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Social Choice and Welfare

, Volume 38, Issue 4, pp 553–567 | Cite as

Reconciling normative and behavioural economics: the problems to be solved

  • Ben McQuillin
  • Robert Sugden
Original Paper

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.

Keywords

Behavioural Economic Normative Criterion Cumulative Prospect Theory Libertarian Paternalism Consumer Sovereignty 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  1. 1.School of Economics and Centre for Competition PolicyUniversity of East AngliaNorwichUK

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