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Behavioral Public Economics: Welfare and Policy Analysis with Non-Standard Decision-Makers

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  • B. Douglas Bernheim

    (Department of Economics, Stanford University)

  • Antonio Rangel

    (Department of Economics, Stanford University)

Abstract

This paper has two goals. First, we discuss several emerging approaches to applied welfare analysis under non-standard (“behavioral”) assumptions concerning consumer choice. This provides a foundation for Behavioral Public Economics. Second, we illustrate applications of these approaches by surveying behavioral studies of policy problems involving saving, addiction, and public goods. We argue that the literature on behavioral public economics, though in its infancy, has already fundamentally changed our understanding of public policy in each of these domains.

Suggested Citation

  • B. Douglas Bernheim & Antonio Rangel, 2005. "Behavioral Public Economics: Welfare and Policy Analysis with Non-Standard Decision-Makers," Discussion Papers 04-033, Stanford Institute for Economic Policy Research.
    • Handle: RePEc:sip:dpaper:04-033
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    More about this item

    Keywords

    mistakes; decision making; behavioral economics; psychology and economics; neuroeconomics; public goods; addiction; savings; corrective policy; paternalism; welfare economics; revealed preference;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • D1 - Microeconomics - - Household Behavior
    • D6 - Microeconomics - - Welfare Economics
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • H0 - Public Economics - - General
    • H1 - Public Economics - - Structure and Scope of Government
    • H4 - Public Economics - - Publicly Provided Goods

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