International audienceNeoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic

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Our paper is a critique of an approach to normative economics -'behavioural welfare economics', or BWE for short -which is advocated by many prominent behavioural economists. Daniel Hausman features in our argument as (in his words) an alleged philosophical fellow-traveller. Having written the paper in the hope of sparking off a debate about how behavioural economics should deal with normative questions, we are pleased that he has responded with a defence of some of the features of BWE that we criticised.If we have read Hausman's comment correctly, he does not disagree with our characterisation of what BWE is, or with our attribution of this approach to behavioural economists. In relation to our critique, the main features of BWE can be summarised as follows: (1) The approach is intended to apply to cases in which individuals' revealed preferences depend on contextual factors that have little or no apparent relevance to those individuals' interests or well-being. (2) The normative criterion is the satisfaction of each individual's latent (or 'purified') preferences, defined as the preferences she would reveal in the absence of any errors that might be caused by limitations of attention, information, cognitive ability or self-control. (3) Latent preferences are interpreted as expressing individuals' subjective judgements about their interests or well-being; they do not necessarily track objective properties of the external world (such as an individual's monetary wealth or health status) or properties of passive experience (such as happiness in the hedonic sense).(4) In the cases to which BWE is to be applied, latent preferences are assumed to be contextindependent.In saying that BWE implicitly uses a model of an inner rational agent, we mean no more than that it has properties (1) to (4). Of course, behavioural economists do not maintain that a human being is really made up of a neoclassically rational entity encased in an errorprone psychological shell. But we think it is both true and illuminating that BWE proceeds as if human beings were like that. BWE invokes a model of rational agency when it assumes that, in the absence of error, an individual's choices would reveal coherent preferences. This

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