Positive Welfare Economics
Welfare Economics, the study of economic well-being, consists of two separate branches, one concerning individual well-being, the other concerning social aggregation. The first branch includes the standard revealed preference paradigm as well as tools from Behavioral Welfare Economics. The second branch subsumes work on social choice and welfare.
Vast literatures study these issues from a normative perspective. They ask, how should we evaluate individual well-being? How should we determine overall social welfare? The normative principles that have emerged from these inquiries have proven useful in innumerable applications.
The objective of this research agenda is to study these issues from a positive perspective. We ask, how do people actually evaluate what is good and bad for other individuals? How do they actually aggregate to reach conclusions about social welfare?
Research in positive welfare economics is valuable because it helps us understand why societies adopt particular policies. With respect to aggregation, it helps us understand how people think their societies ought to balance majority preference against the protection of minorities, judgments which (arguably) their elected representatives ought to respect. It also helps us understand how behavioral considerations, such as cognitive biases, can influence policy formation.
This work departs from most (but not all) of the literature on social preferences by focusing on outcomes for others without implicating selfish concerns.
Working Paper, September 2021
American Economic Review 111(3), 2021, 787-830
Journal of Political Economy 128(5), 2020, 1673-1711
Assistant Professor, University of Zurich
Professor, University of California, San Diego
Assistant Professor, Olin Business School, Washington University St. Louis
Behavioral Economist, Google
Professor, University of Cologne
Interpreting the Will of the People: A Positive Analysis of Ordinal Preference Aggregation
We investigate how individuals think groups should aggregate members’ ordinal preferences – that is, how they interpret “the will of the people.” In an experiment, we elicit revealed attitudes toward ordinal preference aggregation and classify subjects according to the rules they apparently deploy. Majoritarianism is rare. Instead, people employ rules that place greater weight on compromise options. The classification’s fit is excellent, and clustering analysis reveals that it does not omit important rules.
What Motivates Paternalism? An Experimental Study
We study experimentally when, why, and how people intervene in others' choices. Choice Architects (CAs) construct opportunity sets containing bundles of time-indexed payments for Choosers. CAs frequently prevent impatient choices despite opportunities to provide advice, believing Choosers benefit. They violate common behavioral welfare criteria by removing impatient options even when all payoffs are delayed.
When Fair Isn't Fair: Understanding Choice Reversals Involving Social Preferences
In settings with uncertainty, tension exists between ex ante and ex post notions of fairness. Subjects in an experiment most commonly select the ex ante fair alternative ex ante and switch to the ex post fair alternative ex post. One potential explanation embraces consequentialism and construes reversals as time inconsistent. Another abandons consequentialism in favor of deontological (rule-based) ethics and thereby avoids the implication that revisions imply inconsistency. We test these explanations by examining contingent planning and the demand for commitment.