Tuesday, March 17, 2009

Making Wise Choices About Environmental Goods

In my environmental philosophy class, this week we discussed preference utilitarianism, cost-benefit analysis, and whether we should trust people's stated preferences about how highly they value environmental goods.

I tend to be skeptical about economists' measurements of preference, though I don't know of a better and simpler tool that can be substituted.

Preferences can be discovered (only) by introspection, so it seems illogical to say that someone could be mistaken about what they prefer. The claim that someone can be mistaken rests on several observations:
1. Sometimes our actions do not follow our expressed beliefs. Which is the real preference: how we act or what we say?
2. People change their minds depending on how a choice is presented.
3. What we think will make us happy does not always, in fact, make us happy. Predictions of future happiness and unhappiness are wrong in systematic ways.

We talked about some of the mistakes that people make in estimating the value of their preferences and watched this video, from 6:00 to 12:54. I think Leroy's lottery ticket fallacy is particularly telling.

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