Anomalies or Expected Behaviors? Understanding Stated Preferences and Welfare Implications in Light of Contemporary Behavioral Theory

Leonhard Lades (), Ewa Zawojska, Robert Johnston, Nick Hanley, Liam Delaney and Mikolaj Czajkowski
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Leonhard Lades: Environmental Policy & Geary Institute, University College Dublin

No 2022-20, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: The stated preference literature contains an expansive body of research on behavioral anomalies, typically understood as response patterns that are inconsistent with standard neoclassical choice theory. While the literature often implies that anomalous behaviors are distinct to stated preferences, widespread evidence of similar patterns across real-world settings raises the potential for an alternative interpretation. We argue that these anomalies might actually reflect behaviors that are to be expected once deviations from the standard economic model and behavioral reactions to the choice architecture in stated preference surveys are considered. The article reviews and organizes the evidence of so-called “anomalous” stated preference behaviors within the context of behavioral science to provide guidance for applied welfare economics. We coordinate evidence on these anomalies using a typology grounded in behavioral science, which groups non-standard behaviors into: non-standard preferences, non-standard beliefs, and non-standard decision-making. We apply this typology to organize the evidence, clarify nomenclature, and understand the implications of non-standard behaviors in stated preference studies for applied welfare analysis. Observing the systematic and common nature of these behaviors in actual and hypothetical settings, we outline possibilities to overcome associated challenges for applied welfare analysis, by adapting new frameworks for welfare analysis proposed within behavioral science.

Keywords: anomalies; behavioral science; non-standard behaviors; stated preferences; welfare analysis (search for similar items in EconPapers)
JEL-codes: D61 D91 Q51 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2022
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-evo and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.wne.uw.edu.pl/download_file/1879/0 First version, 2022 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2022-20

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