Chapter 24: Appraisal
Fundamental problems for human beings may be recognized as they appear in many different scientific fields, tackled from different perspectives and theories. One such problem is how we as a collective should take decisions, and choose appropriate norms, rules and regulations for society. These are thus topics both in moral philosophy and political philosophy, while social choice theory is a discipline that is devoted to the subject of collective decision-making. Its close relative, public choice theory, addresses the same issue in the interaction between political science and economics. As in all of these fields, the behaviour of individuals is also studied in psychology, but traditionally avoids focusing on normative aspects of behaviour. However, psychology is also interested in changing and influencing people’s behaviour, and therefore the demarcation line is not as clear-cut as one may believe. In this chapter we will focus on what the field of economics has to say about how we can analyze and decide what policies or projects should be implemented in a society. Considerably more specific, we will sketch the fundamentals of neoclassical economic arguments for welfare economics used in cost–benefit analysis (CBA). In particular, we will outline the basic theory and practice of welfare evaluation using random utility econometrics or discrete choice modelling, which are methods that are used in many different subdisciplines of economics.
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