Review of Hausman's "Preference, Value, Choice and Welfare"

Erasmus Journal for Philosophy and Economics, 2012

Economics and Philosophy, 2014

The concept of preference plays a central role in economic theory. Surprisingly however, a monograph dedicated to precisely this, and trying to give us a coherent view on how this concept functions or should function as a building block in various branches of the discipline, has been missing. Daniel Hausman's recent book is a welcome addition. The book consists of three parts. Part I, Preferences in Positive Economics, is the largest; it contains six chapters, devoted to the role preferences play in descriptive economics. Hausman argues for a specific conception, preferences as total comparative evaluations, which is of crucial importance throughout the book. He also defends it against other notions of preference, which are misconceived in his view. There are clear expositions of utility and how the axioms of utility theory work. This part also contains nice discussions of consequentialism and game theory, and how these relate. Part II, Preferences, Welfare, and Normative Economics, contains two chapters on the question of how preference satisfaction relates to welfare. Inter alia, Hausman is critical of the 'laundered preference' approach. Part III, Psychology, Rational Evaluation, and Preference Formation, also contains two chapters. Here Hausman discusses recent research done by psychologists and behavioural economists on choice behaviour and how these findings might inform empirical work on preference formation, but also the normative question of how one ought to form one's preferences. Overall, it is a short and compact book, and a pleasurable read. A central theme in Preference, Value, Choice, and Welfare is how to conceive of preferences in the discipline of economics. Hausman argues for preferences as total comparative evaluations. Together with corresponding beliefs, they determine choice. By being comparative,

Journal of Economic Methodology, 2016

This note replies to a comment by Daniel Hausman on our paper 'Preference purification and the inner rational agent: a critique of the conventional wisdom of behavioural welfare economics'. We clarify our characterisation of behavioural welfare economics and acknowledge that Hausman does not fully endorse this approach. However, we argue that Hausman's response to our critique, like behavioural welfare economics itself, implicitly uses a model of an inner rational agent.

This article reviews the question of whether or not the study of values has or ought to have an important role in the study of economics. The positivist view of Robbins is criticised. Economists cannot ignore the formation of values in their assessment of welfare especially when welfare is affected by the growth and development of the economy. This is illustrated for instance by Weckstein's theory of welfare criteria and changing tastes which indicates that the variables which economists have conventionally regarded as being the determinants of an individual's welfare are not the relevant ones. Similarly the theory advanced by Scitovsky in The Joyless Economy, though different from those of Weckstein and of Marcuse, suggest that economists may not be selecting appropriate measures of welfare. Hollis and Nell, Gintis, Peacock and Rowley have also criticised the limited focus of welfare economics (Paretian welfare economics) from other points of view. The point is made that there are unresolved problems of relevance to economics concerning values·and preferences which can in principle be studied along positivist lines. There is a strong case for economists giving more consideration to these problems.

Journal of Economic Methodology, 2017

Positive economic models aim to provide truthful explanations of significant (aspects of) economic phenomena. While the notion of 'preferences' figures prominently in micro-economic models, it suffers from a remarkable lack of conceptual clarity and rigor. After distinguishing narrow homo economicus models (self-interest maximization) from broader ones (preference satisfaction) and rehearsing the criticisms both have met, I go into the most promising attempt to date at addressing them, developed by Hausman. However, his definition of preferences as 'total comparative evaluations', I argue, plays into the general disregard that economists have for human psychology. My alternative definition of preferences as 'overall comparative evaluations'and hence as one of the many factors that influence people's behaviorallows for more adequate causal explanations of people's dutiful, committed, and norm-guided actions. Against Hausman but in agreement with Sen, it also allows for (motivated) counterpreferential choice.

International Review of Economics

Journal of the History of Economic Thought, vol.34, No.4, 2012

The notion of interdependent preferences has a long history in economic thought. It can be found in the works of authors such as Hume, Rae,Genovesi, Smith, Marx and Mill among others. In the 20th century, the idea became more widespread mainly through the works of Veblen and Duesenberry. Recently, an increasing number of theorists are interested in issues like reference income, relative consumption and positional goods which are all based on the concept of interdependent preferences. However,such preferences were never part of the corpus of orthodox theory. For instance, although Pareto and Marshall were aware of their existence, they rejected their incorporation into economic theory. There were various reasons for this rejection. The structure of mainstream economic methodology might be one reason. Another reason had to do with the theoretical implications of adopting interdependent preferences. The paper discusses the main historical aspects of this idea in relation to the mainstream resistance to incorporate it in orthodox economic theory.

2013

Journal of Business Ethics, 2024

The issue of interpersonal comparisons of utility is about the possibility (or not) of comparing the utility or welfare or the mental states in general, of different individuals. Embedded in the conceptual framework of utilitarianism, interpersonal comparisons were admissible in economics as part of the theoretical justification of welfare policies until the first decades of the twentieth century. Under the strong influence of the scientific philosophy of positivism as reflected in the works of early neoclassical economists and as epitomized by Lionel Robbins, utility comparisons were subsequently rejected as a value judgement. Robbins' methodological stance is still prevalent among mainstream economists. Despite the explicit rejection of comparability by the majority of economists, interpersonal comparisons are necessary for many key policy issues, such as progressive taxation, social welfare policies, GDP-based welfare comparisons, cost-benefit analysis, and public goods provision. In this paper, the case of interpersonal utility comparisons is discussed as an illustrative example of the usefulness of the study of the role of value judgements, and generally of the interrelationship between ethics and economics. It is argued that the current tension between theory and policy practice might be resolved through the efforts of prominent economists and philosophers to challenge positivism, and especially its problematic treatment of value judgements and of ethical assumptions in general. The discussion also provides more strength to the view that policy makers and their economic advisers cannot avoid ethical questions in their analysis of the workings of the economic system.