The evolution of preferences Why ‘sovereign’ preferences may not lead to sustainable policies and what to do about it

The conventional economic paradigm assumes that tastes and preferences are exogenous to the economic system, and that the economic problem consists of optimally satisfying those preferences. Tastes and preferences usually do not change rapidly and, in the short term, this assumption makes sense. Sustainability is an inherently long-term problem and in the long run it does not make sense to assume tastes and preferences are fixed and given. If preferences are expected to change over time and under the influence of education, advertising, changing cultural assumptions, etc., the old assumption of ‘consumer sovereignty’ is not adequate. Different criteria of optimality are needed. How preferences change, how they relate to the goal of sustainability, and how they can or should be actively influenced to satisfy the new criteria needs to be determined. Ecological economics has emphasized the three rank ordered goals of ecological sustainability, fair distribution, and allocative efficiency. This paper examines how preferences evolve and change over time and the implications of this for developing policies that meet these three goals in democratic societies. © 1998 Elsevier Science B.V.