Our Dynamic Being Within: A Smithian Critique of the New Paternalism
31 Pages Posted: 23 Apr 2021
Date Written: April 22, 2021
Adam Smith’s ideas in The Theory of Moral Sentiments anticipate formulations in behavioral welfare economics. Smith often models the person as a duality: an acting self and a being within. Like many behavioral welfare economists, he recognizes that our true desires, which in a static framework correspond to the sentiments of our inner being, may go unfulfilled from the appetites of our acting self. Despite the similarities, Smith’s ideas pose challenges to the behavioral paternalist programs which derive from such views. Smith understands that the desires of our being within would cash out differently in different circumstances. There is no algorithm for discerning error in choice from an impersonal, external perspective. Such considerations pose an identification problem for behavioral paternalist efforts. At a deeper level Smith understands that our being within is not a static rational agent, but a learning and discovering being, a being in the process of discovering what his or her preferences actually are. Developing Smith’s views, I argue that a Smithian ought to conceive of the continuing self as a locus of affirmation, a being who affirms her present desires, despite her knowledge that those desires may yet evolve into something else.
Keywords: Adam Smith; behavioral economics; paternalism; error; welfare.
JEL Classification: B12; D91; I31
Suggested Citation: Suggested Citation