Academic journal article Review of Social Economy

Economic Models of Sin and Remorse: Some Simple Analytics

Academic journal article Review of Social Economy

Economic Models of Sin and Remorse: Some Simple Analytics

Article excerpt

Abstract Economists have recently shown a renewed interest in studying immoral behavior and the feelings of guilt or remorse that such acts engender. Yet the research in this nascent literature has generally lacked mathematical rigor and precision, and the disparate models have not been reconciled with one another. The present paper reviews and formalizes several such efforts in an attempt to form a more unified starting point for future research in this area.

Keywords: morality, sin, contrition, remorse

INTRODUCTION

In the two centuries following Adam Smith's publication of The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776), economics evolved from a branch of moral philosophy into a separate and distinct social science. Eventually, the conscious attempt by neoclassical economists to emulate the physical sciences by modeling and measuring inherently quantifiable phenomena displaced much of the professional interest in the seemingly intractable ethical and moral issues from which the discipline originated. Indeed, for an entire generation, economists schooled in positivism were taught that normative questions were best left to practitioners of other disciplines. Then, perhaps inspired in part by the publication of John Rawls' (1971) magnum opus, A Theory of Justice, economists slowly began to take greater interest in ethical issues some three decades ago. Since that time, as Hausman and McPherson (1993: 723) observe, "economists and moral philosophers have renewed a conversation that was interrupted during the heyday of positivist methodology in both disciplines." Such a conversation is important because, as Hausman and McPherson (1993: 673) point out,

   Without honesty, trust, and goodwill, economic life would grind
   to a halt. Insofar as economists seek to explain economic outcomes
   and to promote economic efficiency, they need to be concerned
   with the nature and sources of useful or harmful moral virtues
   and vices. (1)

Several topics relating economic outcomes to ethical preferences have already received extensive development, including game-theoretic analyses of trust and cooperation in the provision of public goods (see for example, Frank 1987) and charitable donations (see for example, Phelps 1975 and Andreoni 1998). And there is now an extensive literature on the economics of crime that began with the seminal papers in Becker and Landes (1974). Such studies have become familiar and need no elaboration here; but one subject in particular that is just beginning to receive renewed attention from economists is the role of strictly moral sentiments in personal decision-making. The distinction made here between social ethics and personal morality is subtle but important. Interaction with other individuals in society often requires adherence to social norms and the building of goodwill; observed violations are scorned, and the most severe are punished as crimes. (2) A strictly personal morality, in contrast, implies adherence to a set of internalized behavioral and even temperamental standards regardless of the perceptions or actions of others in society. An individual may abstain from the consumption of animal products as a matter of strictly personal morality, for example, even though such consumption is legal and widely practiced by the community at large. A moral code of this sort may be derived from considerations of nature, divine revelation, or other sources, and is often expressed as a sacred covenant with a deity. (3) We may think of adherence to such a standard as virtue or piety, and think of violations of the standard as sin, impiety, or vice. Thus, we may distinguish between sins and (legal or illegal) social offenses on the basis of personal versus social standards. (4) The penalty for a social offense is conditional upon detection by others in society, regardless of whether the penalty is physical imprisonment, a monetary fine, or social disapprobation. …

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