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Comments on: Where behavioural economics goes wrong http://www.tvhe.co.nz/2012/03/08/where-behavioural-economics-goes-wrong/ The Visible Hand in Economics Mon, 12 Mar 2012 06:41:24 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Eric Crampton http://www.tvhe.co.nz/2012/03/08/where-behavioural-economics-goes-wrong/#comment-37090 Mon, 12 Mar 2012 06:41:24 +0000 http://www.tvhe.co.nz/?p=6816#comment-37090 In reply to Hutchison.

One of my worries is that embarking on policy for behavioural-justified reasons puts us quickly on the path to hard coercion when the behavioural targeting fails to achieve the desired end. Politics doesn’t handle sunk costs well. So it’s easy for “We think X failing leads to bad outcomes on Y, so we’ll try B non-coercive policy” to turn into “We have failed to achieve our common goal of Y and so stronger measures are warranted.” 

Examples? Look at how quickly “Oh, imperfect information is what makes people smoke too much” turned into “Let’s force people to quit smoking by eradicating tobacco by 2025”. All kinds of slippery slopes in paternalistic policy. 

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By: jamesz http://www.tvhe.co.nz/2012/03/08/where-behavioural-economics-goes-wrong/#comment-37060 Fri, 09 Mar 2012 03:50:45 +0000 http://www.tvhe.co.nz/?p=6816#comment-37060 In reply to Hutchison.

I think they exaggerated quite a few things so I’ve queued up a few posts on those issues. It is really nice to see them put the views of BE’s opponents so strongly, though. And, as you say, some of the points are well made.

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By: Hutchison http://www.tvhe.co.nz/2012/03/08/where-behavioural-economics-goes-wrong/#comment-37058 Fri, 09 Mar 2012 00:06:20 +0000 http://www.tvhe.co.nz/?p=6816#comment-37058 Seemed to me they exaggerated the extent to which behavioral measures infringe on individual liberty.  For example,  the explicit statement that “the behaviorists’ regulatory toolkit includes … overt coercion” for which no example or evidence was offered. 

If it’s overt coercion, then it is not a behavioural measure, it is regulation.  The whole point of behavioural measures is that they encourage but do not enforce behaviour which is thought to be in the individual’s best interest. 

Their point that regulators cannot be certain that they know the individual’s best interest any better than the individual does is far stronger.

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By: Bill http://www.tvhe.co.nz/2012/03/08/where-behavioural-economics-goes-wrong/#comment-37056 Thu, 08 Mar 2012 22:09:21 +0000 http://www.tvhe.co.nz/?p=6816#comment-37056 There is a secondary problem in the first stage of the BE research programme. There are two opposing views of these errors. One view sees them as rational, optimising responses to newly discovered constraints. That is, I rationally minimise my cognitive effort because it is expensive, which leads my to make certain kinds of errors. The other view sees these behaviours as regularities that are not driven by optimisation, but by biology or sociology.
This is important for the second stage. policy mapping, because it determines whether economists see the problem as constrained optimisation (and therefore probably socially and personally optimal) or as truly ‘behavioural’. 

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