Working paper 1/2015
Abstract: In his essay Against Parsimony (1985), Hirschman argued in favor of “complicating” rather that simplifying economic theory. This paper focuses on two of the economic phenomena that, according to Hirschman, are in need of greater complexity.
The first refers to the process of choice and preference formation: a change in tastes that is preceded by the formation of meta-preferences is in fact, for Hirschman, a change in values. These autonomous, reflective kinds of changes as opposed to wanton, non-reflective kinds, do not take place simply in response to price changes. Contrary to the standard assumption made by economists, de valoribus est disputandum.
The second problem refers to the existence of non-instrumental actions. Striving for truth, love, beauty, common good, justice, liberty, friendship and salvation have non-calculable, non-measurable outcomes. According to instrumental reasoning such actions are inexplicable, “a mystery”. Moreover they are often painful and costly to achieve. Why then are they pursued?
According to Hirschman, changes in choice behavior implying changes in values are the expression of a conflict between meta-preferences and preferences, and this, in its turn, is the result of disappointment. If disappointment is with private consumption practices social and public commitments can provide the alternative values; if, vice-versa, disappointment is with public action, private concerns might provide the prevailing values. In discussing these points, I shall show that there are other sources of conflict, besides disappointment, that have both a cognitive and affective dimension and whose effects on preferences might result in altered choices. These contrasts, such as those between the known and the experienced, or between the expected and the realized, belong to a dimension of choice in which exploratory behavior, interest and intrinsic motivation are the positive determinative elements for change. In such cases not only de valoribus, but also de gustibus est disputandum.
JEL codes: D11, D12, D61, H4
Keywords: Preferences, meta-preferences, economic change, public action.