Abstract
Consider an individual whose preferences are changing over time. How
do we assess her welfare? We argue that this is an empirically relevant
question as preferences are constantly changing over time if the agent has a
bias towards the present. We present a simple example where preferences
are changing over time (the apple tree) and use it to aid our discussion
of welfare. We critically assess the approach that focuses on the decision
maker (revealed preference) and the one that ignores the decision maker
(long-run self) with reference to some recent literature. Finally, we look at
some of the problems that arise when we consider a sovereign individual
who aggregates her changing preferences.
do we assess her welfare? We argue that this is an empirically relevant
question as preferences are constantly changing over time if the agent has a
bias towards the present. We present a simple example where preferences
are changing over time (the apple tree) and use it to aid our discussion
of welfare. We critically assess the approach that focuses on the decision
maker (revealed preference) and the one that ignores the decision maker
(long-run self) with reference to some recent literature. Finally, we look at
some of the problems that arise when we consider a sovereign individual
who aggregates her changing preferences.
| Original language | English |
|---|---|
| Publisher | Edinburgh School of Economics Discussion Paper Series |
| Number of pages | 9 |
| Publication status | Published - 2007 |
Publication series
| Name | ESE Discussion Papers |
|---|---|
| No. | 164 |