It’s a pretty basic logical fact that most taxpayers will be satisfied with the total amount of tax dollars allocated to welfare. Because if they weren’t satisfied they’d change the amount that they allocated to welfare.

I don’t think that’s true. Taxpayers can only decide what proportion of their own taxes goes to welfare, not what proportion of total tax revenue goes to it.

Bob might think that everyone should value welfare at $2,000 per year, or that a total of $2 trillion should be spent on welfare, or 35% of all tax income. Bob might also think that everyone should drive an electric car or eat tofu instead of steak. And he might be just as unhappy that not everyone is allocating $2,000 of their tax money on welfare, as he is unhappy that lots of people are driving a Ford Mustang or eating sirloin.

But that doesn’t matter. If we choose to be unhappy because of what others choose, then that’s our lookout.

Some deviants will want a lot less money spent on welfare, others will want a lot more money spent on welfare.

There is an interesting observation to be made here. As you say, individuals can decide to allocate more or less of their own share of taxes to welfare. The beauty of the pragmatarian approach is that it forces people to make the trade-off between multiple possible uses for their tax money.

The complexity arises in the fact that people may have two preferences: one about the size of the share of their total tax dollars that goes to welfare, and one about the total amount of tax dollars that needs to go to welfare (or the share of total tax). Let’s say Bob thinks his own contribution should be $2,000, and the total should be $2 trillion. Now if the total amount is $3 trillion this year, his second condition his satisfied without his personal ‘contribution’ of $2,000. So he can decide to allocate $2,000 more to, say, education or transport, and still be happy that there is more than enough going to welfare.

He has become a free rider in the pragmatarian market.

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Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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