Behavioral Welfare Economics and Redistribution

Behavioral economics has shaken the view that individuals have well-defined, consistent and stable preferences. This raises a challenge for welfare economics, which takes as a key postulate that individual preferences should be respected. We argue, in agreement with Bernheim (2009) and Bernheim and Rangel (2009) that behavioral economics is compatible with consistency of partial preferences, and explore how the Bernheim-Rangel approach can be extended to deal with distributive issues. We revisit some key results of the theory in a framework with partial preferences and show how one can derive partial orderings of individual and social situations.