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Behavioral Welfare Economics

Theories from Behavioral Economics are playing increasingly important roles in economic policy analysis and policy making, where evaluation (welfare analysis) is essential. Conceptual concerns arise because standard welfare economics defers to choice. Does this deference still make sense if choices exhibit inconsistencies or reflect cognitive biases? Behavioral Welfare Economics is critical because it provides foundations for drawing normative conclusions in these settings.

My work in this area has focused on the development and application of a framework for conducting behavioral welfare analysis. The antecedents of the framework are detectable in papers such as “Addiction and Cue-Triggered Decision Processes” (AER 2004, with Antonio Rangel). The framework’s first formal articulation appears in “Beyond Revealed Preference” (QJE 2009, with Antonio Rangel), but it has since evolved. I am currently working on a book that sets forth the entire framework, starting with philosophical foundations and proceeding through applications. I hope to complete that project by mid-2022. Meanwhile, the best summaries of the framework appear in “In Defense of Behavioral Welfare Economics” (JEM, forthcoming), Section 1 of “Behavioral Public Economics” (Handbook of Behavioral Economics, 2018, with Dmitry Taubinsky), and “The Good, the Bad, and Ugly: A Unified Approach to Behavioral Weflare Economics” (JBCA, 2016). Links to these and other papers appear below.

I've also recorded two lectures, each roughly one hour in length, on Behavioral Welfare Economics. Links to these videos appear in the right-hand column below. In addition, I've included a video lecture on "Choice and Welfare," which I prepared for a first-year PhD class in Microeconomics. It overlaps a bit with the first of the two lectures on Behavioral Welfare Economics, but also covers some additional issues that provide important background, particularly regarding philosophical foundations. 

Collaborators

Choice and Well-Being

I prepared this lecture for a first-year PhD class in Microeconomics. I've included it because it contains some material that provides useful background for my lectures on Behavioral Welfare Economics. (There is also some overlap with the first of the those lectures.)
 

Behavioral Welfare Economics, Lecture 1

Theories from Behavioral Economics are playing increasingly important roles in economic policy analysis and policy making, where evaluation (welfare analysis) is essential. Conceptual concerns arise because standard welfare economics defers to choice. Does this deference still make sense if choices exhibit inconsistencies or reflect cognitive biases? Behavioral Welfare Economics is critical because it provides foundations for drawing normative conclusions in these settings. This is the first of two (roughly) one-hour lectures on Behavioral Welfare Economics. 

Behavioral Welfare Economics, Lecture 2

Theories from Behavioral Economics are playing increasingly important roles in economic policy analysis and policy making, where evaluation (welfare analysis) is essential. Conceptual concerns arise because standard welfare economics defers to choice. Does this deference still make sense if choices exhibit inconsistencies or reflect cognitive biases? Behavioral Welfare Economics is critical because it provides foundations for drawing normative conclusions in these settings. This is the second of two (roughly) one-hour lectures on Behavioral Welfare Economics. 

Behavioural Public Economics

Interest in the field of psychology and economics has grown in recent years, stimulated largely by accumulating evidence that the neoclassical model of consumer decisionmaking provides an inadequate description of human behaviour in many economic situations. Scholars have begun to propose alternative models that incorporate insights from psychology and neuroscience. Some of the pertinent literature focuses on behaviours commonly considered ‘dysfunctional’, such as addiction, obesity, risky sexual behaviour, and crime.

Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice

We introduce a method for experimentally evaluating interventions designed to improve the quality of choices in settings where people imperfectly comprehend consequences. Among other virtues, our method yields an intuitive sufficient statistic for welfare that admits formal interpretations even when consumers suffer from biases outside the scope of analysis. We use it to study a financial education intervention, which we find improves the quality of decisions only when it incorporates practice and feedback, contrary to the implications of analyses based on conventional efficacy metrics.

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