In normative economic analysis, it is conventional to treat each person's preferences as that person's own standard of value, and as the standard by which the effects of public policies on that person should be valued. The proposal that preferences should be treated in this way is usually qualified by two apparently natural conditions—that preferences are internally coherent, and that they reflect the considered judgements of the person concerned. However, there is now a great deal of evidence suggesting that, in many economic environments, preferences of the required kind simply do not exist. It seems that the preferences that govern people's actual behaviour are often incoherent and unstable. This prompts the following question: Is there a defensible form of normative economics which respects each individual's actual preferences, whatever form they take? I shall try to show that there is.

A contractarian approach to normative analysis

This paper is premised on a contractarian understanding of normative analysis. On this understanding, the object of normative analysis is not to arrive at an all-things-considered judgement about what is valuable for society as a whole, but to look for proposals that each individual can value from his or her own point of view. To follow this approach is to treat social value as subjective and distributed. To say that social value is subjective is to say that it is not a property of the world, but a perception or attitude on the part of the valuer.