Our Malleable Preferences: Part 1

Photo: Parthiv Kurup

“When a man is tired of London, he is tired of life …” – Samuel Johnson

Andrew grew up in modest circumstances. When he was 10, having a piece of chocolate was a big thing. He imagined a future in which he’d be able to afford as many chocolates as he wanted. Remarkably, that day has arrived. But he seldom eats chocolate now, save for dark chocolate in the (possibly mistaken) belief that it’s helping his heart. Or sometimes he’ll indulge in an extreme chocolate concoction at a fancy restaurant, but, day-to-day, he doesn’t consume as much as he had imagined he would when he was 10.¹⁾By contrast, Elizabeth’s Dad grew up being served a 1/6th slice of a small brick of ice cream every Sunday evening, after dinner. Upon receiving his first paycheque, at age 18, he stopped on the way home to purchase a full brick, which he ate in its entirety on the spot. Elizabeth grew up in a home where there was always ice cream in the freezer and there were no restrictions on when or how much.

Of course, this story is trivial. All of us undergo similar transformations. We don’t want all the same things at 20 as at 30 or 50… or 80. We call this life.
But the malleability of our preferences raises some profound questions for how to approach public policy to foster flourishing, questions that are almost all left unanswered.

Here are just 4 (well 5) of them:

1. Should we care about the malleability of preferences?
2. Are certain preferences more conducive to flourishing than others?
3. Does flourishing require that an individual have (some) control over how preferences change over time? 3.1. How can this be achieved?
4. Should the state through public policy – in its attempt to foster flourishing – actively try to change (manipulate?) its population’s preferences?

The answers to these questions are: yes; in some cases; yes, with difficulty; and maybe. In this article, we address question 1.

Delving into the origins of preferences takes us into uncomfortable territory. Orthodox economics takes preferences as fixed and something to be maximized. In this tidy world, policy makers don’t need to worry about the dynamic trajectory of preferences because preferences just are. Where they came from and where they are going (if anywhere) are not important questions.

Unfortunately, we’re not in that world. We already have incontrovertible proof that an individual’s preferences can be changed, because enormous resources are expended to indeed change them. We call this marketing, advertising, public relations. We are continuously bombarded with messages that tell us how we can achieve fame, success, money, slenderness… or that if we consume a certain product we will be handsome, or in love, or sexy, or smart. In total, global advertising is a $100 billion business. The very fact that the advertising industry exists – and exists to the extent that it does – is itself proof, in the logic of economics, of the malleability of our preferences from the outside.

And here is the public policy challenge: most current attempts at manipulation of preferences have no relationship with flourishing. That is, those who are trying to change individual’s preferences are doing so for their own ends, not those of the individual. In the orthodox economics world where preferences were fixed, marketing could be viewed as providing information (which is, in fact, what the industry says), leaving no inherent conflict.

But in the real world where preferences can be changed (by oneself through some process, or from the outside through some other process(es)), there’s no reason to believe that someone else’s attempts to change your preferences will foster flourishing.

Of course, it might work. I see an advertisement (or a Like from my Friend) and give Tango dancing a go, attracted by the image of sexy Argentina and the beauty of the music and movement. I love it and am happy to incorporate it into my preferences and spend money and time pursuing a new hobby. And the teacher or club who advertised and provided the service achieves their objectives – they have sold me something.

But it can easily go the other way. Although I drink the beer, extraordinarily attractive potential partners don’t show up in my life in greater numbers than before, nor do I attain the body that the guy in the advertising has.

Overall, in a world where a profit- and growth-seeking entity can both create demand for its good – by cleverly shaping preferences – and fulfill that demand, it seems inevitable that the amount of the good in question will be over-produced and over-consumed relative to the production/consumption that would create flourishing.²⁾It would be a fairly easy exercise to construct a simplified mathematical model (as economists do) of this and show under these conditions the good in question is over-produce/over-consume versus the optimum.

And when we look around at our complex economic ecosystems (CEEs), we see multiple examples of true flourishing being thwarted by over-production and/or over-consumption of certain goods due to a supplier’s ability to shape preferences (or even demand) directly. Examples of this include the following:

1. We’re told (by those that should know, such as the real estate industry) that housing prices will always go up and a granite counter top is an investment (so changing our preferences), and we spend too much getting on the housing ladder.
2. Medicine (in some places) is privatized and pharmaceutical and other providers can advertise directly to the patient population, so we spend too much on medical services, with dubious improvements (or even deteriorations) in health.
3. Certain foods are engineered to be ‘moreish’³⁾Definition: having a very pleasant taste and making you want to eat more. (certainly a manipulation of preferences) so that you consume more of them; of course, such foods are certainly ones that contain high salt, fat, and processed sugars that diminish health.
4. We’re encouraged (by experts) to choose actively managed investment funds or do self-investing where we trade too much (versus low cost index funds) leading to spending more on financial services than is optimal for personal flourishing.

A particularly disturbing example of this is the privatization of prisons. When this happens, there is now a group in society that has a strong financial interest in having as many people in prison as possible, creating a corollary interest in shaping voter preferences so that people are sent to prison for less serious offences. As with many challenges in modern society, the US leads the way here.⁴⁾See Vicki Pelaez, “The Prison Industry in the United States: Big Business or a New Form of Slavery?” at Global Research: Centre for Research on Globalization, US Prisons.

And in light of Covid-19, we mustn’t neglect the similar problem of privatized long-term care homes, which left many elderly Canadians vulnerable (indeed, dead) due to not only the ravages of the virus, but also the effects of profit-maximizing that caused such egregious failures as neglecting to air condition homes and to provide enough staff to foster flourishing lives. Of course, government is also guilty of cost-cutting when it comes to care of the elderly (among other things), and we hope that what came to light in Canada during Covid-19 will increase demand by the electorate for policy that reflects respect of the human dignity of our elderly.⁵⁾See, for example, Liam Casey and Michelle McQuigge, “Disturbing’ Ont. long-term care home report doesn’t come as surprise to families, at CTV News, May 27, 2020: CTV News: Long-Term Care . Accessed August 3, 2020.

In a world where preferences are not fixed, and where the shaping of individual preferences is complex and influenced by multiple factors and groups, avoiding uncomfortable questions around these issues will prolong the subversion of flourishing.