Four Dogmas of Environmental Economics

Author: Sagoff, Mark

Source: Environmental Values, Volume 3, Number 4, November 1994 , pp. 285-310(26)

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Abstract:

Four dogmas have shaped modern neoclassical economics. The first proposes that markets may fail to allocate resources efficiently, that is, to those willing to pay the most for them. The second asserts that choices, particularly within markets, reveal preferences. The third is the assumption that people always make the choices they expect will benefit them or enhance their welfare. The fourth dogma holds that perfectly competitive markets will allocate resources to their most beneficial uses. This is the doctrine of the invisible hand.

I argue that these dogmas of applied welfare economics should be abandoned. One consequence of doing so will be an increased interest in the institutional context of production. A second will be a turn toward empiricism.

Keywords: choices; externalities; market efficiency; preferences; welfare economics

Document Type: Research article

Publication date: 1994-11-01

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Environmental Values is an international peer-reviewed journal that brings together contributions from philosophy, economics, politics, sociology, geography, anthropology, ecology and other disciplines, which relate to the present and future environment of human beings and other species. In doing so we aim to clarify the relationship between practical policy issues and more fundamental underlying principles or assumptions.

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