Economists, who adopt the principle of consumer sovereignty, treat preferences as unquestioned for the purposes of their analysis. They also represent preferences for future outcomes as having value in the present. It is shown that these two characteristics of neoclassical modelling rest on similar reasoning and are essential to achieve high aggregatability of preferences and values. But the meaning and broader implications of these characteristics vary according to the arguments given to support these methodological choices. The resulting ambiguities raise questions (...) regarding economists' attitudes towards the study (by other disciplines) of preference formation and reformation. Under a strong, positivist interpretation (which is philosophically problematic), consumer sovereignty represents a rejection of any meaningful study of these subjects; under a weaker, methodological understanding, consumer sovereignty merely draws a boundary between economics and other disciplines. The weaker version is argued to be more defensible, and economists are urged to engage in interdisciplinary work that will clarify how preferences are formed, criticised and reformed. (shrink)

Four dogmas have shaped modern neoclassical economics. The first proposes that markets may fail to allocate resources efficiently, that is, to those willing to pay the most for them. The second asserts that choices, particularly within markets, reveal preferences. The third is the assumption that people always make the choices they expect will benefit them or enhance their welfare. The fourth dogma holds that perfectly competitive markets will allocate resources to their most beneficial uses. This is the doctrine of the (...) invisible hand. I argue that these dogmas of applied welfare economics should be abandoned. One consequence of doing so will be an increased interest in the institutional context of production. A second will be a turn toward empiricism. (shrink)

Contingent Valuation has been promoted as a catch-all approach to environmental valuation. While there have been numerous attempts in recent years to place monetary values on environmental amenities, studies have often reported a high frequency of protest, zero or inordinately large dollar-value responses. This paper reports on the results of a survey designed to obtain information on how people actually interpret questions of paying to avoid changes in their views of Rangitoto Island. Evidence suggests that the meaning respondents attach to (...) the actual dollar values they offer or bid are inconsistent with the conventional logic that underlies Contingent Valuation. Instead, respondents might be seen to be expressing views about how things ought to be in society, and that it is simply not right to develop Rangitoto Island. (shrink)

Existence Value has become an increasingly important concept as the use of cost benefit analysis has spread from traditional applications to attempts to place monetary value on, for instance, a rare wetland habitat. Environmental economists have generally accepted the tensions arising in the existence value concept from the range of recent applications, but it is argued here that their various attempts to resolve the difficulties have largely failed. Critics from outside economics, on the other hand, typically claim that the very (...) notion of existence value as understood in economics is flawed, and urge its abandonment altogether. This paper suggests instead a fundamental redefinition of existence value, which, it is argued, (i) explains a number of diverse problems posed by the usual meaning of the term in economics; (ii) does not strain the intentions of respondents to ' willingness-to-pay' surveys; (iii) is consistent with a more realistic model of rational choice in environmental decision-making; and (iv) is sensitive to criticisms from environmental ethics.2. (shrink)

This paper presents a critical evaluation of Mark Sagoff's critique of economistic approaches to environmental decision-making in The Economy of the Earth. Whilst endorsing many of Sagoff's specific arguments against the use of extended versions of cost-benefit analysis in making such decisions, it criticises the conceptual framework within which these arguments are developed. In particular, it suggests that what Sagoff represents as a tension between consumers and their public roles as citizens is better understood as one between culturally shared values (...) concerning both the protection of nature and the pursuit of consumption; and that this conflict has itself to be resolved by them as citizens. (shrink)