The Importance of Moral Information
This article will argue that information is heterogeneous. It will further argue that a particular kind of information is moral information and that information is a key driver of consumer and producer preference. These preferential changes can result in significant shifts of entire supply and demand curves.
Let’s say you are told something. You are told that apples cost $.50 per pound and bananas cost $.40 per pound. These statements are information. In themselves they do not determine if you will make a purchase. Let’s say we know that your budget is $4.00. We can now create a budget line and combine that with your preference curves to determine exactly what purchase, if any, that you will make. This is neoclassical economics as usual.
The determination of these preference curves is not neoclassical economics as usual. Economists today realize that these curves will not form a reverse L-shape, but that’s about all they understand. The way these curves are calculated is usually by presuming that the past patterns will hold into the future but this is not always true, and it is further problematic when dealing with a double innovation or something that has no past precedent.
Preference curves derive from moral information. Information about what should be done. Moral information is equivalent to preferential information. Let me be clear about the fact that moral information is usually not correct moral information. ‘Moral’ here is simply referring to what should be done. In this view a moral belief is the same as accepted moral information, which is also the same as a preference. The less complicated idea here is that people want to do the things that they think they should do. This is in some ways similar to and in other ways different from the rational actor model of economics.
Remember the information on fruit cost. Now let’s propose that the consumer’s belief is that a balanced diet between the two is preferable, or that the most calories per dollar is preferable, or that bananas are clearly always preferable because they have potassium, or that the consumer is allergic to bananas and should always buy only apples and so on. Each of these scenarios will result in some particular indifference curve.
This method is useful for at least four reasons. First, this method can be used as a independent check on the validity of the implications of the neoclassical method. Second, this method can sometimes be used for double innovations, or things which have no precedent. Third, this method is sometimes easier to analyze, although it is also sometimes harder. For example, research for my method can be conducted through survey of beliefs rather than observation of action. Lastly, my method implies that a major way to change supply and demand curves in a whole economy is by affecting preferences through related moral information rather than any kind of information.
Spreading information through an advertisement on low prices, for example, will not change consumer behavior unless the consumer behavior is contingent on prices. Usually it is, but sometimes it is not. If you are allergic to bananas it doesn’t matter how cheap they get! If you are opposed to guns or abortions, would a discount really make you change your mind? Here we discover something like an price elasticity of behavior where some actions are more or less contingent on price, while others are virtually unresponsive to changes in price. These critical points can be addressed through moral and preferential analysis but not through neoclassical mechanisms.