On the (non) History of Preference Purification in Modern Economics

Abstract

Economists have typically viewed an individual's economic choices as being tightly linked to their preferences, and in turn, their preferences being tightly linked to the welfare associated with those choices. But behavioral economics drove a wedge between choice and preference, and thus, in turn, between choice and welfare. Trying to reconcile the choice-preference-welfare relationship came to be called the reconciliation problem and one of the main approaches to the problem has been called preference purification. But the presumption has been that preference purification only became an issue with the rise of behavioral economics. This paper will argue that is not the case. During the first part of the twentieth century when the ordinal utility theory of consumer choice was still in the early stages of development, there were many economists who thought about preferences in ways that were quite similar to the way that preferences have been characterized in recent debates about preference purification. This paper will discuss the history of this literature in a way that emphasizes the difference between the situational context of this early research on ordinal utility and the quite different situational context of the recent debates on preference purification. The conclusion suggests how these differences in situational context prevented the similarities between the two literatures from being recognized.