Beyond Revealed Preferences: Choice Theoretic Foundations for Behavioral Welfare Economics.” NBER Working paper No

This paper proposes a choice-theoretic framework for evaluating economic welfare with the following features. (1) In principle, it is applicable irrespective of the positive model used to describe behavior. (2) It subsumes standard welfare economics both as a special case (when standard choice axioms are satis\u85ed) and as a limiting case (when behavioral anomalies are small). (3) Like standard welfare economics, it requires only data on choices. (4) It is easily applied in the context of speci\u85c behavioral theories, such as the ; model of time inconsistency, for which it has novel normative implications. (5) It generates natural counterparts for the standard tools of applied welfare analysis, including compensating and equivalent variation, consumer surplus, Pareto optimality, and the contract curve, and permits a broad generalization of the of the \u85rst welfare theorem. (6) Though not universally discerning, it lends itself to principled re\u85nements