IDEAS home Printed from https://ideas.repec.org/a/fip/fedbcp/y2003ijunn48x4.html
   My bibliography  Save this article

Good policies for bad governments: behavioral political economy

Author

Listed:
  • Daniel J. Benjamin
  • David I. Laibson

Abstract

Politicians and policymakers are prone to the same biases as private citizens. Even if politicians are rational, little suggests that they have altruistic interests. Such concerns lead us to be wary of proposals that rely on benign governments to implement interventionist policies that "protect us from ourselves." The authors recommend paternalism that recognizes both the promise and threat of activist government. They support interventions that channel behavior without taking away consumers' ability to choose for themselves. Such "benign paternalism" can lead to very dramatic behavioral changes. But benign paternalism does not give government true authority to control our lives and does not give private agents an incentive to reject such authority through black markets and other corrosive violations of the rule of law. The authors discuss five examples of policy interventions that will generate significant welfare gains without reducing consumer liberties. They believe that all policy proposals should be viewed with healthy skepticism. No doctor would prescribe a drug that only worked in theory. Likewise, economic policies should be tested with small-scale field experiments before they are adopted.

Suggested Citation

  • Daniel J. Benjamin & David I. Laibson, 2003. "Good policies for bad governments: behavioral political economy," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 48(Jun).
  • Handle: RePEc:fip:fedbcp:y:2003:i:jun:n:48:x:4
    as

    Download full text from publisher

    File URL: http://www.bostonfed.org/economic/conf/conf48/index.htm
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dhami, Sanjit & Al-Nowaihi, Ali, 2010. "Optimal taxation in the presence of tax evasion: Expected utility versus prospect theory," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 313-337, August.
    2. D Nocetti, 2006. "A Monetary Model of Exchange Rate and Balance of Payments Adjustment," Economic Issues Journal Articles, Economic Issues, vol. 11(1), pages 25-36, March.
    3. Lukáš Kovanda, 2011. "Ekonomie budoucnosti: čtyři možné scénáře
      [The Future of Economics: Four Possible Scenarios]
      ," Politická ekonomie, University of Economics, Prague, vol. 2011(6), pages 743-758.
    4. D. Colander., 2009. "The Complexity Revolution and the Future of Economics," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 1.

    More about this item

    Keywords

    Macroeconomics ; Economics ; Economic policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbcp:y:2003:i:jun:n:48:x:4. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio). General contact details of provider: http://edirc.repec.org/data/frbbous.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.