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.
|Number of pages||15|
|Journal||Social Choice and Welfare|
|Early online date||11 Dec 2011|
|Publication status||Published - Apr 2012|