Discussion Paper Series 2014-E-17

Normative Behavioral Economics Based on Unconditional Love and Moral Virtue

Vipul Bhatt, Masao Ogaki, Yuichi Yaguchi

An important difficulty in many models of behavioral economics is that preferences are endogenous and unstable. Therefore, preferences may not provide the most desirable yardstick to evaluate social states. This paper proposes unconditional love as a candidate for such a yardstick. The concept of unconditional love, although sublime, is often hard to apply for practical policy recommendations. We propose an intermediary learning stage, where learning to unconditionally love is desirable, and policies that promote such learning are deemed to be good. We illustrate the use of this principle in models of endogenous altruism.

Keywords: Normative economics; Behavioral economics; Weak Pareto principle; Principle of learning to unconditionally love; Virtue ethics; Endogenous preferences

Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.

Copyright © 2014 Bank of Japan All Rights Reserved.

Home Japanese Home