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Behavioral welfare economics

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  • B. Douglas Bernheim

    () (Department of Economics, Stanford University, USA)

Abstract

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.

Suggested Citation

  • B. Douglas Bernheim, 2010. "Behavioral welfare economics," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(2), pages 123-151, June.
  • Handle: RePEc:voj:journl:v:57:y:2010:i:2:p:123-151
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Patricio Dalton & Sayantan Ghosal, 2012. "Decisions with endogenous frames," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(4), pages 585-600, 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. Alzúa, María Laura & Djebbari, Habiba & Pickering, Amy J., 2018. "A Community Based Program Promotes Sanitation," IZA Discussion Papers 11446, Institute for the Study of Labor (IZA).
    5. Dalton, Patricio & Ghosal, Sayantan, 2008. "Behavioural Decisions and Welfare," The Warwick Economics Research Paper Series (TWERPS) 834, University of Warwick, Department of Economics.
    6. Christopher Tyson, 2015. "Satisficing behavior with a secondary criterion," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(3), pages 639-661, March.
    7. Emmanuel Olusegun STOBER, 2016. "Stomach Infrastructure: Lessons for Democracy and Good Governance," Management Dynamics in the Knowledge Economy Journal, College of Management, National University of Political Studies and Public Administration, vol. 4(3), pages 449-460, September.
    8. repec:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-016-0110-3 is not listed on IDEAS
    9. Dalton, P.S. & Ghosal, S., 2010. "Decisions with Endogenous Frames (Replaces CentER DP 2010-21)," Discussion Paper 2010-142, Tilburg University, Center for Economic Research.
    10. Dalton, P.S. & Ghosal, S., 2010. "Behavioral Decisions and Welfare (Replaces CentER DP 2010-22)," Discussion Paper 2010-143, Tilburg University, Center for Economic Research.
    11. Sandro Ambuehl & B. Douglas Bernheim & Annamaria Lusardi, 2014. "A Method for Evaluating the Quality of Financial Decision Making, with an Application to Financial Education," NBER Working Papers 20618, National Bureau of Economic Research, Inc.
    12. FLEURBAEY, Marc & SCHOKKAERT, Erik, 2011. "Behavioral fair social choice," CORE Discussion Papers 2011043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Jan Schnellenbach, 2016. "A Constitutional Economics Perspective on Soft Paternalism," Kyklos, Wiley Blackwell, vol. 69(1), pages 135-156, February.
    14. Koen Decancq & Marc Fleurbaey & Erik Schokkaert, 2015. "Happiness, Equivalent Incomes and Respect for Individual Preferences," Economica, London School of Economics and Political Science, vol. 82, pages 1082-1106, December.
    15. Jean-Michel Benkert & Nick Netzer, 2015. "Informational Requirements of Nudging," CESifo Working Paper Series 5327, CESifo Group Munich.
    16. Glenn W. Harrison & Jia Min Ng, 2016. "Evaluating The Expected Welfare Gain From Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 83(1), pages 91-120, January.
    17. Lockwood, Ben, 2017. "Confirmation Bias and Electoral Accountability," Quarterly Journal of Political Science, now publishers, vol. 11(4), pages 471-501, February.
    18. Breitmoser, Yves, 2016. "The axiomatic foundation of logit and its relation to behavioral welfare," MPRA Paper 71632, University Library of Munich, Germany.
    19. Cherchye, Laurens & De Rock, Bram & Griffith, Rachel & O’Connell, Martin & Smith, Kate & Vermeulen, Frederic, 2017. "A New Year, a New You? Heterogeneity and Self-Control in Food Purchases," IZA Discussion Papers 11205, Institute for the Study of Labor (IZA).
    20. repec:spr:soinre:v:136:y:2018:i:3:d:10.1007_s11205-016-1538-4 is not listed on IDEAS
    21. Fabrizio Adriani & Silvia Sonderegger, 2014. "Evolution of similarity judgements in intertemporal choice," Discussion Papers 2014-06, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    22. Christoph Engel & Lars Freund, 2017. "Behaviorally Efficient Remedies – An Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2017_17, Max Planck Institute for Research on Collective Goods.

    More about this item

    Keywords

    Modeli izbora; Blagostanje; Preferencije.;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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