Democracy requires a certain degree of rationality among voters. On the other hand,empirical evidence, in particular experimental economics shows that human behaviour deviates from fully rational behaviour. Moreover, it is known that preferences of people are influenced by their social environment and their own past consumption experiences. This causes difficulties for welfare economics – the traditional approach taken by economists for answering policy questions and for justifying market outcomes. This lecture will show that the hypothesis of adaptive preferences is consistent with observed human behaviour and allows a generalisation of welfare economics to cover endogenous formation of preferences. It is also consistent with the rationality requirements of democracy. Professor Weizsäcker suggests that economic theory, economic policy advice and political theory move from the model of “homo oeconomicus” to the model of “homo oeconomicus adaptivus”.
Professor Carl Christian von Weizsäcker
About the speaker
Carl Christian von Weizsäcker studied originally in Basel, where he obtained his Ph.D. in1961. He was Professor of Economics at the universities of Heidelberg (1965-2003), MIT(1968-1970), Bielefeld (1972-1974), Bonn (1974-1982), Bern (1982-1986), Cologne (1986-2003 when he was awarded emeritus status). He is now a senior research Fellow at the MaxPlanck Institute for Research on Collective Goods. From 1989-1998 he was Chairman of the German Monopolies Commission. From 1977 until today he is a member of the advisory group of the German Ministry of Economic Affairs. He is a Fellow of the Econometric Society and a founding member and Fellow of the European Economic Association. Professor von Weizsäcker was a founding trustee of the Anglo German Foundation, served throughout its 35 year existence and was Deputy Chairman from 1999-2009.
The lecture was introduced by the German Ambassador, His Excellency, Ambassador Georg Boomgaarden.