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Behavioral welfare economics

  • B. Douglas Bernheim

    ()

    (Department of Economics, Stanford University, USA)

This paper discusses several competing proposals for general normative frameworks thatwould encompass non-standard models of choice. Most existing proposals equate welfare with wellbeing. 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 substatial degree of underlying coherence in behavior, that criterion leads to a rich and tractable normative framework.

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File URL: http://www.panoeconomicus.rs/casopis/2010_1/01.pdf
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Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

Volume (Year): 57 (2010)
Issue (Month): 1 (March)
Pages: 1-22

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Handle: RePEc:voj:journl:v:57:y:2010:i:1:p:1-22
Contact details of provider: Web page: http://www.panoeconomicus.rs/

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  25. Mandler, Michael, 2014. "Indecisiveness in behavioral welfare economics," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 219-235.
  26. Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
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  28. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
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