Review: “Smart” Government Discourse Through a Behavioral Economics Lens (original) (raw)
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Behaviorally informed regulations - an emerging trend in modern public policymaking
Szabolcs Diósi , 2022
In 2008, following the publication of Richard Thaler and Cass Sunstein's influential book 'Nudge: Improving Decisions About Health, Wealth, and Happiness', a new wave of academic discourse started to formulate around well-established public policymaking practices. Heavily influenced by the findings of modern behavioral sciences, Thaler and Sunstein moved away from prevailing neoclassical economic theories and introduced their novel, empirically grounded, behaviorally informed public policymaking approach; libertarian paternalism. The authors claim that even though various biases, mental shortcomings, and cognitive limitations influence human decision-making, the very process of reaching a decision can still be predictable. By utilizing cognitive flaws, it is possible – without limiting one's freedom– to consciously design choice environments that are able to steer people's decisions into certain desired directions. They conclude that these behaviorally informed regulations - often referred to as nudges, e.g., default rules, automatic enrollment policies, smart disclosures - could become effective, freedom-preserving, cost-saving alternatives to old conventional policymaking strategies primarily relying on bans, commands, and coercion. This paper attempts to provide a detailed picture of the general nature of nudges, explore how different governments have implemented such behaviorally informed policies during the previous decade, and explore the possible challenges liberal paternalism might face in the future.
Behavioural Decisions & Policy Behavioral Decisions and Policy
2010
We study the public policy implications of a model in which agents do not fully internalize all the conscequences of their actions. Such a model uni…es seemingly disconected models with behavioral agents. We evaluate the scope of paternalistic and libertarian-parternalistic policies in the light of our model, and propose an alternative type of approach, called soft-libertarian, which guides the decision makers in the internalization of all the conscequences of their actions. Psychotherapy is one example of a soft-libertarian policy. Moreover, we show that in our behavioral framework, policies that increase the set of opportunities or provide more information to the agent may not longer be individual welfare improving. JEL Classi…cation numbers: D03, D60, I30.
2016
An intervention is classified as a nudge when it is not a coercive measure, retains freedom of choice, is based on automatic and reflex responses, does not involve methods of direct persuasion, does not significantly alter economic incentives, and does revise the context of choice according to the discoveries of behavioural economics (Thaler and Sunstein, 2008). What is proposed is therefore a form of libertarian paternalism that has a dual valency. As paternalism, it aims to make up for citizens’ irrational and self-harming tendencies by “gently nudging them” to decide rationally for their own good. In its libertarian form it aims to give the last word to the outcome of the conscious and deliberative processes of the individual citizen who can always choose to resist the nudge.