RENT SEEKING AND SOCIAL INVESTMENT IN TASTE CHANGE*

Joel M. Guttman, Shmuel Nitzan and Uriel Spiegel

Economics and Politics, 1992, vol. 4, issue 1, 31-42

Abstract: We study the social allocation of resources to the alteration of preferences. Such taste changes are Pareto‐preferred if, according to both the original and the new taste regime, the resource allocation resulting from the taste change constitutes an improvement. According to this criterion, a degree of altruism is in general Pareto‐preferred, because it reduces socially wasteful activities, such as lobbying, bargaining and other rent seeking activities designed to increase one agent's expected share of the contested rent. We present a stylized model that captures the role of education in generating altruism and thus reducing the expenditure on rent seeking.

Date: 1992
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