Allostasis means your preferences are the prices produced by your internal economy

Economics is all about preferences, so what are people’s preferences? Where do they come from? Why do they change?

One approach is to think about people as collective intelligences. Collective preferences could be produced by the interactions of the members of the collective, like the cells that make up a human being. Each cell is trying to pursue its own interests, but because of the way that the cells are connected by a cognitive glue, they end up interacting to produce an equilibrium with prices that constitute the preferences of the larger collective.

Another way of thinking about preferences is in terms of allostasis, or the efficient allocation of scarce internal resources. The idea is that organisms, and intelligences in general, try to achieve allostasis, so allostasis is an umbrella concept for preferences. The general goal of allostasis is as close to a fixed preference as you’ll get.

How can an organism know what the efficient allocation of scarce internal resources is? The answer isn’t written in genetic code or anywhere else. Instead, allostasis has to be figured out. The process of figuring out allostasis is the process of each member of the intelligence, like the people who make up the economy or the cells who make up the organism, pursuing their own self-interest while connected to each other via a cognitive glue so that they end up coordinating to produce a consistent internal model. Preferences are the parameters of this model, and since the parameters will be the prices the cells produce by interacting with each other, preferences are prices yet again.

In the active inference perspective, preferences are prior expectations. In the economy, collective expectations are embodied in prices. Relative prices correspond to the best predictions about relative scarcities. So again, preferences are prices.

All three perspectives on preferences agree: your preferences are the prices produced by the activity of your internal economy. What we observe you wanting is the activity of your body produced by the patterns of internal resource allocation in conjunction with the external environment. (Expectations about the external environment are priced in, of course, so this is somewhat redundant, but surprises will come from the environment as well.)

The internal economy perspective on preferences shows that preferences aren’t inscribed in the genes or brain somewhere. They’re produced by the activities of the members of the collective, such as the cells that make up a human being. It also implies that people don’t have “true” values or whatever; there’s nothing that people “really want” per se beyond economic efficiency.