Behavioral Economics Policy Impact and Future Directions (2023) / Chapter Skim
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4 The Behavioral Economics Toolkit: Policy Levers and Intervention Strategies
4 The Behavioral Economics Toolkit: Policy Levers and Intervention Strategies
Pages 69-92
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From page 69... ...
A nudge is defined in the context of behavioral economics as a lowcost, light-touch change in choice architecture -- the structures and contexts within which and through which a choice is presented -- that shifts people's behavior without explicitly regulating it and without imposing significant (financial) rewards or punishments (Thaler & Sunstein, 2009)
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From page 70... ...
. Behaviorally informed interventions are those that have been selected or designed specifically to address a behavioral barrier, biased tendency, or decision error that can be explained by the foundational principles of behavioral economics discussed in Chapter 3.1 Interventions can be designed and implemented by different actors (corporate, governmental, institutional)
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From page 71... ...
More research and discussion are also needed on the limitations of behaviorally informed interventions (especially for the narrow nudge form) and on how focusing on individual behavior change could preclude or crowd out focus on structural or system change (Loewenstein & Chater, 2017; Chater & Loewenstein, 2022)
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From page 72... ...
72 BEHAVIORAL ECONOMICS TABLE 4-1 Intervention Strategies Mapped to the Five Foundational Principles Strategies Foundational Principle and Everyday Meaning Limited Inaccurate Present Reference Social Attention Beliefs Bias Depen- Preferences and dence and and Social Cognition Framing Norms "I don't "I think "I want it "I want "I want to do know I know now" this more what others what I what I than I are doing" want" want" want that" Altruism Primes X X Behaviorally Informed X X X Incentives, Including Microincentives Choice Sets and Active X X X Choice Commitment Devices X Defaults X X X Feedback X X X Foot-in-the-Door X X Framing X X X Fresh Start Effects X X Hassle Factors X X X Implementation Intentions X Mental Models X X X Planning Prompts X Reciprocity Primes X Reminders X X Salience Primes X Scarcity X X X Simplification X X X Slack X Social Influence X X X X Social Proof X X X X X Switching Costs X X Temptation Bundling X
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From page 73... ...
Defaults have been shown in several systematic reviews and meta-analyses to have larger effect sizes than other intervention approaches. Defaults work through multiple mechanisms but are particularly effective in conditions of limited attentional or cognitive bandwidth, when individuals cannot or will not take the time to evaluate options and make a fully informed choice (Johnson & Goldstein, 2003)
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From page 74... ...
. Creating Slack A final category of intervention strategies to counteract limited attention and cognition is the creation of slack: that is, providing more space
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From page 75... ...
, choice sets, peer feedback, and social proof. In addition to those interventions, two others are important for meeting the challenge of inaccurate beliefs: de-biasing and mental models, which are people's representations of the world.
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From page 76... ...
. For example, multiple studies have shown that people have powerful mental models of the epidemiology of COVID-19 and of the effectiveness and acceptability of mitigation strategies, including masking, social distancing, and vaccination (Southwell et al., 2020; Greenhalgh, 2021; Berg et al., 2022; de Ridder et al., 2022)
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From page 77... ...
Behaviorally Informed Financial or Nonfinancial Incentives Many people who read about behavioral economics in the lay press assume the term refers to financial incentives or paying individuals to change their behavior. It is certainly the case that many well-known behavioral economics studies leverage incentives to counter present bias.
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From page 78... ...
may otherwise be ignored. Lottery-Based Incentives Many variations of financial incentives have also been tested, with features that further leverage behavioral research findings to boost effectiveness.
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From page 79... ...
While financial incentives have been shown to be effective for many behaviors, particularly one-off behaviors where procrastination is a key barrier, there is less evidence that they can lead to sustained behavior change after the incentive is removed or can boost motivation for behaviors with which a person has considerable experience or strong preferences (Mantzari et al., 2015; Thirumurthy, Asch, & Volpp, 2019; Luong et al., 2021)
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From page 80... ...
Reference dependence implies that policy designers can guide choices by creating or highlighting a specific reference group, drawing attention to a temporal reference point, or using framing to prompt a comparison to a reference point. In addition to the strategy of choice sets discussed above, three other strategies are especially relevant to reference dependence: framing, foot in the door, and fresh start effects.
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From page 81... ...
. ADDRESSING SOCIAL PREFERENCES AND SOCIAL NORMS To address social preferences and social norms, the behavioral opportunity for policy makers is that people often care deeply about the well-being of others and how their own behavior and social standing compares with
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From page 82... ...
and people's perceptions of their social standing. Four intervention strategies are particularly relevant for taking advantage of social preferences and social norms: social proof, social comparison, social influence, and reciprocity and altruism.
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From page 83... ...
. Social Influence Social influence, which is also known as social modeling, involves having celebrities or respected opinion leaders endorse or model a desired behavior, which also leverages the importance of injunctive or prescriptive social norms.
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From page 84... ...
Published studies describing behavioral interventions often fail to describe the source of the behavioral intervention tested or the design process that produced it, if any. True collaboration among behavioral economists, other behavioral scientists, and behavioral designers (i.e., practitioners and researchers focused on developing behavioral solutions to meet specific needs)
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From page 85... ...
A field experiment on motivating citi zen behavior change. Journal of Behavioral Public Administration, 4(1)
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From page 86... ...
Mapping mental models of factors contributing to the pandemic. Psychology & Health.
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From page 87... ...
. The impact of financial incentives on physical activity: A systematic review and meta-analysis.
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From page 88... ...
. Personal financial incentives for changing habitual health-related behaviors: A systematic review and meta-analysis.
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From page 89... ...
. Changing mental models: HR's most important task.
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From page 90... ...
. Impact of implementation intentions on physical activity practice in adults: A systematic review and meta-analysis of randomized clinical trials.
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From page 91... ...
. Planning prompts increase and forecast course completion in massive open online courses.
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