Economic choice theory is built on utilitarian foundations. The purpose of this paper is to explore whether a foundation of virtue ethics might be more consistent with human nature.
The paper focuses on utilitarianism vs virtue ethics as foundations of economic choice theory.
Economic choice theory describes consumer choice in terms that are inconsistent with findings from recent research in behavioral economics, neuroeconomics, and psychology. The consumers' dynamic optimization problem, as outlined by traditional theory, is unsolvable in the sense that it contains too many unknowns. This means that the consumer must approach the problem in a different manner than is usually suggested by the literature. Moreover, new psychological theories of well‐being suggest that we can, to some extent, choose what we want to want and that true happiness is based on our character as much as it is based on our consumption of goods.
The idea that human choices may not be based on consistent preferences calls into question the policy suggestions of the literature on revealed preference and welfare economics. In particular, we cannot rely on past choices to draw inferences on people's preferences.
To maximize social welfare, society must value and promote the development of virtue and character.
The paper highlights some of the differences between utilitarian and the virtue ethics perspectives on choice.
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