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Choices3 - 3 Choices preferences and societys economic...

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3. Choices, preferences and society’s economic welfare 1. Three steps from individuals’ choices to welfare of society:- from individuals’ choices to their preferences; from individuals’ preferences to their ‘welfare’; from individuals’ welfare to society’s welfare. 2. How far do peoples’ choices really ‘reveal’ their preferences? Concept of ‘utility’ in economics; from Benthamite interpretation in terms of pleasures and pains, to modern concept of a ‘utility function’ with its denies any particular psychological interpretation of what it is that individuals’ are maximising, such as satisfaction. 3. Choice may not always be ‘rational’ utility-maximising choice. Axioms of rational choice; evidence of ‘irrational behaviour’; wider concepts of ‘rational choice’; 4 Choices may be rational but still fail to promote welfare. In particular, may be based on imperfect information (often rational). Choice may be counter-preferential insofar as influenced by altruism and ‘commitment.
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