Refined Tastes, Coarse Tastes: The Apartheid-of-Goods Enigma

Abstract

The “Apartheid of Goods” is the status stratification of society: Some decision makers cannot enjoy coarse goods such as soap operas while others cannot enjoy refined goods such as Vivaldi operas. The Apartheid of Goods is an enigma for the social welfare function; it makes SWF ill-defined. There is no single metric that allows us to adjudicate the utility functions across camps segregated by the refinement of taste. This paper proposes a model that solves the enigma: DMs start with the same tastes, but because of income inequality, they invest differently in the “sophistication capital” needed to appreciate refined goods.

Keywords: Income Inequality, Putty Capital, Low- and High-brow Preferences, Social Welfare, Utilitarianism