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Cass R. Sunstein, Behavioral Welfare Economics, 11 J. Benefit-Cost Analysis 196 (2020).


Abstract: A growing body of normative work explores whether and how deference to people’s choices might be reconciled with behavioral findings about human error. This work has strong implications for economic analysis of law, cost–benefit analysis, and regulatory policy. In light of behavioral findings, regulators should adopt a working presumption in favor of respect for people’s self-regarding choices, but only if those choices are adequately informed and sufficiently free from behavioral biases. The working presumption should itself be rebuttable on welfare grounds, with an understanding that the ends that people choose might make their lives go less well. For example, people might die prematurely or suffer from serious illness, and what they receive in return might not (on any plausible account of welfare) be nearly enough. The underlying reason might involve a lack of information or a behavioral bias, identifiable or not, in which case intervention can fit with the working presumption, but the real problem might involve philosophical questions about the proper understanding of welfare, and about what it means for people to have a good life.