Our Dynamic Being Within: Smithian Challenges to the New Paternalism
29 Pages Posted: 23 Apr 2021 Last revised: 20 Jun 2022
Date Written: June 17, 2022
This essay uses concepts from Adam Smith’s The Theory of Moral Sentiments to develop ideas about choice and welfare. Those ideas are used to offer several challenges to common approaches to behavioral welfare economics and new paternalist policy making. Drawing on Smith’s dialectical concept of practical reason, which he develops in expositing ideas about self-awareness and self-judgment, I argue that inconsistency need not be viewed as pathological. Inconsistent choices might indicate legitimate context-dependencies as individuals reflect over disjointed perspectives and act accordingly. Understanding inconsistency as reasonable raises epistemic difficulties for identifying errant choices and designing corrective policies. Second, I draw on Smith’s theory of the impartial spectator to discuss dynamic aspects of welfare. Welfare is not simply a matter of desire satisfaction but involves a sense of progress and improvement towards better desires. Smith’s account suggests that economists interested in welfare should focus on institutional arrangements that facilitate self-development.
Keywords: Adam Smith; behavioral economics; paternalism; welfare: The Theory of Moral Sentiments; impartial spectator
JEL Classification: B12; D91; I31
Suggested Citation: Suggested Citation