This book shows through argument and numerous policy-related examples how understanding moral philosophy can improve economic analysis, how moral philosophy can benefit from economists' analytical tools, and how economic analysis and moral philosophy together can inform public policy. Part I explores the idea of rationality and its connections to ethics, arguing that when they defend their formal model of rationality, most economists implicitly espouse contestable moral principles. Part II addresses the nature and measurement of welfare, utilitarianism and cost-benefit analysis. Part (...) III discusses freedom, rights, equality, and justice - moral notions that are relevant to evaluating policies, but which have played little if any role in conventional welfare economics. Finally, Part IV explores work in social choice theory and game theory that is relevant to moral decision making. Each chapter includes recommended reading and discussion questions. (shrink)

The paper analyses economic evaluations by distinguishing evaluative statements from actual value judgments. From this basis, it compares four solutions to the value neutrality problem in economics. After rebutting the strong theses about neutrality (normative economics is illegitimate) and non-neutrality (the social sciences are value-impregnated), the paper settles the case between the weak neutrality thesis (common in welfare economics) and a novel, weak non-neutrality thesis that extends the realm of normative economics more widely than the other weak thesis does.

This book presents a history of behavioral economics. The recurring theme is that behavioral economics reflects and contributes to a fundamental reorientation of the epistemological foundations upon which economics had been based since the days of Smith, Ricardo, and Mill. With behavioral economics, the discipline has shifted from grounding its theories in generalized characterizations to building theories from behavioral assumptions directly amenable to empirical validation and refutation. The book proceeds chronologically and takes the reader from von Neumann and Morgenstern's axioms (...) of rational behavior, through the incorporation of rational decision theory in psychology in the 1950s–70s, to the creation and rise of behavioral economics in the 1980s and 1990s at the Sloan and Russell Sage Foundations. (shrink)

This paper examines methodological issues raised by revealed preference theory in economics: particularly contemporary revealed preference theory. The paper has three goals. First, to make the case that revealed preference theory is a broad research program in choice theory—not a single theory—and understanding this diversity is essential to any methodological analysis of the program. Second, to explore some of the existing criticisms of revealed preference theory in a way that emphasizes how the effectiveness of the critique depends on the particular (...) version of revealed preference under consideration. Finally, three additional criticisms are presented that are aimed specifically at contemporary revealed preference theory. (shrink)

This book is about preferences, principally as they figure in economics. It also explores their uses in everyday language and action, how they are understood in psychology and how they figure in philosophical reflection on action and morality. The book clarifies and for the most part defends the way in which economists invoke preferences to explain, predict and assess behavior and outcomes. Hausman argues, however, that the predictions and explanations economists offer rely on theories of preference formation that are in (...) need of further development, and he criticizes attempts to define welfare in terms of preferences and to define preferences in terms of choices or self-interest. The analysis clarifies the relations between rational choice theory and philosophical accounts of human action. The book also assembles the materials out of which models of preference formation and modification can be constructed, and it comments on how reason and emotion shape preferences. (shrink)

In a recent examination of the origins of ordinal utility theory in neoclassical economics, Robert D. Cooter and Peter Rappoport argue that the ordinalist revolution of the 1930s, after which most economists abandoned interpersonal utility comparisons as normative and unscientific, constituted neither unambiguous progress in economic science nor the abandonment of normative theorizing, as many economists and historians of economic thought have generally believed. Rather, the widespread acceptance of ordinalism, with its focus on Pareto optimality, simply represented the emergence of (...) a new neoclassical research agenda that, on the one hand, defined economics differently than had the material welfare theorists of the cardinal utility school and, on the other, adopted a positivist methodology in contrast to the less restrictive empiricism of the cardinalists. (shrink)