TY - UNPB

T1 - Predictive Power in Behavioral Welfare Economics

AU - Bouacida, Elias

AU - Martin, Daniel

PY - 2020/3/1

Y1 - 2020/3/1

N2 - When choices are inconsistent due to behavioral biases, there is a theoretical debate about whether the structure of a model is necessary for providing precise welfare guidance based on those choices. To address this question empirically, we use standard data sets from the lab and field to evaluate the predictive power of two “model-free” approaches to behavioral welfare analysis. We find they typically have high predictive power, which means there is little ambiguity about what should be selected from each choice set. We also identify properties of revealed preferences that help to explain the predictive power of these approaches.

AB - When choices are inconsistent due to behavioral biases, there is a theoretical debate about whether the structure of a model is necessary for providing precise welfare guidance based on those choices. To address this question empirically, we use standard data sets from the lab and field to evaluate the predictive power of two “model-free” approaches to behavioral welfare analysis. We find they typically have high predictive power, which means there is little ambiguity about what should be selected from each choice set. We also identify properties of revealed preferences that help to explain the predictive power of these approaches.

KW - Welfare economics

KW - behavioral economics

KW - predictive power

KW - revealed preferences

M3 - Working paper

T3 - Economics Working Papers Series

BT - Predictive Power in Behavioral Welfare Economics

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -