Why Is Behavioral Economics So Popular?
At Peg we have past experience of using behavioural economics. This is a good overview of what behavioural economics is. We believe it can be a useful tool in policy reform or program delivery. If we want policy to influence outcomes, considering how humans behave can be beneficial in a program refinement or reform design. It isn’t a silver bullet, and works best with good data that can inform analysis and subsequent modifications. Its impact though, especially on high transactional activities, can deliver tangible benefits. We recommend a quick read of this article by Professor David Gal, or get a taste from the excerpt below.
Excerpt: In practice, much of behavioral economics consists in using psychological insights to influence behavior. These interventions tend to be small, often involving subtle changes in how choices are presented: for example, whether you have to “opt in” to a 401(k) savings plan versus having to “opt out.” In this respect, behavioral economics can be thought of as endorsing the outsize benefits of psychological “tricks,” rather than as calling for more fundamental behavioral or policy change.