Putting the study of tastes outside discipline boundaries is not a viable option for economists, despite what Samuelson and Stigler say. We show how different possibilities lead to drastically different recommendations for economic policies.
1. Once basic needs are met, preferences and satisfaction is determined by comparisons with others. If average consumption in the society rises, I must acquire more to maintain the same level of satisfaction. This theory of taste formation has a radical implications for welfare and efficiency of economic policies. This externality in the utility function leads to a rat race. Everyone works hard to get ahead of others, but there is no net gain to society in terms of satisfaction and welfare (except for reductions in poverty). In such a society, encouragement to relax, enjoy life, not be competitive would be effective in increasing welfare. GNP per capita would be a very poor measure of progress; a headcount of the poor would be a more accurate indicator. Scarcity cannot be eliminated by increased production but by reductions in conspicuous consumption and envy, and teaching contentment. Given these radical implications, surely economists cannot afford to be agnostics on this issue.
2. Galbraith has argued that industrial societies over-produce and use advertisements to create artificial demand for the excess supply of products. If this is true, then refusal to analyze tastes serves corporate needs rather than society as a whole. On this view, over-production rather than scarcity is the central problem of industrial societies.
3. It is plausible to suppose that preferences depend on how children are brought up, and that this is subject to social consensus. If our movies lionize Buddha and Mahatma Gandhi, our children will learn to be ascetics. If we portray warriors as heroes, our children will learn to enjoy war. If we teach cooperation, self-sacrifice, generosity and community to our children, they will learn these values. There is substantial empirical evidence to support the idea that social consensus will determine what we consider to be the entitlement of the poor. As Sen (1983) has shown, it is this, rather than scarcity which creates famines.
Again, it is not our goal to argue for any particular theory of taste formation, but just to note that the issue is crucial to topics of fundamental importance in economics. Different theories lead to different roles for scarcity. As such, we cannot afford to place this issue outside the discipline boundaries of economics.