Edited by Paulo A.L.D. Nunes, Pushpam Kumar and Tom Dedeurwaerdere
Chapter 7: The behavioral argument for an expanded valuation framework for biodiversity and ecosystem services
The cornerstone of Walrasian welfare economics is a model of human behavior characterizing consumer preferences as stable, consistent, insatiable, and independent of the preferences of others. The assumptions embodied in Homo economicus underlie the theoretical assumptions and policy recommendations of most economists, whether explicitly acknowledged or not. In this model, economic value comes solely from the preferences of perfectly rational, self-regarding individuals. For example, environmental economics has become predominantly concerned with uncovering the 'true' value of environmental features using techniques such as hedonic pricing and contingent valuation. Preferences revealed by these techniques can then be used in benefit-cost analysis (BCA) to suggest corrections in market prices and/or to assign property rights more completely (Heal, 1998; Stavins, 2008). Recent work in theoretical welfare economics has exposed flaws in the Walrasian model that have led many theorists to reject a basic principle supporting BCA, that is, that preferences can be characterized as independent and exogenous so that interpersonal comparison of utility can be avoided (Boadway, 1974; Chipman and Moore, 1978; Blackorby and Donaldson, 1990; Ng, 1997; Bowles, 1998; Suzumura, 1999; Gowdy, 2004). Furthermore, it has been well-established in the behavioral literature that preferences are other-regarding, and that they vary significantly according to cultural conditioning, relative position, and other reference points (Henrich et al., 2001; Camerer et al., 2005). Understanding the social process of preference formation is critical to formulating sound economic policies (Kahneman et al., 1999; Knetsch, 2005).
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.