ABSTRACT
Wade Hands argues the inclusion of social preferences in economic models challenges the positive – normative distinction in economics. This paper argues this need not be the case. In their social preference models, behavioral economists can simply treat the social preferences individuals have as relevant facts about some individuals. If behavioral economists simply left it with that, their analyses would fall squarely in the “positive analysis” category. But behavioral economists typically move beyond this by also treating the existence of social preferences favorably for their welfare-enhancing effects. This need not to push their analyses into the “normative analysis” category. Even though their welfare-evaluations inevitably involve normative welfare criteria, these normative welfare criteria need not necessarily reflect their own moral values. If instead these normative welfare criteria reflect the moral values of others, then on Mongin's authoritative criterion their welfare analyses might be called instances of positive welfare economics. The paper concludes by arguing that while staying within the confines of “positive analysis” is a logical possibility for behavioral economists welcoming social preferences, it remains to be seen whether doing so is also psychologically possible and whether it is a good idea to try to do so.
