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The problem of evil: An economic approach

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  • Francisco Parro

Abstract

This paper develops an economic model to study the philosophical problem of evil. God's creation of the world is modeled as a problem of optimal incentives. A principal (God) must choose a world so that the populating agents behave according to his benevolent objective. In a world, the physical environment resembles a contract that determines the rewards and punishments for different choices. The agents' behavioral rule determines how they respond to these incentives. I characterize a contract and a behavioral rule that solve the principal's problem, and evil is evidenced. Specifically, evil endogenously aligns the agents' actions with the principal's objective. Other insights on the origin, cause, and role of evil are also derived from the model. The result of this analysis is a theodicy arisen from an economic model. As a byproduct, this paper shows how an economic model can be used to study philosophical or theological questions.

Suggested Citation

  • Francisco Parro, 2021. "The problem of evil: An economic approach," Kyklos, Wiley Blackwell, vol. 74(4), pages 527-551, November.
    • Handle: RePEc:bla:kyklos:v:74:y:2021:i:4:p:527-551
    DOI: 10.1111/kykl.12277
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    References listed on IDEAS

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    3. Shlomo Benartzi & Richard H. Thaler, 1995. "Myopic Loss Aversion and the Equity Premium Puzzle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 73-92.
    4. M. Keith Chen & Venkat Lakshminarayanan & Laurie R. Santos, 2006. "How Basic Are Behavioral Biases? Evidence from Capuchin Monkey Trading Behavior," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 517-537, June.
    5. Luis Rayo & Gary S. Becker, 2007. "Evolutionary Efficiency and Happiness," Journal of Political Economy, University of Chicago Press, vol. 115(2), pages 302-337.
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    Cited by:

    1. Diaz Sanchez, Jose Luis, 2025. "Hedonic Adaptation and the Persistence of Suffering: A Model-Based Approach to Theodicy," MPRA Paper 125400, University Library of Munich, Germany.

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