Michael Woodford (Columbia University, Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)) has posted Individualistic Welfare Analysis in the Age of Behavioral Science (Capitalism and Society: Vol. 13: Iss. 1, Article 3) on SSRN. Here is the abstract:
Experimental demonstration of systematic errors and biases in human choice behavior might seem to undermine the conceptual basis of the individualistic approach to welfare analysis, in which people’s interests are inferred from the choices that they are observed to make. This essay argues that one need not give up on individualistic welfare analysis, and discusses two ways in which empirical studies can seek to infer people’s true interests, while recognizing that people do not always choose the outcome that is best for them under all circumstances.
