Nudging in Public Policy: Application, Opportunities and Challenges
Intereconomics - Vol. 53, January/February 2018
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One of the most discussed ideas in contemporary 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. Many governments have implemented behaviourally informed policies, focusing on “nudges” – interventions that preserve freedom of choice, but that also steer people in certain directions. This Forum 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?
Additional Highlights from the Current Issue
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.
In this issue's Letter from America, Barry Eichengreen throws some cold water on talk of renewed EU optimism. The European economy may continue to grow, but if something does interrupt that growth, the EU will discover that it still lacks the institutional tools to resolve major problems. This year might well be another one of much talk but little actual progress on institutional reform.
Even though economists keep on emphasising the benefits of international trade, protectionism is on the rise in many industrialised countries. Wolfgang Lechthaler and Mariya Mileva argue that a potential explanation for this phenomenon can be found in the short-run distributional effects of import tariffs: while protectionism hurts the economy from an aggregate perspective (i.e. GDP goes down), unskilled workers in import-competing sectors benefit in the short run and do not lose in the long run. They might therefore lend political support to protectionism.
Quote of the Month
While behavioural economics has emerged rather recently as a new and heavily underexploited policy tool to promote consumer interests and restore market failures, its underlying principles have been well understood – and heavily exploited – by companies for decades.
from Monique Goyens's Forum article Using Behavioural Economics For Rather than Against Consumers – A Practitioner’s Perspective