Toward A Behavioral Foundation of Normative Economics

Abstract

While behavioral economics has had a major impact on positive theorizing in economics, it remains unclear what exactly those new insights about deviations from rational choice mean in terms of policy implications. Given the ever-rising interest in the new, psychologically informed economics, this paper outlines the way in which reasoning about the normative implications of behavioral economics has developed in the last decade. We argue that behavioral economics has inspired new thinking about the prospect of 'behavioral normative economics' (BNE). The paper sketches important approaches in the field, discusses their theoretical shortcomings, and outlines some initial ideas on how to conceptualize individuals' identity as a key task in BNE. We suggest that the dualistic concepts of the individual should be abandoned in favor of a notion of a unified self that is constituted by its capacity to learn and reflect upon new preferences on a continuous basis.

Welfare economics in large worlds: welfare and public policies in an uncertain environment

“…This idea has been pursued in different directions, with as a common starting point the position that preferences are evolving and cannot be considered as given. We can find this type of argument with Binder and Lades (2015) defense of 'autonomyenhancing paternalism' (in particular pp.13-15), or Buchanan's (1979) notion of 'creative choice' developed by Schubert (2015), Dold (2018), and Dold and Schubert (2018). Those contributions emphasise the role of learning and individual development in the definition of welfare, and advance a significant role for education policies aiming to guide individuals to form their own preferences in an autonomous way (Lecouteux 2015, pp.132-133).…”

Opportunity meets self-constitution

“…My ideas here build, on the one hand, on earlier attempts presented in Schubert (2015) and criticized by Sugden (2015). On the other hand, they are inspired by a certain interpretation of James M. Buchanan's concept of personal identity, in the sense described by Dold and Schubert (2018), owing much to Dold (2018), Lewis and Dold (2020), and Rizzo and Dold (2020).…”

Proxyeconomics, a theory and model of proxy-based competition and cultural evolution

“…Ultimately, it is probably necessary to empirically investigate the consequences of any given proxy to the purported underlying goal. Such an empirical assessment of the profit proxy, or more generally economic growth, raises the question how much economic activity is genuinely welfare enhancing and how much predominantly serves self-referential proxy measures [ 17 , 18 , 150 ].…”