Behavioural welfare economics with endogenous preferences for distributive justice

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A substantial empirical literature has found that people often make choices based on moral preferences, such as preferences for equality, fairness, and honesty. Moral preferences pose a problem for welfare analysis because they have been found to be endogenous to policy changes. Policies may induce moral engagement, where people form moral preferences, but also moral disengagement, where such preferences are suppressed. This poses a problem for welfare analysis because many of the standard tools used to evaluate policies assume exogenous preferences. This project seeks to contribute to the literature on behavioural welfare economics in its search for tools that may be used when standard tools are unsuitable. It does so by developing a model of individual decision making that addresses three questions: (1) to what extent are observed choices of an agent based on preferences for distributive justice? (2) to what extent would policy changes lead to changes in these preferences? (3) how may we evaluate policies in a way that takes the endogeneity of these preferences into account? The model developed will study an agent who forms her preferences after paying different levels of attention to the preferences of agents she finds morally relevant. Policies may then be modelled as being able to influence these different levels of attention. Such a model would be a tool that may be used to evaluate policies in a way that is sensitive to endogenous preferences for distributive justice.