SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

Abstract: This paper extends standard consumer theory to account for endogenous moral motivation. Building on cognitive dissonance theory, I show how moral values are affected by changes in prices and income. The key insight is that changes in prices and income that lead to higher consumption of an immoral good also affect the moral values held by the consumer so that the good is considered less immoral. A preliminary empirical analysis based on the World Values Survey is consistent with the model's predictions with respect to income.

Keywords: Consumer theory; moral values; endogenous preferences; cognitive dissonance; self-serving bias

JEL-codes: D11

27 pages, First version: September 21, 2006. Revised: November 7, 2008. Earlier revisions: October 17, 2007, June 17, 2008, June 17, 2008, November 7, 2008.

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