TY  - JOUR
AU  - Bernheim,B. Douglas
TI  - Behavioral Welfare Economics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14622
PY  - 2008
Y2  - December 2008
UR  - http://www.nber.org/papers/w14622
L1  - http://www.nber.org/papers/w14622.pdf
N1  - Author contact info:
B. Douglas Bernheim
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650/725-8732
Fax: 650/725-5702
E-Mail: bernheim@stanford.edu
AB  - 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.
ER  -