Our Dynamic Being Within: Smithian Challenges to the New Paternalism

33 Pages Posted: 23 Apr 2021 Last revised: 11 Apr 2022

See all articles by Erik W. Matson

Erik W. Matson

Mercatus Center at George Mason University

Date Written: April 22, 2021

Abstract

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

Matson, Erik W., Our Dynamic Being Within: Smithian Challenges to the New Paternalism (April 22, 2021). Available at SSRN: https://ssrn.com/abstract=3832079 or http://dx.doi.org/10.2139/ssrn.3832079

Erik W. Matson (Contact Author)

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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