A service of the


Nudging in Public Policy: Application, Opportunities and Challenges

One of the most discussed contemporary ideas in policy making is Richard Thaler and Cass Sunstein’s proposal to influence people’s choices without coercing them by improving the “architecture” of their choices. This Forum, featuring contributions by Cass R. Sunstein, Lucia A. Reisch, Xavier Troussard, René van Bavel, Monique Goyens, and Daniel M. Hausman, addresses both the opportunities and challenges presented by the application of behavioural insights to policy making. What do citizens actually think about behaviourally informed policies? Is this method of influencing choices ethically acceptable? Should the findings of behavioural economics be alarming to normative economists, in that they threaten the grounds upon which economists evaluate alternatives?

Monetary Policy

Helicopter Money: Should Central Banks Rain Money from the Sky?

Ultra-low interest rates have become an endemic and potentially problematic characteristic of the global economy. Central banks in the euro area, the United States, Japan and Australia have bet on lowering interest rates to increase inflation, but despite their efforts, core inflation remains stubbornly below the desired two per cent. Ansgar Belke points out, however, that central banks have another tool at their disposal that has the potential to stimulate inflation: helicopter money.


Europe in 2018: Less Populist, More Popular?

A year ago, Europe seemed to be under siege by populist forces. The worst of those fears proved unfounded. However, while Europe's far-right surge has stalled, the populist threat has certainly not gone away. Furthermore, despite the encouraging economic developments, there are persistent divergences between euro area economies. European Commissioner Pierre Moscovici details how Europe should face these challenges in 2018.

Figure of the Month

Behavioural Insights in EU Policy

This figure from the article How Can Behavioural Insights Be Used to Improve EU Policy? by Xavier Troussard and René van Bavel shows how behavioural insights are utilised in the EU policy cycle. Click in the figure for further information.

Editor's Choice

The Basics of Basic Income

John Kay describes how any attempt to turn basic income into a feasible proposal necessarily involves the reintroduction of elements of the benefit system which are dependent on multiple contingencies and also on income and wealth. The outcome is a welfare system which resembles those that already exist. Thus, basic income is merely a distraction from sensible and necessary welfare reforms.

Letter from America

Is Renewed EU Optimism Justified?

Barry Eichengreen looks at renewed EU optimism and assesses whether it is warranted. Will the European economy continue to grow? Will 2018 be another year of much talk but little actual progress on institutional reform?

Editor's Choice

The Engines of Inequality

Maurizio Franzini and Mario Pianta argue that today's inequality in advanced countries is the result of four factors, namely the increased power of capital over labour, the emergence of an "oligarch capitalism", the growing individualisation of economic conditions and the retreat of politics.

Quote of the Month

Behavioral Economics and Public Opinion

“(C)itizens generally do not approve or disapprove of nudges as such; everything depends on the direction in which people are being nudged. By contrast, people often have strong opposition to mandates and bans, even if they approve of the direction in which they push people”

from Cass R. Sunstein, Lucia A. Reisch's Forum article "Behavioral Economics and Public Opinion"

Editor's Choice

Trump’s Confrontational Trade Policy

It now seems clear that Trump's campaign rhetoric promoting trade protectionism will be turned into official policy. Caroline Freund writes that his confrontational approach to international trade will lead to retaliation and in a worst case could lead to an unravelling of existing trade agreements and global economic cooperation.