Behavioral economics and the positive-normative distinction: Susntein’s Choosing Not to Choose and behavioral economics imperialism

ABSTRACT

This paper examines behavioral economics’ use of the positive-normative distinction in its critique of standard rational choice theory as normative, and argues that it departs from Robbins’ understanding of that distinction in ways that suggest behavioral economists themselves do not observe that distinction. One implication of this is that behavioral economists generally do not recognize Putnam’s fact-value ‘entanglement thesis’ while a second implication is that the charge that rational choice theory is descriptively inadequate paradoxically appears to mean that it does not employ the implicit value basis and normative vision that behavioral economics recommends, thus actually violating Robbins’ distinction. This latter argument is developed through an examination of Sunstein’s Choosing Not to Choose which uses nudge policy in the form of default rules to advance a different conception of freedom than standard choice theory employs. The paper goes on to argue that behavioral economics imperialism, particularly in the form of behavioral development economics imperialism, is more about promoting its implicit value basis and normative vision over that promoted by standard rational choice theory than about advancing an alternative conception of economics for social science. A final section comments on economics’ status and relation to the other social sciences.

KEYWORDS

positive-normative, Putnam, Sunstein, freedom, economics imperialism