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Behavioral Welfare Economics

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  • B. Douglas Bernheim

Abstract

This paper discusses several competing proposals for general normative frameworks that would encompass non-standard models of choice. Most existing proposals equate welfare with well-being. Some assume that well-being flows from the achievement of well-defined objectives, and that those objectives also guide choices; the trick is to formulate a framework in which less-than-completely coherent choice patterns reveal the unobserved objectives. Others are predicated on the contention that well-being, and hence welfare, is directly measurable. Both of those approaches encounter serious conceptual difficulties. An alternative approach, developed by Bernheim and Rangel [2009], defines welfare directly in terms of choice. It entails a generalized welfare criterion that respects choice directly, without requiring any rationalization involving potentially unverifiable assumptions concerning underlying objectives and their relationships to choice. Because useful behavioral theories generally envision a substantial degree of underlying coherence in behavior, that criterion leads to a rich and tractable normative framework.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14622.

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Date of creation: Dec 2008
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Handle: RePEc:nbr:nberwo:14622

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  5. Jawwad Noor, 2005. "Temptation, Welfare and Revealed Preference," Boston University - Department of Economics - Working Papers Series WP2005-15, Boston University - Department of Economics.
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  1. JEEA - New Issue
    by Liam Delaney in Geary Behaviour Centre on 2009-05-22 14:49:00
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Cited by:
  1. Marc Fleurbaey & Erik Schokkaert, 2012. "Behavioral Fair Social Choice," Working Papers 2012-012, Human Capital and Economic Opportunity Working Group.
  2. Cameron Hepburn & Stephen Duncan & Antonis Papachristodoulou, 2010. "Behavioural Economics, Hyperbolic Discounting and Environmental Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(2), pages 189-206, June.
  3. Agee, Mark D. & Crocker, Thomas D., 2013. "Operationalizing the capability approach to assessing well-being," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 46(C), pages 80-86.
  4. Dalton, Patricio; Ghosal, Sayantan;, 2010. "Decisions with Endogenous Frames," CAGE Online Working Paper Series 30, Competitive Advantage in the Global Economy (CAGE).

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  1. Douglas Bernheim in Wikipedia (English)

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