Abstract

The intent of applied welfare economics is to distinguish good from bad, so it is a branch of moral philosphy/ethics. Said another way, welfare economists are in the business of determining whether a policy will increase or decrease happiness. For thirty-odd years I have done environmental valuation: trying to estimate in dollars or Euros individuals’ willingness-to-pay for changes in the environment, estimating how and why willingness-to-pay might vary across individuals, and using these estimates to guide policy decisions. The foundations of this practice are the following: Economists believe, or assume, an individual has one, and only one, stable ordering of states of the world, believe the individual knows their ordering and will choose the highest-ranked availabe state, and believe that achieving a higher ranked state is preferred to a lower-ranked ...