Introduction

‘Welfare economics should be concerned not only with the efficient allocation of material goods, but also with designing institutions such that people are happy about the way they interact with others.’ This sentence by Matthew Rabin (1993, p. 1283) evokes not only Serge-Christophe Kolm's (1984, p. 18) pioneering stance in these matters but also some voices from the mainstream that point to a novel area of concern for economic analysis: interpersonal relations. Take the lucid admission by Jack Hirschleifer (1978): ‘Perhaps the grossest flaw in the economist's traditional view of the human being is illustrated by the attention we devote to his “man-thing” activities as opposed to “man-man” activities. Our textbooks talk of tastes for cheese or shoes or automobiles, rarely of desires for children or mates or subordinates or fraternal associates. Other social scientists … have just scorned this view of man as rational unaffiliated thing-consumer, interacting with others only through market exchange.’

As an increasing number of similar statements confirm, there exists a largely unexplored ‘interpersonal dimension of economic reality’ that encompasses the innumerable reciprocal influences between the entities or actions we commonly identify as ‘economic’, and the interpersonal occurrences of a communicative/affective nature.

One way of discerning the economic significance of this interpersonal or relational dimension is to measure the monetary amounts that are involved – for instance, the expenditure in two inputs for the satisfaction of relational needs: the travel costs people undergo for spending the weekend with those they love or like, despite the natural or historical attractions of the regions where they may happen to be working; or the expenditure in telecommunications that is imputable to mere relational exchange.