Abstract
Three major ethics theories are utilitarianism, deontology, and moral virtue ethics. There is a commonly accepted basis for policy evaluation in traditional economics under broadly-defined utilitarianism with no interpersonal comparisons of utilities: Pareto efficiency. With exogenous-stable preferences, Pareto efficiency gives a solid basis. In contrast, there is no such commonly accepted basis for policy evaluation in behavioral economics. This is because, in behavioral economics, preferences are often assumed to be unstable and endogenous. This paper proposes to use moral virtue ethics as the basis for evaluating policies in behavioral economics. Extending the tough love altruism framework of Bhatt and Ogaki (2012), this paper compares government policies that are based on utilitarianism and those based on moral virtue ethics.
