What preferences for behavioral welfare economics?

Abstract

Behavioral welfare economics (BWE) assigns different roles to preferences than either non-behavioral forms of welfare economics or theories outside of the domain of welfare economics. In particular, BWE differs from other forms of welfare economics in its attempt to distinguish welfare-relevant from welfare-irrelevant subjective attitudes based on some notion of deliberation error. Based on recent arguments for the purpose-dependence of the interpretation of preferences, I argue that a functionalist-dispositional understanding of preference is not sufficient for BWE. Instead, I distinguish two levels of functional analysis–algebraic and algorithmic–and argued that it is the algorithmic level, capturing the relevant mental processes and representations producing the observed behavior, that is required for BWE.