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Behavioral Economics and Public Policy 102: Beyond Nudging

Author

Listed:
  • Saurabh Bhargava
  • George Loewenstein

Abstract

Policymakers have recently embraced Behavioral Economics as an alternative approach which recognizes the limits and consequences of human decision-making. Early applications of BE ("nudges") produced notable successes and helped to set the stage for more aggressive applications aimed at the deeper causes of policy problems. We contend that policies that aspire to simplify products and incentives, rather than choice environments, aggressively protect consumers from behavioral exploitation, and leverage BE to enhance the design and implementation of traditional policy instruments offer solutions commensurate with contemporary challenges. Case studies in health insurance, privacy, and climate change illustrate the application of these ideas.

Suggested Citation

  • Saurabh Bhargava & George Loewenstein, 2015. "Behavioral Economics and Public Policy 102: Beyond Nudging," American Economic Review, American Economic Association, vol. 105(5), pages 396-401, May.
  • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:396-401
    Note: DOI: 10.1257/aer.p20151049
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    References listed on IDEAS

    as
    1. Brigitte C. Madrian, 2014. "Applying Insights from Behavioral Economics to Policy Design," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 663-688, August.
    2. Adam M. Lavecchia & Heidi Liu & Philip Oreopoulos, 2014. "Behavioral Economics of Education: Progress and Possibilities," NBER Working Papers 20609, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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