A common framework for economic analysis is to assume that people attempt to maximize lifetime utility subject to a discount rate. But should economic analysis be concerned that your future self has different preferences than your current self? Are you really two different selves whose desires should then be weighed separately? A new paper from the Boston Fed argues that neuroeconomic evidence suggests that the answer may be “yes”, because when we make choices that affect both our current selves and our future selves, we think about the preferences of our future self in the same way we think about the preferences of a different person:
…our central idea is that essentially the same brain system is utilized when individuals attempt to predict or empathize with others and when they attempt to predict or empathize with themselves in the future.
So if the way we think about our future selves is as distant as we think about strangers, then is our current self really adequately considering the wants of our future selves when they make choices that affect our selves in the future? This naturally raises the question of whether and to what extent the state should protect our future selves from the actions of our current selves.
If one seriously considers the future self as a separate self, it seems to me a serious challenge the Szaszian idea that mental illness is just extreme preferences and that suicide should be respected and allowed as a legitimate exercise of choice; if our future selves are separate selves, then suicide is murder.
One way to incorporate this into policy making would be to consider not just the individuals who be affected today by policies, but also how their future selves will ex ante view the policy. For instance, we would consider how people who were “nudged” into quitting smoking by high cigarette taxes feel about the desirability of those taxes both before and after they quit.
Behavioralists who are pleased to see a new justification for their favorite paternalism-lite policies should not celebrate so quickly. Behavioral economic studies that demonstrated seemingly irrational choices may no longer be inconsistent with rational agents when you consider present and future selves separate agents.
People who think that economists are intellectual turf-grabbers probably aren’t going to like this one.