How should a Behavioral Economist do Welfare Economics?, working paper

Economists use the standard rational model to predict behaviour under a new policy regime and to evaluate the policy according to its impact on the welfare of the people a¤ected. Experimental observation of behaviour casts some doubt on the predictive accuracy of the standard model, but the more realistic behavioral alternatives often provide a poor basis for normative evaluations. This paper suggests that in some cases we can do both. A behavioral trait can be modeled as a cognitive strategy that has evolved to augment a deeper notion of personal welfare. This makes it possible to predict behaviour with greater accuracy and to make normative evaluations of the outcomes of policy