Abstract
Behavioral economics (BE) accounts for how people actually behave has proven to be very influential in multiple domains. Its insights have dislodged settled assumptions and put forward an improved understanding of human beings and their agency. Although it challenges the conventional approach, advanced by rational choice theory (RCT), because it also formally builds on it, BE shares some of RCT’s advantages as well as its shortcomings. One the one hand, it shares an important focus on freedom. On the other, it is limited to self-interest as the main motivation for human action. The latter is a limitation since human experience is much richer than that. To complement BE’s limitation, this paper suggests Amartya Sen’s Capability Approach (CA). This framework places humans and their quality of life at the locus of attention for the assessment of social states. To do so, it challenges RCT in a more fundamental way and it provides a richer account of human agency, which includes both self-regarding as well as other-regarding motivations. This combination enriches BE’s realism as well as practicality.
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