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The limits of opportunity-only: context-dependence and agency in behavioral welfare economics

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  • Malte F. Dold
  • Mario J. Rizzo

Abstract

What should be the ‘informational base’ of welfare economics if one takes the insights from behavioral economics seriously? Sugden proposes individuals’ sets of opportunities. This paper discusses his opportunity criterion and argues that it largely neglects intricate problems of context-dependence and personal agency. We contrast Sugden’s approach with Buchanan’s understanding of choice, which highlights the importance of agentic capabilities to navigate choice sets, particularly in situations where individuals face subtle interdependences between preference formation processes and their situational or social environment. This paper advocates that the informational base of welfare economics may need to go beyond opportunities if it is to command general assent among individuals who have an interest in being sovereign ‘authors of their own lives’. We argue that economists who take individuals interests seriously should not only consider the size of opportunity sets but also individuals’ sense of personal agency when comparing alternative social states.

Suggested Citation

  • Malte F. Dold & Mario J. Rizzo, 2021. "The limits of opportunity-only: context-dependence and agency in behavioral welfare economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 28(4), pages 364-373, October.
    • Handle: RePEc:taf:jecmet:v:28:y:2021:i:4:p:364-373
    DOI: 10.1080/1350178X.2021.1988132
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    Cited by:

    1. Malte Dold, 2023. "Behavioural normative economics: foundations, approaches and trends," Fiscal Studies, John Wiley & Sons, vol. 44(2), pages 137-150, June.
    2. Bertrand Crettez, 2023. "On Sugden’s normative economics and the comparison of non-nested opportunity sets," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 60(4), pages 545-559, May.

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