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Preference Satisfaction And Welfare Economics

Author

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  • Hausman, Daniel M.
  • McPherson, Michael S.

Abstract

The tenuous claims of cost-benefit analysis to guide policy so as to promote welfare turn on measuring welfare by preference satisfaction and taking willingness-to-pay to indicate preferences. Yet it is obvious that people's preferences are not always self-interested and that false beliefs may lead people to prefer what is worse for them even when people are self-interested. So welfare is not preference satisfaction, and hence it appears that cost-benefit analysis and welfare economics in general rely on a mistaken theory of well-being. This essay explores the difficulties, criticizes standard defences of welfare economics, and then offers a new partial defence that maintains that welfare economics is independent of any philosophical theory of well-being. Welfare economics requires nothing more than an evidential connection between preference and welfare: in circumstances in which people are concerned with their own interests and reasonably good judges of what will serve their interests, their preferences will be reliable indicators of what is good for them.

Suggested Citation

  • Hausman, Daniel M. & McPherson, Michael S., 2009. "Preference Satisfaction And Welfare Economics," Economics and Philosophy, Cambridge University Press, vol. 25(1), pages 1-25, March.
  • Handle: RePEc:cup:ecnphi:v:25:y:2009:i:01:p:1-25_00
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    Cited by:

    1. Shiri Cohen Kaminitz, 2018. "Happiness Studies and the Problem of Interpersonal Comparisons of Satisfaction: Two Histories, Three Approaches," Journal of Happiness Studies, Springer, vol. 19(2), pages 423-442, February.
    2. Malte F. Dold, 2018. "Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 25(2), pages 160-178, April.
    3. DECANCQ, Koen & FLEURBAEY, Marc & SCHOKKAERT, Erik, 2014. "Inequality, income, and well-being," CORE Discussion Papers 2014018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Roberto Fumagalli, 2016. "Decision sciences and the new case for paternalism: three welfare-related justificatory challenges," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(2), pages 459-480, August.
    5. Andrew Yuengert, 2011. "Economics and Interdisciplinary Exchange in Catholic Social Teaching and “Caritas in Veritate”," Journal of Business Ethics, Springer, vol. 100(1), pages 41-54, March.
    6. Daniel M. Hausman, 2012. "Why Satisfy Preferences?," Papers on Economics and Evolution 2011-24, Philipps University Marburg, Department of Geography.
    7. Hasan, Hamid, 2013. "Capabilities vis-a-vis Happiness: Evidence from Pakistan," MPRA Paper 44892, University Library of Munich, Germany.
    8. Necati Aydin & Aljawhara Ibrahim Alquayid, 2019. "Market Reality Versus Religious Morality: Empirical Evidence from the Saudi Arabian Labor Market," Journal of Business Ethics, Springer, vol. 156(3), pages 679-698, May.
    9. Santiago J. Gangotena, 2017. "Dynamic coordinating non-equilibrium," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 30(1), pages 51-82, March.
    10. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    11. Mozaffar Qizilbash, 2019. "The market, utilitarianism and the corruption argument," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 66(1), pages 37-55, March.
    12. Jan Schnellenbach & Christian Schubert, 2014. "Behavioral Political Economy: A Survey," CESifo Working Paper Series 4988, CESifo.
    13. Hamid Hasan, 2019. "Confidence in Subjective Evaluation of Human Well-Being in Sen’s Capabilities Perspective," Journal of Happiness Studies, Springer, vol. 20(1), pages 1-17, January.
    14. Gregory Wolcott, 2019. "Restricting Choices: Decision Making, the Market Society, and the Forgotten Entrepreneur," Journal of Business Ethics, Springer, vol. 156(2), pages 293-314, May.

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