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Behavioural welfare economics: does 'behavioural optimality' matter?

Costa-Font, Joan ORCID: 0000-0001-7174-7919 (2011) Behavioural welfare economics: does 'behavioural optimality' matter? CESifo Economic Studies, 57 (4). pp. 551-559. ISSN 1610-241X

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Identification Number: 10.1093/cesifo/ifr028


This editorial article argues that the development of behavioural economics gives rise to a wide re-interpretation of the field of welfare economics. More specifically, social efficiency criteria under quasi-rationality might well diverge from that of full rationality. This arguably has at least two effects. First, public policy evaluation, especially standard cost–benefit analysis, ought to be reinterpreted accommodating such ‘behavioural optimality’ restrictions. Second, the acceptance of ‘behavioural market failures’ alongside of ‘behavioural political failures’ can give rise to new reasons for public sector intervention. The papers of this special issue can be seen as paradigmatic examples of the former and/or the latter, and more generally suggest that ‘behavioural optimality’ cannot be disregarded.

Item Type: Article
Official URL:
Additional Information: © 2011 the Author
Divisions: European Institute
Social Policy
Centre for Economic Performance
LSE Health
Health Policy
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
JEL classification: D - Microeconomics > D0 - General
D - Microeconomics > D6 - Welfare Economics > D60 - General
Date Deposited: 22 Nov 2011 16:35
Last Modified: 05 Jan 2024 22:18

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