Review of Behavioral Economics > Vol 5 > Issue 3-4

Toward A Behavioral Foundation of Normative Economics

Malte F. Dold, New York University, USA, malte.dold@nyu.edu Christian Schubert, German University in Cairo, Egypt, christian.schubert@guc.edu.eg
 
Suggested Citation
Malte F. Dold and Christian Schubert (2018), "Toward A Behavioral Foundation of Normative Economics", Review of Behavioral Economics: Vol. 5: No. 3-4, pp 221-241. http://dx.doi.org/10.1561/105.00000097

Published: 31 Dec 2018
© 2018 M. F. Dold and C. Schubert
 
Subjects
Behavioral Economics,  Bounded rationality,  Procedural rationality
 
Keywords
JEL Codes: B41D04P46
BehavioralIdentityNudgingNormative EconomicsWelfare
 

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This is published under the terms of CC-BY.

In this article:
1. Introduction
2. Behavioral Policy Advice: The Pragmatic Way
3. Behavioral Welfare Economics: Laundering Preferences
4. A Contractarian Approach: The Opportunity Criterion
5. Back to the Unified Self: Preference Learning and Active Choice
6. Conclusion
References

Abstract

While behavioral economics has had a major impact on positive theorizing in economics, it remains unclear what exactly those new insights about deviations from rational choice mean in terms of policy implications. Given the ever-rising interest in the new, psychologically informed economics, this paper outlines the way in which reasoning about the normative implications of behavioral economics has developed in the last decade. We argue that behavioral economics has inspired new thinking about the prospect of ‘behavioral normative economics’ (BNE). The paper sketches important approaches in the field, discusses their theoretical shortcomings, and outlines some initial ideas on how to conceptualize individuals’ identity as a key task in BNE. We suggest that the dualistic concepts of the individual should be abandoned in favor of a notion of a unified self that is constituted by its capacity to learn and reflect upon new preferences on a continuous basis.

DOI:10.1561/105.00000097

Companion

Review of Behavioral Economics, Volume 5, Issue 3-4 Special issue Paternalism: Articles Overiew
See the other articles that are part of this special issue.