The Political Economy of Paternalism

Konrad, Kai A.

doi:10.2139/ssrn.4351518

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The Political Economy of Paternalism

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Konrad, Kai A.
Public Economics, MPI for Tax Law and Public Finance, Max Planck Society;

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Citation

Konrad, K. A. (2023). The Political Economy of Paternalism. Working Paper of the Max Plank Institute for Tax Law and Public Finance, No. 2023-02. doi:10.2139/ssrn.4351518.

Cite as: https://hdl.handle.net/21.11116/0000-000F-1FB5-3

Abstract

The study predicts how individual preferences and majoritarian political decisions about the extent of paternalism in a society depend on the distribution of genuine preferences for economic activi-
ties, the distribution of information about these preferences, and the distribution of capabilities for individual decision-making. It explains observed heterogeneity of preferences and suggests that citizens with eccentric tastes and with high decision-making abilities favor a libertarian regime. If decision-making ability is a learnable activity, a feed-back loop emerges between anticipated majority decisions about paternalism and individual investments in citizens own decision-making
abilities, leading to a multiplicity of majoritarian political equilibria.