RENT SEEKING AND SOCIAL INVESTMENT IN TASTE CHANGE*

Authors


  • *

    We are indebted to Gary Becker and to two anonymous referees for helpful comments on previous versions of this paper, and to Ruth Ben-Yashar for her able research assistance.

Abstract

We study the social allocation of resources to the alteration of preferences. Such taste changes are Pareto-preferred if, according to both the original and the new taste regime, the resource allocation resulting from the taste change constitutes an improvement. According to this criterion, a degree of altruism is in general Pareto-preferred, because it reduces socially wasteful activities, such as lobbying, bargaining and other rent seeking activities designed to increase one agent's expected share of the contested rent. We present a stylized model that captures the role of education in generating altruism and thus reducing the expenditure on rent seeking.

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