Wednesday, April 22, 2015

Behavioural policy readings updated

I have a habit when giving talks or lectures of promising to put up a blogpost with links afterwards and given I have given a lot of talks and lectures recently, below updates a previous post and hopefully fulfills the bulk of those promises.

For general books about behavioural economics see below

Popular texts:
1. Ariely (2008), Predictably irrational
2. Kahneman (2011), Thinking, fast and slow
3. Thaler & Sunstein (2008), Nudge: Improving Decisions About Health, Wealth, and Happiness
4. Akerlof & Kranton (2010), Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being.
5. Sunstein (2013) Simpler: The Future of Government 
6. Akerlof and Shiller (2009) Animal Spirits 
7. Lunn (2008) Basic Instincts: Human Nature and the New Economics

1. Camerer, Loewenstein & Rabin (2004) Advances in Behavioral Economics
2. Frey & Stutzer (2007), Economics and Psychology: A Promising New Cross-Disciplinary Field
3. Loewenstein (2007), Exotic Preferences: Behavioral Economics and Human Motivation
4. Shafir (2013), The Behavioral Foundations of Public Policy
5. Angner (2012), A Course in Behavioural Economics
6. Wilkinson & Klaes (2012) An Introduction to Behavioural Economics
7. Varian (2008), Intermediate Microeconomics

Selected Policy Readings

(i) The book Nudge by Thaler and Sunstein outlines a strong view of how behavioural economics might influence the shaping of policy. (blog with link to the book here). A recent UK paper outlines the Cabinet Office approach developed with many UK academics (MINDSPACE paper and Journal of Economic Psychology paper). Haynes et al. (2012), Test, Learn, Adapt: Developing Public Policy with Randomised Controlled Trials, Cabinet Office. Work of Olivier Ouiller and others at Centre d’analyse stratégique another good example of development of behavioural economics in areas such as environmental policy (see, for example, Green Nudges document). Sunstein's recent "Empirically informed regulation" very detailed overview. The Brookings Institute publication “Policy and Choice: Public Finance through the lense of behavioural economics” is one of the best available introductions to this area. One of the key statements of the potential for non-mandated inteverventions in public policy is the 2003 paper by Camerer et al: Regulation for Conservatives: Behavioral Economics and the Case for "Asymmetric Paternalism"

(ii) Some of the papers on libertarian paternalism are very useful in understanding from a more formal perspective the link between behavioural economics and government policy. (key paper here).

(iii) The well-known UK scholar Robert Sugden has written a number of articles critical of the idea that failures in self-control and information processing are sufficient rationales for paternalistic policy. 

(iv) Mark White teaches at the intersection of Law Philosophy and Economics and has written a number of critiques: 

(v) Kyle Whyte  has written a lot on the ethics of "nudging".

-"Nudging cannot solve complex policy problems"

(vi) Adam Curtis takes a sceptical view of nudge and the Cabinet Office unit in a lengthy blogpost 

(vii) Luc Bovens (LSE) on ethics of nudge 

(viii) Gilles St. Paul's recent PUP book "The Tyranny of Utility" takes the argument below. He also has a recent IZA paper on the topic  

"The general assumption that social policy should be utilitarian--that society should be organized to yield the greatest level of welfare--leads inexorably to increased government interventions. Historically, however, the science of economics has advocated limits to these interventions for utilitarian reasons and because of the assumption that people know what is best for themselves. But more recently, behavioral economics has focused on biases and inconsistencies in individual behavior. Based on these developments, governments now prescribe the foods we eat, the apartments we rent, and the composition of our financial portfolios. The Tyranny of Utility takes on this rise of paternalism and its dangers for individual freedoms, and examines how developments in economics and the social sciences are leading to greater government intrusion in our private lives.  
Gilles Saint-Paul posits that the utilitarian foundations of individual freedom promoted by traditional economics are fundamentally flawed. When combined with developments in social science that view the individual as incapable of making rational and responsible choices, utilitarianism seems to logically call for greater governmental intervention in our lives. Arguing that this cannot be defended on purely instrumental grounds, Saint-Paul calls for individual liberty to be restored as a central value in our society.
Exploring how behavioral economics is contributing to the excessive rise of paternalistic interventions, The Tyranny of Utility presents a controversial challenge to the prevailing currents in economic and political discourse"
(ix)  Hausman and Welch "Debate: To Nudge or Not to Nudge". (h/t Dr. Ben Saunders from Stirling)

(x) Why We Should Reject ‘Nudge’ by Tom Goodwin  (h/t Dr. Ben Saunders from Stirling)

(xi)  "Obesity: Towards a System of Libertarian Paternalistic Public Health Interventions"

(xii) Ciriolo, E. (2011). "Behavioural economics in the European Commission: past, present and future".

(xiii) The House of Lords report into behavioural interventions was sceptical about the potential for behavioural interventions to act as a substitute to more direct intervention

(xiv) A recent paper by Ben Seymour and Ivo Vlaev -  "Can, and should, behavioral neuroscience influence public policy?" - takes a very cautious stance amid worries about contamination of neuroscience research by policy and business interests.

(xv) The Behavioral Foundations of Public Policy Edited by Eldar Shafir is a comprehensive edited volume with chapters by leading figures in the discipline covering a substantial range of topics.

(xvi) See the SSRN page of Professor Peter John for a number of papers on nudging including on the policy environment in the UK.

(xvii) The Financial Conduct Authority in the UK has written a set of Occasional papers many of which deal directly with the implications of behavioural economics. The first one is particularly useful as an overview. In the US context, this very interesting report by Barr, Mullainathan and Shafir from 2008 outlines a new approach to consumer regulation based partly on the notion of “sticky defaults” whereby firms would be required to default people into the most desirable option based on their characteristics and only move them if they make choices following being provided with clear information.

(xviii) Useful readings on behavioural economics and consumer exploitation below

Mark Armstrong and John Vickers "Consumer protection and contingent charges". A later version of this is available in the Journal of Economic Literature.

The Office of Fair Trading investigation into fees for fitness clubs an interesting example of where a regulator specifically took action on a practice said to be exploiting consumer biases.

(xix) See the very useful database of over 100 studies in the area of nudging compiled by our centre researcher Mark Egan. 

(xx) Sunstein (2011), Empirically informed regulation, University of Chicago Law Review. This is a key paper. Cass Sunstein's recent papers on the ethics of Nudging are superb readings on the more complex ethical aspects of behavioural policy. See also Sunstein, Cass R. (2014). Why Nudge?: The Politics of Libertarian Paternalism (The Storrs Lectures Series).
Based on a series of pathbreaking lectures given at Yale University in 2012, this powerful, thought-provoking work by national best-selling author Cass R. Sunstein combines legal theory with behavioral economics to make a fresh argument about the legitimate scope of government, bearing on obesity, smoking, distracted driving, health care, food safety, and other highly volatile, high-profile public issues. Behavioral economists have established that people often make decisions that run counter to their best interests—producing what Sunstein describes as “behavioral market failures.” Sometimes we disregard the long term; sometimes we are unrealistically optimistic; sometimes we do not see what is in front of us. With this evidence in mind, Sunstein argues for a new form of paternalism, one that protects people against serious errors but also recognizes the risk of government overreaching and usually preserves freedom of choice. Against those who reject paternalism of any kind, Sunstein shows that “choice architecture”—government-imposed structures that affect our choices—is inevitable, and hence that a form of paternalism cannot be avoided. He urges that there are profoundly moral reasons to ensure that choice architecture is helpful rather than harmful—and that it makes people’s lives better and longer.
(xxi) House of Lords Science and Technology Select Committee (2011), Behaviour Change Report This is an important document which sounds a note of caution about the limits of nudge policies to create widespread behavioural change in the absence of hard intervention.

(xxii) Bubb and Pildes "How Behavioural Economics Trims its Sails and Why" argues that much of BE has artificially restricted the domain of potential public policies by focusing on choice-preserving mechanisms - response by Sunstein


Ben said...

Further suggestions:
Hausman and Welch (2010) 'Debate: To Nudge or Not to Nudge' Journal of Political Philosophy 18:1, pp. 123-36.
Menard (2010) 'A 'Nudge' for Public Health Ethics' Public Health Ethics 3:3. pp. 229-38.
Goodwin (2012) 'Why We Should Reject 'Nudge'' Politics 32:2, pp. 85-92.

Pelle Guldborg Hansen said...

Further suggestion:

Hansen and Jespersen (2013) 'Nudge and the Manipulation of choice' in The European Journal of Risk Regulation Vol. 1, 2013, pp. 3-28.

Dave O'Donnell said...

Thanks for this.

Very useful.

Matthieu Plonquet said...

Very nice list. However, I would add the following article which, in addition to being a nice review of the debate, adresses some issues I haven't seen elsewhere yet (notably about semantic variance):

Selinger, E., & Whyte, K. (2011). Is There a Right Way to Nudge? The Practice and Ethics of Choice Architecture. Sociology Compass, 5(10), 923‑935.

And since Ben proposed the critic of Goodwin (Why we should reject Nudge), I suggest you also provide the answer of Mills:

Mills, C. (2013). Why Nudges Matter: A Reply to Goodwin. Politics, 33(1), 28‑36.

In addition, if you are interested in ethical concerns, Wilkinson wrote a very interesting paper on the issue of manipulation in nudges :

Wilkinson, T. M. (2013). Nudging and Manipulation. Political Studies, 61(2), 341‑355.