Introducing Virtue Ethics into Normative Economics for Models with Endogenous Preferences

The next LEMMA seminar will host Masao Ogaki from Doshida University.

Masao is a professor of economics at Doshida University. He earned his Ph.D. in 1988 from the University of Chicago under the supervision of Lars Peter Hansen (2013 Nobel Prize winner). His research covers a wide range of fields, including behavioral economics, macroeconomics, international economics, econometrics, and cultural economics.

Masao Ogaki will present Introducing Virtue Ethics into Normative Economics for Models with Endogenous Preferences

Co-author:  Vipul Bhatt 

Abstract: An important role for normative economics is to provide an analytical framework to evaluate social states. This evaluation is based on value judgments derived from moral views of members of the society. There exist three major approaches in normative ethics, which formalize many people's moral views. These are consequentialism, which focuses on consequences of actions; deontology, which focuses on moral duties, and virtue ethics. Virtue ethics has two important aspects: acquiring virtues (which we call the learning aspect) and human flourishing by using virtues and abilities (which we call the flourishing aspect). Among these, formal analytical frameworks have been developed for important aspects of consequentialism, deontology, and the flourishing aspect of virtue ethics. However, normative economics does not have a formal analytical framework for the learning aspect of virtue ethics. In this paper, we develop such a framework for models with endogenous preferences. We apply this framework to a rational addiction model and an intergenerational altruism model. We find that the introduction of virtue ethics can lead to very different policy recommendations than those based solely on welfarism, where emphasis is on maximizing social welfare functions. In contrast to the commonly held view, we find that incorporating virtue ethics into normative economic analysis may not always lead to greater government interventions.