Repudiated Preferences: Redefining the Knowledge Problem in Behavioral Welfare Economics

I argue that the discussion around the True Preferences Knowledge Problem in behavioral welfare economics has suffered from a missing distinction between two different knowledge problems: one about welfare, and the other about public policy. Here, I separate those knowledge problems and show that, given their different success conditions, it is no surprise that we haven’t found a satisfactory answer to “the” true preferences knowledge problem. There is an embedded tendency to try to answer the policy knowledge problem by engaging the welfare knowledge problem. I show that the impulse is misguided, and that we do not need to appeal to a complete theory of how preferences are related to welfare to answer questions about policy. However, this does not mean that we need to stop talking about preferences. We can make progress on the policy knowledge problem without appealing to a theory of welfare by focusing on the information that people are giving us about the mistakes they are making. I introduce repudiated preferences as a device that allows us to break out of this cycle and start to make progress in our discussions of nudging and Behavioral Intervention Policies without first solving the welfare knowledge problem. Finally, I acknowledge the challenges that still face this approach, and trace some avenues for how further work could build on these insights.