What preferences for behavioral welfare economics?

ABSTRACT Behavioral welfare economics (BWE) assigns different roles to preferences than either non-behavioral forms of welfare economics or theories outside of the domain of welfare economics. In particular, BWE differs from other forms of welfare economics in its attempt to distinguish welfare-relevant from welfare-irrelevant subjective attitudes based on some notion of deliberation error. Based on recent arguments for the purpose-dependence of the interpretation of preferences, I argue that a functionalist-dispositional understanding of preference is not sufficient for BWE. Instead, I distinguish two levels of functional analysis – algebraic and algorithmic – and argued that it is the algorithmic level, capturing the relevant mental processes and representations producing the observed behavior, that is required for BWE.