Hostname: page-component-6bf8c574d5-w79xw Total loading time: 0 Render date: 2025-02-16T19:53:06.267Z Has data issue: false hasContentIssue false
  • English
  • Français

How behavioural economics does and can shape public policy

Published online by Cambridge University Press:  01 January 2023

Andrew Leigh
Andrew Leigh*
Affiliation:
Parliament House, Canberra, Australia
*
Andrew Leigh, House of Representatives, PO Box 6022, Canberra, ACT 2600, Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Behavioural economics research has pointed to the importance of market inefficiencies, framing, heuristics and hyperbolic discounting. Empirically, behavioural economics has been shown to predict patterns of consumer behaviour, exercise patterns and substance addiction. In this article, I discuss the ways in which our growing understanding of behavioural economics has shaped the development of public policies. I conclude with six pieces of advice for behavioural policymakers.

Keywords

D03Behavioural economicsframinghyperbolic discountingloss aversionrandomised trials
Type
Policy Article
Information
The Economic and Labour Relations Review , Volume 26 , Issue 2 , June 2015 , pp. 339 - 346
Copyright
Copyright © The Author(s) 2015

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ariely, D (2008) Predictably Irrational: The Hidden Forces that Shape Our Decisions. New York: HarperCollins Publishers.Google Scholar
Bell, C (2013) Inside the coalition’s controversial nudge unit. The Telegraph, 11 February.Google Scholar
Cohen, J, Dupas, P (2010) Free distribution or cost-sharing? Evidence from a randomized malaria prevention experiment. Quarterly Journal of Economics 125(1): 1–45.CrossRefGoogle Scholar
Connolly, E (2007) The effect of the Australian Superannuation Guarantee on household saving behaviour. RDP2007-08. Sydney, NSW, Australia: Reserve Bank.Google Scholar
Connolly, E, Kohler, M (2004) The impact of superannuation on household saving. RDP2004-01. Sydney, NSW, Australia: Reserve Bank.Google Scholar
DellaVigna, S, Malmendier, U (2004) Contract design and self-control: theory and evidence. Quarterly Journal of Economics 119(2): 353–402.CrossRefGoogle Scholar
DellaVigna, S, Malmendier, U (2006) Paying not to go to the gym. American Economic Review 96(3): 694–719.Google Scholar
The Economist (2014) Fiscal blackmail: lessons from behavioural economics can boost tax compliance. The Economist, 24 May. Available at: http://www.economist.com/news/finance-and-economics/21602705-lessons-behavioural-economics-can-boost-tax-compliance-fiscal-blackmail (accessed 5 March 2015).Google Scholar
Epley, N, Mak, D, Idson, L (2006) Bonus of rebate?: the impact of income framing on spending and saving. Journal of Behavioral Decision Making 19(3): 213–227.CrossRefGoogle Scholar
Gerrans, P (2012) Retirement savings investment choices in response to the global financial crisis: Australian evidence. Australian Journal of Management 37(3): 415–439.CrossRefGoogle Scholar
Harford, T (2014) Behavioural economics and public policy. Financial Times, 21 March.Google Scholar
Hasham, N (2014) Nudge, nudge, how Baird government will get us to pay our bills on time. Sydney Morning Herald, 2 June.Google Scholar
Horowitz, J, McConnell, K (2002) A review of WTA/WTP studies. Journal of Environmental Economics and Management 44(3): 426–447.CrossRefGoogle Scholar
Knetsch, J (2012) Behavioural economics, policy analysis and the design of regulatory reform. In: Low, D (ed.) Behavioural Economics and Policy Design: Examples from Singapore. Singapore: World Scientific, pp. 161–182.Google Scholar
Leigh, A (2010) Evidence-Based policy: summon the randomistas? In: Strengthening evidence-based policy in the Australian Federation: Roundtable proceedings, vol. 1, pp. 215–226. Canberra, ACT, Australia: Productivity Commission.Google Scholar
Leigh, A (2012) How much did the 2009 Australian fiscal stimulus boost demand? Evidence from household-reported spending effects. The B.E. Journal of Macroeconomics 12(1): Article 4.CrossRefGoogle Scholar
Leigh, A (2014) The Economics of Just about Everything. Sydney, NSW, Australia: Allen & Unwin.Google Scholar
Low, D (2012) Cognition, choice and policy design. In: Low, D (ed.) Behavioural Economics and Policy Design: Examples from Singapor. Singapore: World Scientific, pp. 1–16.Google Scholar
Low, L, Yiling, Y (2012) Using behavioural insights to improve individual health decisions. In: Low, D (ed.) Behavioural Economics and Policy Design: Examples from Singapore. Singapore: World Scientific, pp. 127–146.Google Scholar
Minifie, J (2014) Super sting: how to stop Australians paying too much for superannuation. Grattan Institute Report 2014-6. Melbourne, VIC, Australia: Grattan Institute.Google Scholar
Mullainathan, S, Thaler, R (2001) Behavioral economics. In: International Encyclopedia of Social Sciences. New York: Pergamon Press, pp. 1094–1100.CrossRefGoogle Scholar
Read, D, Van Leeuwen, B (1998) Predicting hunger: the effects of appetite and delay on choice. Organizational Behavior and Human Decision Processes 76(2): 189–205.CrossRefGoogle ScholarPubMed
Read, D, Loewenstein, G, Kalyanaraman, S (1999) Mixing virtue and vice: combining the immediacy effect and the diversification heuristic. Journal of Behavioral Decision Making 12(4): 257–273.3.0.CO;2-6>CrossRefGoogle Scholar
Shampanier, K, Mazar, N, Ariely, D (2007) Zero as a special price: the true value of free products. Marketing Science 26(6): 742–757.CrossRefGoogle Scholar
Tsin, Yen K (2012) Key ideas in behavioural economics – and what they mean for policy design. In: Low, D (ed.) Behavioural Economics and Policy Design: Examples from Singapore. Singapore: World Scientific, pp. 17–34.Google Scholar