ECONOMIC MAN AS A MORAL INDIVIDUAL

First, there is the broadly ethical question 'How should one live?' To emphasize this connection is not the same as asserting that people will always act in ways they will themselves morally defend, but only to recognize that ethical deliberations cannot be totally inconsequential to actual human behavior. (Sen [1988, 3-4]) I. INTRODUCTION It is a plausible proposition that some people's behavior is affected significantly by moral considerations. A growing literature in economics and related disciplines, reviewed and analyzed in earlier work by two of the authors (Goldfarb and Griffith [1991a], Griffith and Goldfarb [1991b]), explores the possibility and desirability of incorporating these moral considerations into the economic analysis of individual behavior.(1) A variety of approaches to introducing moral considerations into economic analysis have been put forward by contributors within economics, including Sen [1974, 1977, 1988], Hirschman [1985], Phelps [1975], Vanberg [1988], Brunner [1987], Frank [1987, 1988], Hirshleifer [1985], Mueller [1986] and Schotter [1981], among others. Among related disciplines, the philosophers Gauthier [1986] and Ulman-Margalit [1977], the sociologists Coleman [1987] and Etzioni [1986, 1988], and the political scientist Axelrod [1984] all present relevant analyses. As our earlier review indicated, these authors pursue three competing approaches: introducing moral values as part of preference functions, introducing moral norms or rules as constraints, and introducing such norms as decision rules for coping with strategic interaction (gaming) situations. We propose here a concrete method for including moral values in the economist's model of preferences. Our method maintains the standard economic framework of an agent maximizing his or her utility subject to constraints, but modifies the utility function so that the enjoyment or utility from consuming a given set of goods varies in a "lumpy" or "discontinuous" way depending on the concurrent moral content of the individual's behavior. Moreover, it offers an analytical representation of the linkage between preferring to act morally and the individual's being faced with possibly significant differences in constraints because of such moral considerations.(2) The paper proceeds as follows. Section II indicates where our approach fits in the existing literature incorporating moral values into preference functions. Section III sets forth our approach to specifying these utility functions. Section IV suggests some extensions. Section V presents further discussion and conclusions. II. RELATION TO THE LITERATURE While not directly inspired by the occupational choice literature, our approach can be usefully viewed as an application of the economic model of occupational choice to modelling moral preferences.(3) This approach helps fill an analytical gap between Hochman and Rodgers' [1969] "small" modification of the standard microeconomic framework and the more extensive departures suggested by Etzioni [1986] and Sen [1974, 1977]. Our model helps fill this gap by providing what we think is an intuitively appealing treatment of the "discontinuous" or "lumpy" content of important classes of moral decisions. Hochman and Rodgers [1969] present an analysis of the possible relationship between moral and other values in the context of charitable transfers. Their analysis is now a standard ingredient in intermediate microeconomics textbooks.(4) Their "interdependent utility" approach puts impoverished individual Y's income or utility into individual X's utility function. One then analyzes the conditions under which individual X will either himself transfer resources to individual Y, or vote for a government program to make such a transfer. This approach allows transfers that vary continuously from zero to very large amounts of money, with decisions involving trade-offs at the margin. For our purposes, this marginal trade-off feature, so useful for analyzing charitable transfers, presents a very significant limitation when attempting to apply the model to a wider range of moral behavior. …