Accounting for Tastes: Correlates of Risk and Time Preferences

Abstract

Most economists assume that tastes are exogenous, that tastes do not lend themselves to economic analysis, and that their development should therefore be ignored. While most recognize that tastes are probably influenced by psychological and sociological factors particularly as they influence family life, few economists speculate about what those factors might be and the corresponding implications they might have for economic policy pronouncements. By assuming tastes to be exogenous, economics is rendered an inherently conservative discipline; that is, much economic analysis provides an ideological rationale for the status quo. Economists are more likely to ask, How might resources be better allocated to satisfy existing tastes? rather than, Are tastes themselves in any sense desirable or undesirable and should they be changed? Policymakers, fortunately, are willing to ask both questions and to be guided by social science research in arriving at answers. Social scientists have provided valuable information to policymakers concerning, for example, the causes and cures for bigotry. Education researchers have produced ample evidence that, for children studying in racially mixed classrooms, attitudinal measures of racism are less than for children who study in segregated classrooms. The primary aim of desegregation and civil rights legislation in the eyes of many policymakers has been to change the tastes and preferences of segregated populations concerning their views of each other.