Behavioral Economics For Dummies®

Chapter 18

Ten (Or So) Key Public Policy Implications of Behavioral Economics

In This Chapter

Considering how behavioral economics can impact public policy

Paying attention to everything from consumer rights to gender rights to tax policy

Behavioral economics has an important role to play when it comes to public policy — and that means everything from institutional design, transparency, consumer rights, and gender rights to government intervention in the realm of consumption, tax policy, and the overall design of public policy. In this chapter, I point out ten (or so) implications of behavioral economics in this arena.

I frame this narrative in the context of the two leading worldviews in the field: One school of thought in behavioral economics argues that people are essentially irrational, and it requires experts to nudge or even force people to behave smartly. The other school of thought maintains that people often make good choices except when they face poorly designed institutions, misleading information and decision-making defaults, inadequate education or experience, or an inability to make their preferred choices.

Conventional economics assumes that people make appropriate ...