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Book part
Publication date: 23 October 2023

Glenn W. Harrison and Don Ross

Behavioral economics poses a challenge for the welfare evaluation of choices, particularly those that involve risk. It demands that we recognize that the descriptive account of…

Abstract

Behavioral economics poses a challenge for the welfare evaluation of choices, particularly those that involve risk. It demands that we recognize that the descriptive account of behavior toward those choices might not be the ones we were all taught, and still teach, and that subjective risk perceptions might not accord with expert assessments of probabilities. In addition to these challenges, we are faced with the need to jettison naive notions of revealed preferences, according to which every choice by a subject expresses her objective function, as behavioral evidence forces us to confront pervasive inconsistencies and noise in a typical individual’s choice data. A principled account of errant choice must be built into models used for identification and estimation. These challenges demand close attention to the methodological claims often used to justify policy interventions. They also require, we argue, closer attention by economists to relevant contributions from cognitive science. We propose that a quantitative application of the “intentional stance” of Dennett provides a coherent, attractive and general approach to behavioral welfare economics.

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Models of Risk Preferences: Descriptive and Normative Challenges
Type: Book
ISBN: 978-1-83797-269-2

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Article
Publication date: 1 February 1994

L.A. Duhs

Cropsey′s 1955 invitation to reassess the particular metaphysic orpolitical philosophy which underpins modern economics remainsunder‐appreciated. Reviews Cropsey′s 1955 argument…

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Abstract

Cropsey′s 1955 invitation to reassess the particular metaphysic or political philosophy which underpins modern economics remains under‐appreciated. Reviews Cropsey′s 1955 argument in order to apprehend just what charges are being laid at the door of modern welfare economics. Considers the way in which Benjamin Ward misconstrued that argument in his 1956 “rebuttal” and the same misunderstandings and dividing lines which still exist in economics today. Offers illustration from the contemporary economics literature (e.g. regarding the market for baby adoption) to gauge the plausibility of Cropsey′s 1955 prediction that certain social, political and moral consequences will follow for society in the longer run if more traditional metaphysical teachings and conceptions of social welfare are undermined by what Cropsey sees as the potentially destructive metaphysics embodied in orthodox welfare economics.

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International Journal of Social Economics, vol. 21 no. 1
Type: Research Article
ISSN: 0306-8293

Keywords

Content available
Book part
Publication date: 18 March 2004

Matthew Clarke and Sardar M.N. Islam

Abstract

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Economic Growth and Social Welfare: Operationalising Normative Social Choice Theory
Type: Book
ISBN: 978-0-44451-565-0

Article
Publication date: 1 April 1989

Stavros A. Drakopoulos

The starting‐point of the article is the inconsistency between theestablished practice of acceptance in many cases, of economic policy(i.e. progressive taxation, national…

Abstract

The starting‐point of the article is the inconsistency between the established practice of acceptance in many cases, of economic policy (i.e. progressive taxation, national insurance policies) and the theoretical rejection of interpersonal comparisons of utility who see it as an unscientific value judgement. The inconsistency is explained by identifying three groups of theorists: (1) those who thought of comparability as a value judgement and unacceptable for economic policy considerations (positivists), (2) those who agreed with the positivists, on the normative nature of comparability but accepted it as a basis for economic policy, and (3) those who thought of it as part of a scientific economics. The implication was that, despite the dominance of positivist methodology in other sub‐fields, the historical experience points to the difficulty of applying positivist methodology to the issue of comparability. If the inconsistency is thus due to the inappropriateness of the positivist approach, the only possible solution is the explicit abandonment of this approach at least in matters related to the collective aspects of economics.

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Journal of Economic Studies, vol. 16 no. 4
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 20 May 2017

Philip DeCicca, Donald Kenkel, Feng Liu and Hua Wang

The U.S. 2009 Tobacco Control Act opened the door for new antismoking policies by giving the Food and Drug Administration broad regulatory authority over the tobacco industry. We…

Abstract

The U.S. 2009 Tobacco Control Act opened the door for new antismoking policies by giving the Food and Drug Administration broad regulatory authority over the tobacco industry. We develop a behavioral welfare economics approach to conduct cost-benefit analysis of FDA tobacco regulations. We use a simple two-period model to develop expressions for the impact of tobacco control policies on social welfare. Our model includes: nudge and paternalistic regulations; an excise tax on cigarettes; internalities created by period 1 versus period 2 consumption; and externalities from cigarette consumption. Our analytical expressions show that in the presence of uncorrected internalities and externalities, a nudge or a tax to reduce cigarette consumption improves social welfare. In sharp contrast, a paternalistic regulation might either improve or worsen social welfare. Another important result is that the social welfare gains from new policies do not only depend on the size of the internalities and externalities, but also depend on the extent to which current policies already correct the problems. We link our analytical expressions to the graphical approach used in most previous studies and discuss the information needed to complete cost-benefit analysis of tobacco regulations. We use our model as a framework to reexamine the evidence base for strong conclusions about the size of the internalities, which is the key information needed.

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Human Capital and Health Behavior
Type: Book
ISBN: 978-1-78635-466-2

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Article
Publication date: 1 November 2005

John M. Gowdy and Raluca Iorgulescu Polimeni

This paper draws upon the work of Georgescu‐Roegen to outline some theoretical alternatives to standard welfare theory, and to examine the policy implications of discarding the…

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Abstract

Purpose

This paper draws upon the work of Georgescu‐Roegen to outline some theoretical alternatives to standard welfare theory, and to examine the policy implications of discarding the Walrasian core of neoclassical economics.

Design/methodology/approach

Current work in behavioral economics and game theory shows that economic behavior depends on social context, a point understood by social economists for a hundred years or more. This work is related to Georgescu's contributions to utility theory and bioeconomics.

Findings

Neoclassical welfare economics continues to dominate economic theory and policy even though its theoretical foundations, economic man and perfect competition, have been discredited by mainstream theorists. Economic processes take place in specific social contexts and also coevolve with the biophysical universe.

Practical implications

Although modern economics is incorporating many of Georgescu's insights about human preferences it has yet to come to grips with the fact that human economic activity is shaped by its biophysical context. It is believed this should be a major focus of future economic research.

Originality/value

Provides further insights into welfare theory and bioeconomics.

Details

International Journal of Social Economics, vol. 32 no. 11
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 May 2006

Norio Sasaki

To explain a fiscal rule that functions in a different way from a constitutional ideal of a welfare state, as Japan's case, and to give a literary examination of that kind of…

Abstract

Purpose

To explain a fiscal rule that functions in a different way from a constitutional ideal of a welfare state, as Japan's case, and to give a literary examination of that kind of thoughts in modern economics and theory of public finance.

Design/methodology/approach

Compares neo‐institutional economics and fiscal sociology about the role of a government, using recent fiscal data of developed countries.

Findings

For neo‐institutional economics it is difficult to explain “welfare state” that substitutes the role of a family because the approach can only explain a complementary relationship of organizations in higher levels with lower organizations.

Practical implications

Points out that neo‐institutional economics should be examined by a historical formation of each rule and a real legal system in each country.

Originality/value

Discusses institutional economics and fiscal sociology from an aspect of possibility of applying to the field of public finance and social welfare.

Details

Journal of Economic Studies, vol. 33 no. 3
Type: Research Article
ISSN: 0144-3585

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Abstract

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Documents on and from the History of Economic Thought and Methodology
Type: Book
ISBN: 978-1-84663-909-8

Book part
Publication date: 19 January 2024

Irène Berthonnet

This chapter tells the story of how the concept of Pareto efficiency was shipped from Lausanne to the modern US theory of competitive general equilibrium, focusing on the specific…

Abstract

This chapter tells the story of how the concept of Pareto efficiency was shipped from Lausanne to the modern US theory of competitive general equilibrium, focusing on the specific role of Maurice Allais. It identifies similarities in both epistemological approach and theoretical achievements realized first by Pareto, then by Allais, and finally by Debreu and Arrow and Hahn. It also shows that these similarities are not casual, since historical circumstances account for the influence of Pareto on Allais and later of Allais on Arrow and Debreu.

Details

Research in the History of Economic Thought and Methodology: Including a Symposium on John Kenneth Galbraith: Economic Structures and Policies for the Twenty-first Century
Type: Book
ISBN: 978-1-80455-931-4

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Abstract

Details

Economic Growth and Social Welfare: Operationalising Normative Social Choice Theory
Type: Book
ISBN: 978-0-44451-565-0

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