Freedom of Choice: Concept and Content

The idea that freedom of choice is quite central to leading a good life is not a new one. It is, for example, very forcefully discussed by Aristotle. Given the importance of the quality of life of the members of the society in judging the success of economic policies, it is easy to see the centrality of freedom of choice to economic evaluation and assessment. It is, in a sense, more important than wealth, with which so much of economics-as a separate discipline-is concerned. "The life of money-making," as Aristotle noted, "is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something But what is freedom of choice? Why is it important? Is its importance intrinsic or is it also-like wealth-valuable as a means to other ends? There are different concepts of freedom and different ways of valuing it. Much of this lecture will be devoted to addressing + Alfred Marshall Lecture given on 22nd August, 1987, in Copenhagen at the annual meeting of the European Economic Association. I have greatly benefitted from reading the preliminary versions of Janos Kornai's Presidential Address ("Individual Freedom and Reform in the Socialist Economy") and Assar Lindbeck's Schumpeter Lecture ("Individual Freedom and Welfare State Policy") also given at the same meeting of the European Economic Association. For helpful comments and suggestions, I am also most grateful to Jean Dreze,-2-these issues, and to pursuing their implications. I will also try to show the foundational as well as logistic importance of these questions for economics. The arguments will be illustrated with particular examples chosen from pure theory as well as applied policy analysis. But the reach and relevance of the concept of freedom in economics is, in fact, far wider than what these particular examples can capture. Such basic economic notions as individual well-being, social welfare, living standard, consistent choice and rational behaviour can all be fruitfully reexamined by paying more adequate attention to the perspective of freedom. Finally, I shall also suggest that the neglect of this perspective has had a profoundly restrictive and limiting effect on the nature of our discipline. 2. Intrinsic Value versus Instrumental Role That freedom must have instrumental importance as a means to other-ends is obvious enough. For example, what living standard we can enjoy must depend, at least partly, on how free we are …