Attitude Choice, Economic Change, and Welfare

Economists take preferences as given. This paper analyzes the choice by an individual of her preferences, her attitude towards wealth in particular. Evidence that one?s attitude towards wealth may affect utility and that people can, at least to some extent and at some costs, choose their attitudes is surveyed. Using a simplified model of attitude choice, this paper analyzes the comparative-static effects of some economic changes and shows that individuals with high/low incomes tend to adopt an attitude emphasizing the importance of material consumption more/less. Economic growth unambiguously makes the rich better off (unless the generation of growth itself is too costly on the rich) by increasing both their income and the prevailing materialistic attitude. Its effect on the poor is ambiguous as it makes them better off through a higher income level but worse off through a higher prevailing materialistic attitude. Some implications of the results are also discussed