Arguing About Tastes: Modeling How Context and Experience Change Economic Preferences

Mainstream economics considers individual preferences to be fixed and unchanging, but psychologists and social scientists explore how tastes are formed, influenced, and evolve. David M. Kreps argues that economists should abandon the principle that preferences are fixed and incorporate how context and experience shape individual tastes. He develops formal models that illustrate the power of intrinsic motivation and show why applying extrinsic incentives can be counterproductive.

Format: Unspecified
Length: 216 pages
Publication date: 28 November 2023
Publisher: Columbia University Press

Mainstream economics assumes that individual preferences are fixed and unchanging, disregarding the influence of psychology and other social sciences on the formation, influence, and evolution of tastes. While psychologists and other social scientists delve into the intricacies of taste, orthodox economics considers this topic as unconventional and outside its purview.

In his book, Arguing About Tastes, David M. Kreps challenges this notion and advocates for a shift in economic thinking. He argues that economists must abandon the principle of fixed preferences and incorporate the dynamic nature of individual tastes into their analysis. Kreps emphasizes the importance of accounting for dynamic personal tastes when understanding social exchange, particularly in the context of human resource management and on-the-job behavior. He develops formal models that illustrate the power of intrinsic motivation and demonstrate why applying extrinsic incentives can be counterproductive.

Kreps explores the advantages and disadvantages of the principle de gustibus non est disputandum, which asserts that there is no arguing about tastes. He advocates for a new era of economics where preferences are not taken for granted but rather considered as dynamic and subject to change.

In the concluding chapters of Arguing About Tastes, distinguished economists Alessandra Casella and Joseph E. Stiglitz provide their perspectives on the book's arguments. Kreps also responds to their insights, further reinforcing the importance of incorporating preferences into economic analysis.

Overall, Arguing About Tastes offers a compelling argument for a re-examination of economic principles and a recognition of the role that psychology and other social sciences play in shaping individual preferences. By incorporating these insights, economists can gain a deeper understanding of social exchange and develop more effective policies and strategies for promoting economic well-being.

Weight: 370g
Dimension: 148 x 224 x 20 (mm)
ISBN-13: 9780231209908