Behavioral Welfare Economics

B. Douglas Bernheim ()

No 14622, NBER Working Papers from National Bureau of Economic Research, Inc

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

JEL-codes: D01 D60 H40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-evo and nep-hap
Date: Written
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Journal Article: Behavioral Welfare Economics (2009)
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