Arguing about tastes : modeling how context and experience change economic preferences

"Gary Becker once wrote a periodic column for Business Week, and, in the December 29, 1997 issue, his column was entitled "Why Every Married Couple Should Sign a Contract." Becker argues, roughly, that marriage, a complex contractual arrangement (subject to dissolution), should be fine-tuned to the circumstances and desires of the two parties, assuming their beliefs and preference are static. In lieu of defaulting to one-size-fits-all divorce law, Becker argues, it is better to take matters in to your own hands and craft a detailed agreement best suited to you and your partner. And, to deal with the objection that one party might take the mention by the other of such an arrangement as a signal of . . . something less than romantic love, Becker says that making such an arrangement mandatory will defeat this signaling problem. But is this premise-that negotiating a prenup will have no impact on preferences-reasonable? David Kreps instead seeks to challenge this assumption, and indeed in a broader sense, the principle of orthodox economics that de gustibus non disputandem est, there is no arguing about tastes. Building on Arrow formal models of choice, preference, and utility maximization, Kreps argues that accounting for dynamic personal tastes should be a mainstream element of economics, focusing on the interaction between intrinsic motivation and extrinsic incentives, both in static situations and in more dynamic contexts. He ends with a discussion of whether or not accounting for individual preferences is good for the soul of economics."