“Utility,” in plain English, means usefulness. In Australia, a ute is a useful vehicle. Jeremy Bentham specialized the meaning to a particular sort of usefulness. “By utility,” he said, “is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness or to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered”. The “principle of utility” is the principle that actions are to be judged by their usefulness (...) in this sense: their tendency to produce benefit, advantage, pleasure, good, or happiness. When John Stuart Mill spoke of the “perfectly just conception of Utility or Happiness, considered as the directive rule of human conduct,” he was using “Utility” as a short name for this principle. “The greatest happiness principle” was another name for it. People who subscribed to this principle came to be known as utilitarians. (shrink)

Normativity involves two kinds of relation. On the one hand, there is the relation of being a reason for. This is a relation between a fact and an attitude. On the other hand, there are relations specified by requirements of rationality. These are relations among a person's attitudes, viewed in abstraction from the reasons for them. I ask how the normativity of rationality—the sense in which we ‘ought’ to comply with requirements of rationality—is related to the normativity of reasons—the sense (...) in which we ‘ought’ to have the attitudes what we have conclusive reason to have. The normativity of rationality is not straightforwardly that of reasons, I argue; there are no reasons to comply with rational requirements in general. First, this would lead to ‘bootstrapping’, because, contrary to the claims of John Broome, not all rational requirements have ‘wide scope’. Second, it is unclear what such reasons to be rational might be. Finally, we typically do not, and in many cases could not, treat rational requirements as reasons. Instead, I suggest, rationality is only apparently normative, and the normativity that it appears to have is that of reasons. According to this ‘Transparency Account’, rational requirements govern our responses to our beliefs about reasons. The normative ‘pressure’ that we feel, when rational requirements apply to us, derives from these beliefs: from the reasons that, as it seems to us, we have. (shrink)

Behavioural economics has taught us that human agents don't always display consistent, context-independent and stable preferences in their choice behaviour. Can we nevertheless do welfare economics...

In this paper, we explore an under-investigated question concerning the class of formal models that aim at providing normative guidance. We call such models normative models. In particular, we examine the question of how normative models can successfully exert normative guidance. First, we highlight the absence of a discussion of this question – which is surprising given the extensive debate about the success conditions of descriptive models – and motivate its importance. Second, we introduce and discuss two potential accounts of (...) the success conditions of normative models. Our tentative conclusion is that the second account is more promising. (shrink)

Despite their popularity, dual process accounts of human reasoning and decision-making have come under intense scrutiny in recent years. Cognitive scientists and philosophers alike have come to question the theoretical foundations of the ‘standard view’ of dual process theory and have challenged the validity and relevance of evidence in support of it. Moreover, attempts to modify and refine dual process theory in light of these challenges have generated additional concerns about its applicability and refutability as a scientific theory. With these (...) concerns in mind, this paper provides a critical review of dual process theory in economics, focusing on its role as a psychological framework for decision modeling in behavioral economics and neuroeconomics. I argue that the influx of criticisms against dual process theory challenge the descriptive accuracy of dualistic decision models in economics. In fact, the case can be made that the popularity of dual process theory in economics has less to do with the empirical success of dualistic decision models, and more to do with the convenience that the dual process narrative provides economists looking to explain-away decision anomalies. This leaves behavioral economists and neuroeconomists with something of a dilemma: either they stick to their purported ambitions to give a realistic description of human decision-making and give up the narrative, or they revise and restate their scientific ambitions. (shrink)

A principal source of interest in behavioral economics has been its advertised contributions to policies aimed at ‘nudging’ people away from allegedly natural but self-defeating behavior toward patterns of response thought more likely to improve their welfare. This has occasioned controversies among economists and philosophers around the normative limits of paternalism, especially by technical policy advisors. One recent suggestion has been that ‘boosting,’ in which interventions aim to enhance people’s general cognitive skills and representational repertoires instead of manipulating their choice (...) environments behind their backs, avoids the main normative challenges. A limitation in most of this literature is that it has focused on relatively sweeping policy recommendations and consequently on strong polar alternatives of general paternalism and strict laissez faire. We review a real instance, drawn from a consulting project we conducted for an investment bank, of a proposed intervention that is more typical of the kind that economists are more often actually called upon to offer. In this example, the sophistication of current tools for preference attribution, combined with philosophical externalism about the semantics of preferences that makes it less plausible to attribute their literal self-conscious representation to people as propositional attitude content becomes more tightly refined, blocks applicability of the distinction between nudging and boosting. This seems to call for irreducible, context-specific ethical judgment in assessing the appropriateness of the forms of paternalism that economists must actually wrestle with in going about their everyday business. (shrink)

The tenuous claims of cost-benefit analysis to guide policy so as to promote welfare turn on measuring welfare by preference satisfaction and taking willingness-to-pay to indicate preferences. Yet it is obvious that people's preferences are not always self-interested and that false beliefs may lead people to prefer what is worse for them even when people are self-interested. So welfare is not preference satisfaction, and hence it appears that cost-benefit analysis and welfare economics in general rely on a mistaken theory of (...) well-being. This essay explores the difficulties, criticizes standard defences of welfare economics, and then offers a new partial defence that maintains that welfare economics is independent of any philosophical theory of well-being. Welfare economics requires nothing more than anevidentialconnection between preference and welfare: in circumstances in which people are concerned with their own interests and reasonably good judges of what will serve their interests, their preferences will be reliable indicators of what is good for them. (shrink)

This note replies to a comment by Daniel Hausman on our paper ‘Preference purification and the inner rational agent: a critique of the conventional wisdom of behavioural welfare economics’. We clarify our characterisation of behavioural welfare economics and acknowledge that Hausman does fully endorse this approach. However, we argue that Hausman’s response to our critique, like behavioural welfare economics itself, implicitly uses a model of an inner rational agent.

Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human (...) being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic. (shrink)

Policy-makers sometimes aim to improve well-being as a policy goal, but to do this they need some way to measure well-being. Instead of relying on potentially problematic theories of well-being to justify their choice of well-being measure, Daniel Hausman proposes that policy-makers can sometimes rely on preference-based measures as evidence for well-being. I claim that Hausman’s evidential account does not justify the use of any one measure more than it justifies the use of any other measure. This leaves us at (...) a loss as to which policy should be chosen in the non-trivial cases for which there is substantial disagreement between the different measures in their assessment of policy. (shrink)

In the recent well-being literature, various theory-free accounts of well-being have been proposed to ground informative evaluations of policies’ welfare implications without relying on any specifi...

This chapter contains sections titled: Rationality as a Property and Rationality as a Source of Requirements Rationality and Normativity Requirements of Rationality Reasoning References Further reading.

Scientific methods are heuristic in nature. Heuristics are simplifying, incomplete, underdetermined and fallible problem-solving rules that can nevertheless serve certain goals in certain contexts better than truth-preserving algorithms. Because of their goal- and context-dependence, a framework is needed for systematic choosing between them. This is the domain of scientific methodology. Such a methodology, I argue, relies on a form of instrumental rationality. Three challenges to such an instrumentalist account are addressed. First, some authors have argued that the rational choice of (...) at least some methods, namely those supporting belief formation, is not goal-dependent. Second, some authors have observed that some method choices seem intuitively rational, even though relevant goals are lacking. Thirdly, some authors have argued that instrumental rationality itself depends on a goal-independent form of rationality. It is the heuristic nature of scientific methods that affords me the arguments against these challenges. This heuristic-instrumentalist account provides the means-ends analysis needed to evaluate heuristic method choice. The paper thus offers the conceptual basis for a scientific methodology that is both compatible with the heuristic nature of actual scientific practice and also normatively relevant for assessing method choice. (shrink)

In this article, I will discuss two prominent views on the relevance and irrelevance of ontological investigations for the social sciences, namely, ontological foundationalism and anti-ontological pragmatism. I will argue that both views are unsatisfactory. The subsequent part of the article will introduce an alternative role for ontological projects in the philosophy of the social sciences that fares better in this respect by paying attention to the ontological assumptions of actual social scientific theories, models, and related explanatory practices. I will (...) illustrate and support this alternative through discussion of three concrete cases. (shrink)

This essay examines the critique of behavioral economics that Infante, Lecouteaux and Sugden offer in:"Preference Purification and the Inner Rational Agent.” It identifies and questions three main criticisms that ILS make: a methodological criticism, alleging that there is no psychological basis for the attribution of purified preferences, an epistemological criticism, alleging that there is little evidence for claims about purified preferences, and a normative criticism, arguing that policies should aim to facilitate people’s choices rather than to satisfy purified preferences. The (...) essay also distinguishes the view of welfare economics defended in Preference, Value, Choice, and Welfare from the claims of behavioral economists ILS criticize. (shrink)