The social contingency of wants

Economic models typically assume that individual wants are determined by forces exogenous to the economic system. Social psychology and consumer research, in contrast, support the view that the perceived benefits of goods and services are strongly affected by endogenously determined social norms. We present a selective overview of the literature on the relationship between consumption and well-being, exploring the ways in which informal arguments from social science might be linked to formal models of economic behavior. We find that the "fixed preferences" hypothesis leads to the systematic undervaluation of environmental services and the underprovisioning of environmental goods.