Front Page Titles (by Subject) Part 1.: Individual Private Choice - The Collected Works of James M. Buchanan, Vol. 10 (The Reason of Rules: Constitutional Political Economy)
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Part 1.: Individual Private Choice - Geoffrey Brennan, The Collected Works of James M. Buchanan, Vol. 10 (The Reason of Rules: Constitutional Political Economy) 
The Collected Works of James M. Buchanan, Vol. 10 (The Reason of Rules: Constitutional Political Economy) Foreword by Robert D. Tollison (Indianapolis: Liberty Fund, 1999).
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Individual Private Choice
The commonplace warning that “we start from here” prefaces any serious discussion of institutional-constitutional change. In a casual treatment, the “here” is atemporal. Our emphasis is instead on the temporal element. Not only must we start from here, defined as where we are, but we must also start now, in the present. We cannot undo events that have already taken place. We may, of course, reinterpret our history, but we cannot go back in time and reverse its course.
We can act only now; we cannot act in the past. But neither can we act in the future. We confront choice options now, not later, and although the action that we take now may influence the choice of options available to us later, along with our possible orderings of these options, the fact remains that we cannot, in the present, make choices in future time. Nonetheless, the choices that we make now must embody the recognition that we will also face choices at some later date.
The Ultimate Z’s
We shall relate the analysis here to modern developments in the theory of individual choice behavior, notably to the work of Gary Becker and his colleagues.1 In that work, the arguments in an individual’s utility function have been redefined so that they represent composite “commodities,” the Z’s, which are themselves produced by the household through combinations of inputs, the X’s, which are purchased as ordinary goods in the marketplace. Household production functions describe the relevant trade-offs among the separate inputs, the X’s, that are variously combined to generate the Z’s. The individual is modeled as maximizing utility, defined over the Z’s, given the market or shadow prices for the X’s, within some overall income constraint.
From this basic construction, it is relatively straightforward to shift one stage back in the individual’s decision process and to drop the income constraints by including leisure, or desired usage of time, as a Z commodity with its own shadow price. We can then model the individual as choosing a whole profile of behavior, constrained by time, talent, and initial endowments. This one step back in the decision sequence would seem to be as far as most modern economists could go. They would not seek to go farther back in the imagined choice chain, to get behind the set of composite commodities, the Beckerian Z’s. Economists become uncomfortable when they are unable to specify arguments in utility functions.
Our interest here, however, is not in further elaboration of the analysis of utility maximization in the orthodox economists’ framework. Our interest lies, instead, in moving beyond the Beckerian Z’s to what we might call the “ultimate Z’s.” Our concern is with an individual’s selection of a life-style, or behavior pattern, in a more comprehensive setting than any that might be conceptualized as the maximization of a function defined over a set of known arguments. The individual may choose a life plan, a sequence of actions, that he hopes will ensure that his experiences are “interesting,” “good,” “rewarding,” and/or “happy.”
There must, of course, be minimal attainment of the Beckerian Z’s for the achievement of such experiences. The basic human needs—food, clothing, shelter, sex, security, liberty—will place bounds on feasible life-styles. But, essentially, individuals in modern Western society have long since attained levels of affluence that enable them to transcend these elementary biological determinants of behavior.
Preferences for Preferences
To what extent are the preferred trade-offs among the ultimate Z’s chosen? Can we really go much beyond the Beckerian Z’s? Can we say anything about the formation of preferences? Can we discuss meta-preferences meaningfully?
More can be said once we recognize that individuals make choices sequentially over discrete time periods and that choices made in one period influence those made in later periods. We stress here that we seek to do more than introduce the capital investment aspects of current-period choices. We can readily incorporate such aspects into the standard framework by defining a relevant Z as “consumption in time ti,” hence allowing a person at time t0 to devote available resources to the production of that Z. This analysis implicitly presumes that the individual chooses only at t0. No multiperiod choice is introduced, although the temporal interdependence of utility is embodied in the analysis.
We propose to examine genuine multiperiod choice in a setting where the individual, having chosen among the relevant Z’s, all dated as of time t0, moves through time to find himself at t1. He is not the same person who confronted choice at t0, and this fact will be taken into account when the initial choice is made at t0. At t1, the individual will be a “product” of choices that have been previously made at t0 and over the whole sequence of periods t-1, t-2, ..., t-n. Within relevant limits, the individual constructs himself as an acting and choosing entity by the actions taken in periods before that in which choice is now confronted.2
The individual has a private, personal history, and this history will have shaped both the preferences and the constraints that interact to determine choice behavior in any period t0. A person who has never tasted wine cannot exhibit a preference for “good” wines even when the standard constraints allow such options to be within the potential consumption bundle. A person who has not trained for long-distance running cannot compete in the Boston marathon regardless of a strong desire to do so.3 In the conceptualization here, an individual is analogous to a specific capital good, a machine designed and constructed with a determinate form and shape and, therefore, capable of being used over a relatively limited range of functions, departures from which can be made only at some anticipated costs in efficiency.
Rationality precepts require that this temporal interdependence be recognized. A rational person, temporally located at t0 and given a personal history, will recognize that current-period choices among relevant Z’s will, in turn, directly affect the range of Z’s that will be potentially attainable in t1 and beyond and, also, that current-period choices can shape, to an extent, the Z’s that will be preferred in later periods. “The individual” at t1 will be predicted to be some continuity of the person who faces the choice options at t0; the individual “constructs” the chooser at t1 and beyond, as well as the set of choice options, within limits. (The limits of the interdependencies are not important for the analysis as such.) A preference ordering of the set of possible “persons at t1” that the chooser reckons to be feasibly attainable would seem no different, conceptually, from a preference ordering of a set of basic Z commodities.
If such a preference ordering is admitted to be possible, and if current-period choices are acknowledged to affect the choices to be made in subsequent periods, the analysis must involve a “preference for preferences.” Some futures must be deemed better than others, and choices in the present will tend to reflect these preferences.
Past, Present, and Future
Despite the anticipated continuity of being, the individual knows that the person who will confront the choices in t1 will be different. This future reality must enter into the decision calculus of the present, in t0, as a constraint. Within limits, the person who will exist in t1 can be “constructed” so as to reflect the preference ordering exhibited at t0—but only within limits. Such a construction will, at best, be only partial, and the chooser at t0 will know that the person alive at t1 must exhibit a will and a personality, a set of preferences, that are “all his own.” The new person, emergent only in t1, may find it in his power to destroy or modify seriously any plans that may be carefully reflected in the forward-looking choices made at t0. The person who chooses at t0 operates in a tension that opposes the continuity of his temporal existence as a conscious being to the reckoned potential for temptation by the less reflective other selves that the future may bring forth.
As a continuing conscious being, the individual may be reluctant to impose constraints on his freedom of action. Liberty may be valued even if the person does not know what will be the object of his actions in future periods. At the same time, however, totally unconstrained behavior may be genuinely feared. A preferred life plan is vulnerable to depletion and erosion by patterns of behavior that the “other” persons in future periods may exhibit. From a planning perspective in t0, therefore, the reference individual may seek out ways to make “subversive” actions costly to those “other persons” that may emerge from the same consciousness in future periods and, in extreme cases, may try to prohibit such behavior.
There are two distinct but related ways the individual might attempt to accomplish this purpose. The first involves the selection of a set of moral precepts that can guide both present- and future-period choices. To the extent that a person establishes a coherent and subjectively meaningful morality, and draws on intellectual and emotional resources in the legitimization and justification of this morality in a manner designed to leave quasi-permanent residues, he will succeed in increasing the costs of any future-period departures from the life plan partially described by adherence to the precepts of such morality. An internal personal commitment to live by a set of moral rules will not explicitly bind choices. But such a commitment can ensure that undesired patterns of behavior (as evaluated from the perspective of t0) will give rise to feelings of guilt. Consider the work ethic as an example. If a person imbeds this ethic in his psyche, by either design or unconscious habituation, sloth in future periods will be accompanied by subjectively sensed costs. Loafing will seem sinful; it will cost more to loaf.
The person may seek, however, to go beyond an instrumental selection of current-period Z’s and also beyond the instrumental adoption of a personal moral code. The individual may, over certain ranges of potential choice behavior, attempt to precommit future-period choice by the imposition of binding rules or constraints. That is to say, the person may deliberately reduce the choice options anticipated to be open in t1 and beyond. There may be a conscious reduction in liberty or freedom of action. The purpose will be to close off possibilities for acting in ways that are deemed “inefficient” in carrying forward a preferred life plan.
As an example, consider Crusoe alone on his island (before Friday). He may deliberately choose to sleep on the beach at a location where the morning tide will rudely awaken him. By sleeping in such a place, Crusoe precommits himself to start the next day’s work early. He closes off the option of deciding when to get up because his life plan includes work rather than sloth, and he wants to remove temptation of the latter.
Precommitment has been discussed at some length by Jon Elster in his book Ulysses and the Sirens.4 As the classic example of the title suggests, Ulysses has himself bound to the mast of his ship as it approaches the sirens’ shore. He recognizes his weakness of will; he does not trust his ability to resist temptation, and he knows that if he succumbs, the larger purpose of the voyage will be undermined.
Precommitment has been analyzed by Thomas Schelling5 and others as a “strategy of conflict.” In potential gamelike interactions, precommitment may offer a means of securing strategic advantage. The general orders the bridge to be burned after his army has crossed the river. Such a strategic “reason of rules” is not the object of our attention in this chapter or, indeed, in this book. In the discussion here, only a single person is directly involved. There is no strategic interaction as such, except that between the person who is and the person who might be. As the analysis has suggested, constraints on future-period behavior may emerge from the rational calculus of a person who remains totally isolated from other persons. The individual may precommit himself to choices that are deemed more worthy in a long-range perspective than a pattern of purely situational responses.
The analysis is not, of course, restricted to the choice behavior of an individual in social isolation. Part 2 of this chapter extends the analysis to the behavior of the individual in choice settings that are explicitly collective. But even when choice remains strictly “individualistic,” the choice setting may be social, as exemplified in market relationships. In these situations, the nonstrategic setting remains descriptive so long as the choice of the individual is not predicted to influence the behavior of other persons directly. Persons who act as demanders and/or suppliers of resources, goods, and services in competitive markets may do so without being conscious that they are bargaining over terms of trade or, differently stated, over shares in the gains from trade. In more general terms, the analysis seems applicable to all large-number settings where the reference person remains one among many and where the behavior of others is taken as a part of the environment rather than as an object to be controlled.
[1. ]See Gary Becker, The Economic Approach to Human Behavior (University of Chicago Press, 1976).
[2. ]This self-construction aspect of choice has been discussed in some detail by James M. Buchanan, “Natural and Artifactual Man,” in What Should Economists Do? ed. James M. Buchanan (Indianapolis, Ind.: Liberty Fund, 1979), pp. 93-112.
[3. ]For purposes of our analysis, it is not important to distinguish between shifts in constraints and shifts in preferences. Stigler and Becker argue that it is helpful to treat all such shifts as changes in constraints, under the postulate that preferences remain uniform both over time and among persons. In either case, the individual who chooses does so in the knowledge that his choice behavior at one time can affect his potential choice actions at other times. See George Stigler and Gary Becker, “De Gustibus Non Est Disputandum,” American Economic Review 67 (March 1977): 76-90.
[4. ]Jon Elster, Ulysses and the Sirens (Cambridge University Press, 1979).
[5. ]See Thomas Schelling, The Strategy of Conflict (Cambridge, Mass.: Harvard University Press, 1960).