Changing People’s Preferences by the State and the Law

Abstract

Abstract In standard economic models, two basic assumptions are made: the first, that actors are rational, and the second, that actors’ preferences are a given and exogenously determined. Behavioral economics — followed by behavioral law and economics — has questioned the first assumption. This Article challenges the second one, arguing that in many instances, social welfare should be enhanced not by maximizing satisfaction of existing preferences but by changing the preferences themselves. The Article identifies seven categories of cases where the traditional objections to intentional preference change by the state and the law lose force and argues that in these cases, such a change warrants serious consideration. It then proposes four different modes of intervention in people’s preferences, varying in intensity, on the one hand, and in the identity of their addressees, on the other, and explains the relative advantages and disadvantages of each form of intervention.