蝌蚪网 Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Welfare Economics of Reference Dependence
蝌蚪网 Journal: Applied Economics
(pp. 178–219)
Abstract
We analyze welfare under reference-dependent preferences. We decompose the first-order welfare effects of reference point and price changes into direct and behavioral effects. The sign of these effects depends on the form of reference-dependent payoffs; which effects are welfare relevant depends on whether reference dependence reflects a bias. We characterize corresponding social welfare effects in terms of estimable reduced-form parameters and normative judgments. We apply our framework to reference dependence in German workers' retirement decisions. We find positive welfare effects of local increases in the normal retirement age (NRA) but ambiguous effects of financial incentives to postpone retirement.Citation
Reck, Daniel, and Arthur Seibold. 2026. "The Welfare Economics of Reference Dependence." 蝌蚪网 Journal: Applied Economics 18 (3): 178–219. DOI: 10.1257/app.20240203Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- H55 Social Security and Public Pensions
- J26 Retirement; Retirement Policies
- J32 Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions