disease process whereby the individual exhibits total loss of control over his drinking" (Miller and Hersen 1975, 1; emphasis added). And just as the alcoholic is described as one simply unable to stop himself from drinking, whether speaking colloquially or professionally, the addictive personality is described as simply "unable" to resist indulging in the addictive activity.
Again, it is possible to turn to mainstream economics to see the problem with such characterizations. To be "out of control" would seem to carry with it the implication that one's actions would not be influenced by a change of incentives. One who is swept up by a tornado cannot exert any influence upon where she will land. Offering a million-dollar reward if she will land in one spot rather than another cannot alter the outcome, an outcome that is fully "out of her control." With any imaginable addiction, this is not the case. A credible offer of one million dollars conditional on remaining heroin-free for one month would succeed in getting many, many addicts to freely give up their habits for this length of time. For the less gripping sorts of "addiction," this is more obvious still. Shopping addicts and Internet addicts would likely find the offer of such a sum of money too good to resist. It may not be true that each and every addict "has his price," but there can be little doubt that the great majority does.
This is not a new point and has figured prominently in the recent attempts of economists to provide insights about addictions. But economists have steered away from the question that this book will largely be concerned with. What do markets and addictions have to do with one another? Is their simultaneous historical rise a spurious correlation or might a causal connection be at work? As a first step in getting to such questions, a brief consideration of how economists have responded to the question of changing tastes is in order.
The Galbraithian Challenge
Extending back to at least the 1930s, mainstream economists have generally resisted directing their analytical efforts toward the study of preference change. Two different rationales have been offered for such resistance. First is the claim that preference creation and preference change are topics simply lying outside the scope of economics. We have here not any claim about the possibility, in principle, of studying what determines preferences and what changes them. What we do have is a denial that this is a project that should occupy economists. Following Lionel Robbins's often cited claim, economics would be defined as the study of the efficient means of responding to given ends (Robbins 1952, chap. 1). This position may be understood as something of a reverse "turf war." Rather than staking new ground for their analytical talents, economists taking this position are on the contrary claiming no responsibility for the study of some issues that might, on the surface, appear to be within their domain. Rather than questioning the importance of what determines tastes, they are, like the proverbial bureaucrat, choosing to refer the curious party elsewhere.
This first reason for ignoring preference change applies mainly to the positive side of economics. The study of how and why preferences change is judged to fall outside the subject's boundaries. A second reason for ignoring preference change pertains to the normative side of the discipline. The widely accepted claim for some time has been that there is simply no basis for making any normative judgments when a preference change occurs. Someone whose tastes change from reading the National Enquirer to reading the New York Times (or from playing pushpin to reading Pushkin) is not someone, by the official line, for whom a welfare change in well-being can be traced. This conclusion follows from the convention of treating a single agent with different preference rankings over time as analytically equivalent to two agents with different preferences at a single moment in time. To be able to rank the well-being of the "different agents" would be nice, most economists would likely agree, but happens to be impossible.
This official position of the neoclassical economists did not deter John Kenneth Galbraith from arguing in his 1958 book, The Affluent Society, that it was troubling for the American economy, ever more reliant on advertising and marketing, to be measuring its success by the satisfaction of the very wants that it had created. Galbraith's argument, while never embraced by mainstream economists, did resonate with cultural critics of the period.
Concerns about the harmful effects of the market's persuasive processes have never disappeared, but these concerns have taken a backseat to other issues for critics of contemporary capitalism. Beginning with Michael Harrington's 1962 classic, The Other America, attention has been more often centered on America's underclass. This worked against the Galbraithian critique in two distinct ways. First, it drew attention to the fact that concern with "preference manipulation" was primarily a preoccupation of the economically secure. Those liberated from the fear of poverty might indeed care very much about their fitness and personal growth, and might indeed resent the efforts of sellers to persuade them to spend in ways that do not further these ends. But such concerns came to seem somewhat narcissistic and of secondary status from a broader social perspective. Second, and at least as significantly, the Galbraithian exercise of pointing to particular examples of objectionable taste manipulation (tail fins on cars being the most memorable example) likely began to seem too elitist to be easily digested by the spreading populist mood of the 1960s. How could one feel solidarity with the underclass of the nation while simultaneously poking fun at the objects that might attract their increased purchasing power were the agenda of reform to succeed?
Albert Hirschman (1982a) notes that critics of the historical unfolding of capitalism can be usefully divided into two camps. Those in one group claim that capitalism "goes too far," displaying great success in the transformation of inefficient economic practices that predate it, but eventually eroding parts of the social infrastructure that are critical for its success. Those in the other group instead see the major problem as "not going far enough," as existing comfortably with social inefficiencies and injustices inherited from earlier social arrangements.
The Galbraithian critique seems to best fit the first of these. The market was praised for its ability to furnish the basics of life but strongly criticized for its proclivity to replace sensible tastes with superfluous created tastes. In contrast to this, liberal critics of social inequalities were not usually inclined to attribute maldistribution of income, power, and wealth to capitalism's natural unfolding. Capitalism was faulted for peacefully coexisting with social injustices, not for creating them. Since gender, race, and ethnic prejudices were common long before the rise of the modern market economy, capitalism was found guilty not of creating the pathologies but of not going far enough to alleviate them. (This distinction may help to explain why the movement of women, African Americans, and other previously underrepresented groups into the mainstream, a liberal goal, has historically coincided with the strengthening of capitalism. To help members of these groups has not required reversing capitalism's trajectory, but merely helping to undo wrongs that it was not equipped to undo on its own.)
The Hirschman distinction between those critiques that judge the market as too powerful and those that judge it as too weak not only separates Galbraith's concerns from those that replaced it, but also draws attention to a particular weakness in Galbraith's argument. For it is not hard to come up with examples where the complaint directed at the market is not that it shapes tastes but that it fails to do so. In other words, the market is sometimes faulted for catering to preexisting tastes rather than ignoring these tastes and inculcating superior ones. This kind of criticism is directed with particular force at the entertainment industry. Television producers must often face the complaint that television panders rather than leads, that it indulges relatively immature tastes rather than aiding in the shaping of more sophisticated tastes.
There is particular irony to be found in the battle for survival being waged by public television in the United States. One time known as "educational television," PBS still sees one of its missions to be the development of new and improved tastes in the American public. Thus in this realm, at least, it is a public rather than a private provider that seeks to change tastes. And it is, of course, the commercial networks that are criticized precisely for their unwillingness to do so! The Galbraithian argument appears to have been stood on its head.
There is an initial temptation to rescue Galbraith by simply conceding that his argument was too specific. By this rescue attempt, one would acknowledge that the market's tendency to pander to our tastes is indeed also at times a problem but would also insist that Galbraith only wished to focus his attention on a particular type of market pathology, namely, objectionable preference change. But any such defense is doomed to fail. For it must not be overlooked that the basis for his objection to preference manipulation had much more to do with the manipulative act itself than with what changes in taste this manipulation caused. In other words, he directed his criticism at what he chose to call the "dependence effect," suggesting that it was problematic to praise an economic system for satisfying tastes that the system itself had created. To concede that there are instances when the market's shortcoming is its proclivity to pander rather than to create tastes for its products clearly makes it impossible to accept the Galbraithian critique in its present form.
Thickening the Plot
To reject Galbraith's argument as it was presented is not to reject the intuition that likely prompted the argument. And as my personal experiences convinced me some time ago, the forces of the market were not operating to my advantage as a consumer in quite the way the textbooks taught. The standard line regarding rational choice as communicated in Paul Samuelson's Economics (already in its seventh edition when I read it) was compelling but at the same time something that troubled me. In reflecting on my eating habits, the claims of rationality seemed not to apply. I would regularly and voluntarily direct myself to McDonald's, order two cheeseburgers, french fries, and Coke, and yet be troubled by the thought that the market was responding to my desires. For there was clearly some sense in which I wanted to be acting differently than I was. Either I had to resolve the paradox or accept the label of hypocrite par excellence. I was a regular critic of so much of the commercial sphere, yet here I was through my actions giving an unequivocal "vote" for the spread of a true symbol of that sphere, McDonald's restaurants.
None of my early attempts to resolve the conflict seemed to in any way put at risk the essentials of rational choice theory. For I realized that feelings of conflict or even of "regret" were not sufficient to undo the essential arguments. I might, after all, regret that my decision to purchase the McDonald's meal was simultaneously the decision to not purchase some almost equally desirable meal from some other restaurant. Regret, in other words, might often stem from the brute fact that to make a selection from one's choice set is very often to simultaneously reject another desirable option. And even if the two cheeseburgers, fries, and Coke were far more desired by me than anything else in my choice set, there would still be another possible explanation for my feelings of regret. For regret might just be the consequence of not being able to have something that was unavailable. Perhaps my dissatisfaction was tied to the fact that I yearned to have more purchasing power and the more attractive bundle that would have thus been available.
While in some circumstances internal conflict might indeed follow from either of these—having to forgo the next best option in one's choice set or recognizing that a favored something was not in the choice set—neither of these could capture properly the internal dissatisfaction that my eating habits created. This became apparent when I thought about what my decision would have been had I been able to make it well in advance of the actual meal. Were I to have decided what I would eat twenty-four hours prior to consumption, I realized I would not have chosen the cheeseburger, fries, and Coke nearly so often. I would have likely opted, at least part of the time, for healthier choices. This is not to say that a spartan existence would have prevailed if there had always been time between choice and actual consumption. It is to say that health would have more often entered into my thinking. What is more, it became clear that the regret I experienced was very different from the two sorts mentioned above. I did not regret not being able to have my McDonald's bundle and some other bundle that I was forgoing (the "wanting to have my cake and eat it too" sort of regret). Nor did my consumption of this bundle cause me to regret not having been able to have some unattainable bundle. Rather, I clearly seemed to regret consuming what I was rather than something else that was available. But this served to open up new questions. If, as seemed reasonable, the standard economic line that an agent chooses the preferred item from the choice set was correct, how could it be that I both preferred the McDonald's bundle and preferred some other, healthier bundle?
The solution to this paradox will provide the uniting theme of this book. My proposed addition to the standard theory of rational choice will permit the resolution of a number of puzzles, one of which is worth giving attention to here. Consider the following three statements: (1) I am a rational person who selects what is optimal from the choices available; (2) although other choices are available, I have currently selected the McDonald's meal; (3) I report that in the best of all possible worlds, given currently prevailing prices and given my income, I would have chosen something else.
The strongest defenders and the harshest critics of the economist's rational choice model might have difficulty finding common ground, but they would be in agreement that only two of these three statements could be true. The defender would most likely focus critical attention on the third statement. For me to make such a claim would signal either confusion or dishonesty on my part, according to this view. My considered, deliberate selection would be taken to reveal that the McDonald's meal is optimal, even if it does carry with it an increased risk, however slight, of ill health as well as unwanted calories. Critics of the rational choice model, on the other hand, would turn a critical eye on the first statement. From the observation that people report dissatisfaction with their free choices, they would ask us to reject the assumption of rationality. By their analysis, my reported dissatisfaction with my choice would be a clear signal that I lack fully rational faculties (see, e.g., Thaler 1991; Schwartz 1998).
Neither the "anti–rational choice" rejection of statement 1 nor the "pro–rational choice" rejection of statement 3 is, I would argue, acceptable. It is true that certain subjective claims of doing other than what one prefers to do are based on definitions of prefer that are not what the economist has in mind. However, it will be demonstrated at a later point that even after all the definitional differences are taken into account, agents do sometimes express dissatisfaction with their choices in a way that is incompatible with orthodox choice theory.
But to toss out the rationality assumption is at least as troubling. Models that ask us to treat the rational agent as in fact something else have become common. Recasting a person as not one agent, but two (or even more), or characterizing people as comprised of two or more simultaneous preference orderings may result in the substitution of the standard model with a richer model having greater explanatory power, but it seriously compromises a most vital component of the rational choice model, namely, the normative dimension. To evaluate the efficiency characteristics of competing economic arrangements requires a basis for saying unequivocally when an agent is becoming better or worse off. The postmodern agent that emerges from the rejection of the rationality assumption brings with her a severe loss of the ability to make evaluative judgments. Clearly, a better way must be found.
Resolving a Paradox
But how is it possible to accept all three of the above claims? The analytical tool that will make this possible is a "second-order preference." Let M represent the McDonald's meal that has already been described. Let H represent a similarly priced, more healthy alternative. The personal conflict described above is the simultaneous occurrence of a regular, or "first order," preference for M (that is, "M preferred H") and a second-order preference for H (that is, "H preferred M" is a preference that is preferred to "M preferred H"). Quite simply, my preference was something that I very definitely "had," or "felt" or "experienced" but was just as surely something that I would have preferred to have not "had" or "felt" or "experienced."
If such a higher-order preference, a preference for a particular preference, is introduced, the above paradox is resolved. Just as (1) says, I can be treated as a rational agent who selects what is best from the alternatives available. And as (2) says, I selected the McDonald's meal. But it is also possible now to accept statement (3), namely, that, holding my income and prices steady, in the best of all possible worlds I would have found myself choosing a different bundle. For in the best of all possible worlds I would have found myself experiencing a different preference ranking. Rather than suffering from a preference for M, I would have been experiencing a different preference, and as a result would have also found it in my interest to choose H.
From a strictly descriptive standpoint, the admission of second-order preferences into the discussion can undoubtedly be of value. Following the advice of Albert Hirschman, this richer rendering of the rational agent can aid in the resolution of otherwise paradoxical behavior (1985, 8–11). But such positive pursuits will remain very much secondary in the chapters that follow. The question to be ultimately addressed is this: How should we rate the market in its sensitivity to second-order preferences? Is there any inclination to produce unpreferred preferences? Does a sufficient market for preference shaping exist to protect, from a normative standpoint, the current-day prestige of the market as an economic organizing principle? Or might a serious shortcoming emerge?
In the twentieth century economists were nearly silent on the question of second-order preferences. But this was not always true. John Stuart Mill, who straddled the line between economics and philosophy (to the disadvantage of his contribution to each, some would undoubtedly claim), had the following to say:

A person whose desires and impulses are his own—are the expression of his own nature, as it has been developed and modified by his own culture—is said to have a character. One whose desires and impulses are not his own, has no character. (1962, chap. 3, qtd. in Heap et al. 1992, 80)

Even while stressing the importance of taste formation, Mill minimized the significance of economic institutions in the taste-shaping enterprise. It was the other social institutions—school, church, family, neighborhood— that occupied center stage in the engineering of preferences. At the time that Mill wrote, this might have been a reasonable conclusion to have reached. Sellers of that period were surely more prone to shape the tastes of customers than would have been true had perfect competition prevailed. But it is equally apparent that preference formation on their part was far less common than it has become in the century and a half since.
By Mill's account, to not have desires that are one's own (similar to having unpreferred preferences) was to be without character. Similar claims have been made in more recent years. According to the philosopher Terence Penelhum, "Someone achieves self-identity, or finds himself, if the desires that move him to act are, for the most part, desires that he recognizes and wishes to be the ones to move him" (1979, 304–5). For Harry Frankfurt, to have a free will is to be moved by desires that one wishes to be moved by (1971, 14–15). My unhappiness at consuming cheeseburgers, fries, and Cokes would classify me, following Frankfurt's way of characterizing matters, as one who acted freely upon the will that he had, but not as one who had a free will. For this will ("disposition to action") was not the will I wished to have.
In the chapter to follow, I will more thoroughly explore second-order preferences and the controversies that have surrounded them. In chapter 3, some welfare conclusions will be spelled out, conclusions that will not paint a very flattering picture of the market. Economists are in general agreement that spillover effects, whether positive or negative, have inefficiencies associated with them. The market delivers too much of that which creates spillover costs (whether in the act of producing or consuming) and too little of that which creates spillover benefits. The rejuvenated conservatives of the last twenty years have mounted counteroffensives against liberal critiques of the free market. The spillover problem provides one example, the recurrent conservative theme being that government is not the only source of solutions to the problem. People's sense of right and wrong and their desire for social approval provide mechanisms by which the damaging effect of spillovers may be avoided without government participation in the matter.
But to the extent that ideology matters and shapes us in ways that are not necessarily efficient, it will be my argument that the market-embracing nations of the world are heading in precisely the wrong direction when it comes to the shaping of our tastes. Imagine if overnight laws against noxious externalities were overturned. Imagine as well that people were unable to sense the damage that their actions were causing to others. We might expect a sudden rise in pollution, not out of thoughtlessness but because polluting was in the interest of the polluter and of no apparent harm to others. By the book's conclusion, I hope to have shown that something not unlike this has been occurring within market economies over the last century. Unrestricted persuasion has attained a legitimacy it did not have in earlier historical epochs. The consequence has been a slide away from what has been called, among other things, "character development," the achievement of "self-identity," and the attainment of "free will." To put it mildly, this amounts to a substantial welfare loss.




Continues...

---

Excerpted from Preference Pollution by David George Copyright © 2004 by David George. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

---

Table of Contents

Acknowledgments 1. Introduction 2. Freedom to Choose 3. Market Failure in the Shaping of Tastes 4. Fortifications, Extensions, Clarifications 5. Market Failure or Human Imperfection? 6. The Critic’s Retreat 7. Sexual Choices: The First Order’s Rise and the Second Order’s Fall 8. Risk Taking: The Rise of the Gambler 9. The Surge of Consumer Credit 10. Conclusion Notes References Index