The Political Economy of Paternalism

Kai Konrad

Working Papers from Max Planck Institute for Tax Law and Public Finance

Abstract: The study analyzes and predicts how individual preferences and majoritarian political decisions about the extent of paternalism in a society depend on the distribution of genuine preferences for economic activities, the distribution of information about these preferences, and the distribution of capabilities for individual decision-making. The theory explains the observed heterogeneity of preferences and suggests that citizens whose tastes differ from the mean of the population and those with high decision-making abilities favor a libertarian regime. To the extent that decision-making ability is a learnable activity, a feedback loop emerges between anticipated majority decisions about paternalism and individual investments in citizens own decision-making abilities, leading to a multiplicity of majoritarian political equilibria. Keywords: paternalism, libertarianism, autonomous decision-making, majoritarian decisions, decision skills, formation of decision capabilities.

JEL-codes: D18 D78 H11 (search for similar items in EconPapers)
Pages: 37
Date: 2023-02-05
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