De Gustibus Est Disputandum – Behavioral Foundations of Constitutional Political Economy

Abstract:     
This paper emphasizes an old idea: ideas matter. They affect economic and most importantly political behavior. Economists have started to question the primacy of formal institutions as determinants for economic development, and to accept the fact that the causality between ideas and institutions is bidirectional, and to explore this process. Rational choice type explanations start with preferences and beliefs as data. However, preferences and beliefs are themselves shaped by the necessities of social co-existence. Where the strict rational choice approach starts with a lone Robinson Crusoe, a constitutional political psychology explains mental processes as shaped by actual evolutionary and historical constrains. If we can develop a better understanding of belief and preference formation it might be possible to explain the development of formal institutions.

Number of Pages in PDF File: 26

working papers series