Reconciling normative and behavioural economics: the problems to be solved |
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Authors: | Ben?McQuillin Email author" target="_blank">Robert?SugdenEmail author |
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Institution: | (1) School of Economics, University of East Anglia, Norwich, NR4 7TJ, UK |
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Abstract: | We review the problem of reconciling normative and behavioural economics. In conventional welfare economics, individuals’
preferences are assumed to be coherent, and the satisfaction of those preferences is the normative criterion; but this approach
breaks down if preferences are incoherent. Traditionally, the preference-satisfaction criterion has been interpreted in three
conceptually different ways, emphasising respectively the normative value of happiness, self-assessed well-being, and freedom.
If individuals’ preferences are incoherent, these interpretations diverge, leading to fundamentally different strategies for
dealing with the reconciliation problem, and new questions are raised about whether normative economics should be addressed
to governments or individuals. |
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Keywords: | |
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