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)

Cost–benefit analysis (CBA) is much more philosophically interesting than has in general been recognized. Since it is the only well-developed form of applied consequentialism, it is a testing-ground for consequentialism and for the counterfactual analysis that it requires. Ten classes of philosophical problems that affect the practical performance of cost–benefit analysis are investigated: topic selection, dependence on the decision perspective, dangers of super synopticism and undue centralization, prediction problems, the indeterminateness of our control over future decisions, the need to exclude (...) certain consequences for moral reasons, bias in the delimitation of consequences, incommensurability of consequences, difficulties in defending the essential requirement of transferability across contexts, and the normatively questionable but equally essential assumption of interpersonal compensability. (Published Online July 31 2007). (shrink)

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)

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)

The discourse about commodification of time indicates that under the current socio-economic regime important values get systematically ignored. This paper reviews literature about the value of time in classical political economy, neoclassical economics, the household production approach, household economics, and activity models. Starting with neoclassical economics, all these approaches are largely in accordance with utilitarian methodology. Utilitarian methodology turns out to be incapable of explaining the value of time. The debate about “quality work” allows us to identify the following intrinsic (...) values: power, playfulness, a sense of meaning, and a sense of belonging. These intrinsic values match with the “five sources of motivation” in contemporary psychological research, which confirms the empirical relevance and irreducibility of these values for understanding behaviour. We propose a definition of commodification of time and illustrate some of the potential effects of commodification of time. (shrink)