Consumer And Citizen Preferences

The consumer interests or preferences of my students are typical of those of Americans in general. Most Americans like a warm bed better than a pile of wet leaves at night. They would rather have their meals prepared in a kitchen than cook them over a camp stove. Disney's market analysts knew all this. They found that the resort would attract more than 14,000 tourists a day, in summer and winter alike, which is a lot more people than now hike into Mineral King.3 The tourists would pay to use the valley, moreover, while the backpackers just walk in.

You might suppose that most Americans approved of the Disney proposal; after all, it would service their consumer demands. You could ride up the mountain and get a martini or watch TV. You could buy a burger and a beer at the gondola stops. The long Kaweah River might be transformed into a profitable commercial strip. Every red-blooded American with a camper, an off-road vehicle, a snowmobile, or some snazzy clothes and a taste for a little "action" might visit the Disney playland.

You might think that the public would have enthusiastically supported the Disney plan. Yet the public's response to the Disney project was like that of my students - overwhelming opposition.4 Public opinion was so unfavorable, indeed, that Congress acted to prohibit the project by making the Mineral King Valley a part of Sequoia National Park.5

Were the rights of the skiers and scene-makers to act freely within a market thwarted by the political action of the preservationists? Perhaps. But perhaps some of the swingers and skiers were themselves preservationists. Like my students, they may themselves condemn the likely consequences of their own consumer interests on cultural or ethical grounds.

I sympathize with my students. Like them and like members of the public generally, I, too, have divided preferences or conflicting "preference maps." Last year, I bribed a judge to fix a couple of traffic tickets, and I was glad to do so because I saved my license. Yet, at election time, I helped to vote the corrupt judge out of office. I speed on the highway; yet I want the police to enforce laws against speeding. I used to buy mixers in returnable bottles - but who can bother to return them? I buy only disposables now, but to soothe my conscience, I urge my state senator to outlaw one-way containers.

I love my car; I hate the bus. Yet I vote for candidates who promise to tax gasoline to pay for public transportation. I send my dues to the Sierra Club to protect areas in Alaska I shall never visit. And I support the work of the American League to Abolish Capital Punishment although, personally, I have nothing to gain one way or the other. (If I hang, I will hang myself.) And of course, I applaud the Endangered Species Act, although I have no earthly use for the Colorado squawfish or the Indiana bat. The political causes I support seem to have little or no basis in my interests as a consumer, because I take different points of view when I vote and when I shop. I have an "Ecology Now" sticker on a car that drips oil everywhere it's parked.

I am not alone in possessing incompatible "consumer" and "citizen" preference-orderings. Economists have long been aware of the existence of these conflicting preference-schedules in the average individual. Indeed, the distinction between consumer and citizen preferences has long vexed the theory of public finance. R. A. Musgrave, reporting a conversation he had with another economist, Gerhard Colm, states the problem as follows:

He [Colm] holds that the individual voter dealing with political issues has a frame of reference quite distinct from that which underlies his allocation of income as a consumer. In the latter situation the voter acts as a private individual determined by self-interest and deals with his personal wants; in the former, he acts as a political being guided by his image of a good society. The two, Colm holds, are different things.6

Are these two different things? Stephen Marglin suggests that they are. He writes:

The preferences that govern one's unilateral market actions no longer govern his actions when the form of reference is shifted from the market to the political arena. The Economic Man and the Citizen are for all intents and purposes two different individuals. It is not a question, therefore, of rejecting individual... preference maps; it is, rather, that market and political preference maps are inconsistent.7

Marglin observes that if this is true, social choices optimal in one set of preferences will not be optimal under another. What, then, is the meaning of optimality? An "efficient" policy, let us say, is one that maximizes the satisfaction of preferences weighted by their intensity, that is, by the amount individuals are willing to pay to satisfy them. If individuals possess conflicting preference-maps, however, how can we say what an efficient policy is?

Marglin jokes that economists, to preserve the coherence of the efficiency concept, "might argue on welfare grounds for an authoritarian rejection of individuals' politically-revealed preferences in favor of their market revealed preferences!" Marglin could correctly point out that the students in my class even though they favored politically the preservation of Mineral King would benefit personally only from its exploitation. Economist Paul Milgrom speculates along these lines that if society wanted economically efficient policies it would have to exclude from the welfare calculus all idealistic or moral choices since these are not related to what people believe benefits them. He notes, "it would be necessary... to reflect only their own personal economic motives and not altruistic motives, or sense of duty, or moral obligation."8 My students plainly revealed conflicting preferences or values and would do so in their political as contrasted with their consumer behavior. Which kind of preference or preference-ordering should we privilege; which should we reject?

Very few economists, if any, advocate an authoritarian rejection of either political or consumer preferences. Some would seek a way to combine both sorts of preferences on the same preference-map. They might agree with Gordon Tullock, who observes that two assumptions about preferences are essential to modern economic theory.

One of these is simply that the individual orders all alternatives, and the schedule produced is his total preference schedule. The second is that he will be able to make choices among pairs of alternatives, unless he is indifferent between them From this assumption and a further assumption, that such choices are transitive, it is possible to deduce the preference schedule, and most modern economists have taken this route.9

If we make these assumptions, which are essential to the theory of welfare economics, then we would say that social policy should seek the overall goal of efficiency - the satisfaction of preference, taken as it comes, and measured by willingness to pay (WTP) - and that no other moral, aesthetic, cultural, or political judgments should count except that they are treated as preferences, at least when equity issues are not urgent. In that case, the only people who can assert political judgments or principles are economists because they speak truth to power, while everyone else expresses - and is only capable of expressing - personal wants and desires.

On this approach, individuals represent channels or locations at which preference or WTP is to be found. If one makes this assumption -which is basic to welfare economics - one may in principle be able to infer, for any individual, a "meta-ordering" of his consumer and political preferences. Once WTP becomes the metric for valuation, then, in principle, all the preferences located at a site can be ordered in relation to that metric. A rational public policy, on this approach, would respond not to the quality of ideas - their plausibility, credibility, or merit - but to the quantity of WTP they represent. The reason for this is simple: economists prefer to define "welfare" or "value" as willingness to pay.

Markets, to be sure, would not reveal this meta-ordering, for it includes politically expressed values. Society must then hire experts to determine people's meta-orderings by estimating the WTP of the individual to satisfy his or her cultural, political, and ethical commitments together with consumer demands. While the fees economists charge will be expensive, no demand is too great, since once society empowers economists to measure its values scientifically on the basis of WTP it can save money by disbanding legislatures, abolishing courts, and doing away with democracy generally.

No matter how much economists are paid, however, they are bound to fail in their attempt to find a "combined" or inclusive preference-ordering. They will fail for logical, not merely practical, reasons. Individuals have a variety of often incompatible preference schedules they reveal in the contexts appropriate to each - for example, in markets, family situations, professional contexts, and political circumstances. To try to combine these preference schedules into one is to search for a single comprehensive role the individual plays; it is to ask for the individual to think and behave not as a parent, citizen, consumer, or the like but in all and none of these roles at once. The individual, in effect, must reveal himself or herself as the "rational man" of economic theory simply because economic theory demands it. As one commentator rightly points out, no such social role exists, unless it is the role of a social moron.10

In some roles - particularly that of a citizen or a member of a community - the individual states what he or she thinks the group should do; the individual makes a judgment with which he or she would expect any member of the community to agree insofar as that person reflects on the values of the community, not just on his or her own interests. In that situation, each member of the group judges, as it were, for all, and if they disagree, they must deliberate and debate together to determine who is right and who is wrong. This way of finding the will of the community may require a vote; the vote addresses a logical contradiction between beliefs, however, not necessarily a conflict among personal interests. Thus, analysts who attempt to shuffle citizen judgments and personal preferences into the same ordering commit a logical mistake. They confuse judgment with preference, that is to say, beliefs about what we should do as a community with expressions of what I want or prefer as an individual.

Some economic analysts attack the problem of split preference-orderings in another way. They note that since efficiency need not be the only goal of social policy, the political process may deal with matters of equity or justice. Thus, the government might rely on self-regarding preferences, measured by WTP, to determine efficient social policies. This is the realm of microeconomics. Then the political process could respond to altruistic or ideal-regarding preference-orderings to organize the redistribution of opportunities and wealth.

This reply may be helpful insofar as consumer preferences reveal a person's interests with regard to his or her own consumption opportunities, while citizen preferences express his or her altruistic concerns about the distribution of consumption opportunities in society generally. Yet citizens advocate many ideal-regarding convictions and beliefs that are not directed to the ways consumption opportunities are distributed. Environmentalists are sensitive to the distributive effects of the policies they favor, but they do not necessarily support these policies for the sake of those effects. To join an organization to preserve an endangered species, for example, is not to seek to achieve greater equity in the distribution of wealth.

One could speculate, indeed, that the distributive effect of environmental protection is often to make the rich richer and the poor poorer.11 When land is removed from development, housing becomes more expensive; consumer products also cost more when corporations are required to pollute less. The rich can afford to live in environmentally protected areas and, therefore, arguably benefit more than the poor from environmental preservation. It has been very difficult for state governments to site environmentally necessary hazardous-waste treatment and landfill facilities; one often hears, however, that these tend to end up in the neighborhoods of the poor. This would be another example of the way the poor may pay the costs of environmental protection while the rich reap the benefits.

I do not think any systematic relationship exists in fact between the policies environmentalists favor and the relative well-being of the rich and the poor or, for that matter, of present and future generations. The speculations I have offered so far are just that - speculations. I know of no empirical study that substantiates them. They suggest, however, that equality or justice is not the only ethical or cultural goal that concerns us as citizens. We may also be concerned as citizens with education, the arts and sciences, safety and health, and the integrity and beauty of the natural environment. These concerns cannot be assimilated to the personal, arbitrary preference-maps of consumers. Nor can they be entirely analyzed in terms of equity or justice.

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