Taking Absurd Theories Seriously 3 essays on Rational Choice Theory and Welfare Analysis
AbstractThe effects of public policies on the welfare of different groups in society are in many cases unclear. Economists often study such effects through welfare analyses based on a mathematical model of an individual decision maker. I show for the case of Rational Addiction theory that we have both theoretical and empirical reasons to think that the model fails to reflect the welfare of real people. I argue that the acceptance and standing of the theory is due to a failure to apply relevant criteria when evaluating such welfare analyses, that this failure makes the profession take absurd theories seriously, and that such welfare analyses should therefore be treated with scepticism and great care.
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Bibliographic InfoPaper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2004:12.
Length: 23 pages
Date of creation: 14 Jun 2009
Date of revision:
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Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
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More information through EDIRC
Welfare Analysis; Rational Choice; Rational; Addiction; Gary Becker; Jon Elster;
Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-HEA-2009-07-03 (Health Economics)
- NEP-HPE-2009-07-03 (History & Philosophy of Economics)
- NEP-PKE-2009-07-03 (Post Keynesian Economics)
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