1Almost a century ago, J. M. Clark (1918, 4) argued that economists require a decent understanding of psychology to include in their models of men—for by neglecting such knowledge, the economist “will not thereby avoid psychology. Rather he will force himself to make his own, and it will be bad psychology.” Since the conclusions drawn from economic models depend, among other factors, on such psychological assumptions, it is straightforward to recognise that economic policy inferences depend on these as well. Nonetheless, discussions of the characteristics and traits of the agents within the economy have, for a long time, hardly played any significant role in discussions of policy analysis or recommendations (see Shafir, 2012a, 1). The past few years, however, have seen a shift: Along with the recently frequently ascribed (see e.g. Sent, 2004, 735; Heukelom, 2011, 27; 2014, 200; Angner and Loewenstein, 2012, 641; Wilkinson and Klaes, 2012, 14) rise of behavioural economics (BE), it was also observed that results from behavioural research have entered policy discussions. This tendency has not only been documented in academic discussions, but also in the press: Summarizing the developments of recent years, Tim Harford (2014) argued in a Financial Times article from March 21st 2014 that BE was “one of the hottest ideas in public policy”.
2The analysis in this paper builds on previous research and expands it towards a comprehensive and comparative analysis in order to assess the influence BE had on economic policy. To do so, it primarily investigates recent developments in three of the largest Western economies: The United States (US), the United Kingdom (UK) and Germany. Additionally, important international institutions with a potentially large impact on economic policy (advice) are also taken into account. The international scope is further expanded by reference to some noteworthy examples from other countries. Due to the various national and international institutions of interest, and because of the lack of any kind of systematic data available on these—notwithstanding the methods for ordering which will be illustrated and employed in the following—the paper cannot conclude with a thoroughly objective assessment, at least in the sense of a complete quantification of the impact BE has had on policy (advice). Nonetheless, the paper provides a more detailed, ordered and comprehensive overview of some trends in economic policy over the past decade, and allows for some cross-country comparison, as becomes evident from the notable differences identified between the US and the UK on the one hand, and Germany on the other.
3The paper is structured as follows: First, Section 1 summarises the results of previous research on the rise of BE, and then proceeds to illustrate the kind of economic policy advice which is discussed within the BE literature, particularly the notion of “libertarian paternalism”. The central part of the paper is Section 2. After a summary of already available literature on the topic of BE in economic policy, this section illustrates the research question in more detail and provides some operationalizations for it, pointing out the difficulty of finding a non-ambiguous measure of the target variables. It then proceeds to list the observations the analysis is based upon, and subsequently derives and discusses the results from the studies. Section 3 concludes with a short summary of the results and submits a careful outlook.
- 1 The following is just a very short roundup. For a detailed overview, see Heukelom (2014).
4BE has its roots in the literature on the bounded rationality (BR) of economic agents, a term which was introduced into economics by Herbert Simon (1955) in his criticism of the standard Rational Choice (RC) model. In order to take man’s limited rationality into account, BE incorporates insights from psychology into economic models (see Camerer, 1999, 10575; Mullainathan and Thaler, 2000). On a very general level, two “schools” of BE may be distinguished (see Sent, 2004): “old” BE, which has an understanding of BR close to what Simon had originally meant, represented prominently today by Gerd Gigerenzer; and “new” BE, the dominant branch, which builds more on the work of Daniel Kahneman and Amos Tversky (especially, 1979) than that of Simon, and is prominently represented by authors such as Richard Thaler, Colin Camerer, and others. “New” BE usually retains RC as a normative standard and constructs its models relative to it (see Altman, 2004, 8), whereas “old” BE tends to reject RC not only on the descriptive, but also on the normative level (further see Berg and Gigerenzer, 2010, 144 ff.).
5In recent literature on the history of economic thought related to BE, it has become a relatively frequent observation to state that BE has experienced a rise in popularity over the past two decades, and it is even argued that BE may be ascending towards the mainstream (or that it has possibly already done so). For example, Heukelom (2011, 27) sees increased recognition for BE not just in general, but also among what is standard practice in economics, as he notes: “behavioral economists gradually built their program into a stable and well-defined mainstream economic program”. Wilkinson and Klaes (2012, 14) mention that “the field has now become a more respectable one” (also see Laibson and List, 2015, 388 f.). Already a few years earlier, Sent (2004, 735) had opened her survey of the history of BE with the observation that BE “is attracting increasing attention and recognition”, and similarly concludes her article on “rationality, history of the concept” (Sent, 2008) for the New Palgrave by stating that “more and more economists are embracing one form or another” of BR. Anecdotal reference to conferences, university hirings, etc., confirms this impression (see Rabin, 2002, 657 f.). The clearest individual pieces of evidence of a rise of BE can probably be found among recent Nobel Laureates and their topics of research: In 2001, George Akerlof titled his lecture “Behavioral Macroeconomics and Macroeconomic Behavior” (Akerlof, 2002), and already in the following year, Daniel Kahneman, a psychologist received the honours. Last but not least, in 2013, Robert Shiller, who together with Akerlof wrote Animal Spirits, which “draws on an emerging field called behavioral economics” (Akerlof and Shiller, 2009, xi), and is a prominent figure in behavioural finance, entered this hall of fame as well.
6Furthermore, these more or less anecdotal observations have been confirmed by a thorough empirical analysis of bibliometric time series in Geiger (2014). Among many other variables, the relative frequency of papers employing the key terms “bounded rationality” or “behavioural economics” (respectively the American spelling, “behavioral economics”) within JSTOR’s database was observed and plotted from 1950–2010, as reproduced in Figure 1 here. The numbers in the figure are the relative amounts of articles within a subject group in JSTOR, or within five journals identified as “top journals” through the RePEc Aggregate Ranking, i.e. The Quarterly Journal of Economics, The American Economic Review, Econometrica, The Journal of Political Economy and The Journal of Economic Literature, which contain the key terms.2
Figure 1: Relative frequencies of papers mentioning “behavioural economics” and “bounded rationality”, 1950–2010, by JSTOR category and in top journals.
Vertical bars highlight the years of Nobel Prizes for Herbert Simon (1978) and Daniel Kahneman (2002) respectively. (Source: JSTOR DfR)
7It is evident from the time series displayed in Figure 1 (and the more detailed results and discussion in Geiger, 2014) that the story usually told in the literature on history of thought in BE is quite appropriate indeed, because the two arguably most central terms—the name of the field itself, and its fundamental underlying concept—clearly were featured relatively more frequent in the years leading up to 2010, compared with two or three decades earlier. This notably also holds for top journals, which interestingly contained a higher proportion of papers using the terms almost throughout the whole observation frame. It is also worth noting that over the past two decades, it was especially “behavioural economics” which rose in prominence, whereas “bounded rationality” had already begun its (slower) ascent in the 1980s. Overall, these observations provide the impression of an increased discussion of BE in the literature, making the question of whether or not these translated into developments in economic policy—the primary research interest of the present paper—even more interesting.
8As Chetty (2015) points out, BE can contribute to public policy in three ways: by providing new tools, by improving predictions about the effects of already existing policies, and by producing new and possibly different welfare implications. Concerning “new” BE in particular, many of its policy implications and tools are linked to the label of “libertarian paternalism” (LP), a term which was coined by Thaler and Sunstein (2003). A similar and closely related category is what Camerer et al. (2003) name “asymmetric paternalism”. These policy advices take into account that given BR, an individual’s choices may turn out to be subpar, implying that better decisions could be made. Therefore, under labels such as LP, the authors discuss possibilities for economic policy to affect individuals’ decisions without coercion, and thereby steer them towards better choices—to pick up the title of Thaler and Sunstein’s (2008) book, how to “nudge” them in the proper direction, particularly by minor alterations to the choice architecture. Although any kind of meddling with individual decisions on the part of a state authority may appear alien and despicable to many liberal economists, representatives of LP in effect argue that due to agents’ BR, what they suggest is not an interference with free choice by the individuals, and is less “intrusive” than other policies with comparable aims. Indeed, it would be illusory to assume that without political interference in the form of e.g. nudges, the world would be void of any form of choice architecture with potential influences on individual behaviour (see e.g. Reiss, 2013, 299; Schubert, 2014, 1110)—which is why LP argues that the respective institutional rules should be set in a welfare-enhancing way (see e.g. Sunstein and Thaler, 2003, 1161, 1164; Thaler and Sunstein, 2003, 176 f.).
9Still, critics of the approach do not only include stalwart defenders of RC (e.g. Becker and Posner, 2009, ch. 20), effectively arguing that “Libertarian Paternalism Is An Oxymoron” (Mitchell, 2005), and economists in favour of “limited government” (Glaeser, 2006), but can also be found among “old” BE (e.g. Berg and Gigerenzer, 2007) whose criticism revolves around the different underlying normative standard. Furthermore, it can be argued that there is some modelling inconsistency in the fact that LP assumes cognitive biases in individual agents, but trusts in a benevolent planner to make unbiased choices (see, for example, Glaeser, 2004, 411 f.; 2006; Schnellenbach and Schubert, 2014). Another argument holds that LP is not the only form of “soft paternalism” policy which may be derived from the observation of individual decision making biases, and the aim to prevent them in order to increase individuals’ welfare: For example, Schubert (2014) proposes a “constitutionally constrained” variant of LP, which is described as the result of citizens who are aware of their cognitive biases, and through the policy-maker implement “counter-nudges” in order to combat those (also see Lades, 2014). Binder (2014a; 2014b), on the other hand, remains more sceptical of LP from the perspective of evolutionary economics. Binder and Lades (2015) thus suggest “autonomy-enhancing paternalism”, which does not alter choice architecture in the way LP does, but aims to put individuals in a better position to avoid their biases themselves—it is thus focused on the decision making process, not its outcomes. This strategy, in turn, is similar to the “boosts” instead of “nudges” which “old” BE favours (see e.g. Grüne-Yanoff and Hertwig, 2015).
10There is also criticism of LP in political discussions, of course, but it can be shown that this oftentimes conflates the method itself with the goals pursued by it, i.e. that it is actually a criticism of a policy end or intention which is achieved through the means of a generally neutral (with respect to the ends) method such as LP (see Tannenbaum, Fox, and Rogers, 2015). Indeed, as the examples in the next section show, LP has already been called upon and employed by politicians from different areas in the political spectrum. Be that as it may, evaluating the policy proposals of LP and related concepts is not the aim or scope of this paper. The research question here is to assess whether or not BE has entered economic policy advice over the past few years, and since LP is arguably the most prominent category of policies related to BE, it deserves special attention. Therefore, some instances of what this programme discusses and recommends should also be given to illustrate the case.
11Given its close connection to work in “new” BE, many of the policy issues discussed by LP resemble prominent examples from the “new” BE literature. A standard method for how economic policy may influence choices without actually forcing them is a kind of agenda-setting (or “choice architecture”), i.e. by taking status-quo-bias into account and trying to provide as default options those which are thought by the policy maker to provide greater social benefit (see especially Thaler and Sunstein, 2003, 175). The most evident example of the prevalence of such effects are organ donor rates, which are at almost 100% in Austria—where being a donor is the default—and below 25% in Germany—where people have to opt in to become a donor—even though both countries are very similar in most other respects (see Johnson and Goldstein, 2003). Other topics frequently discussed under the headline of LP are savings behaviour for retirement and consumer protection (see Sunstein and Thaler, 2003; Thaler and Sunstein, 2008; Kahneman, 2011, 412-415). As indicated, the main methods of LP are nudging and altering the choice architecture, which both aim to only meddle with individual freedom of choice as little as possible. However, more recently, Bhargava and Loewenstein (2015) have emphasised the success of early applications of BE and LP in policy, and argued that behaviourally grounded policy should thus now strive to reach further, to tackle larger problems more thoroughly and “more aggressively address the underlying causes of problems” (p. 397). Doing so would move policy makers beyond nudges: According to Bhargava and Loewenstein (2015), they should target not only choice environments, but options (such as financial products) themselves, and improve policies based on traditional economic reasoning, for it is perceived incentives which matter.
12In general, there is a broader perspective to the way behavioural insights may feature in policy, which can be subsumed under the headline of “behavioural public policy”. Evidence-based policy advice building on principles and regularities identified within research on human behaviour can include more tools than setting default options or nudging people towards the “right” direction. An example of this would be Bhargava and Loewenstein (2015) who argue for going beyond the standard LP methods. Furthermore, the fields of application clearly are not limited to purely economic questions (as many of the examples already show), since the underlying premises are not originally economic concepts. Therefore, there is a broad scope of applications in public policy in general. Additionally, there is research on policy which incorporates insights from behavioural science, but not necessarily those which LP builds on. Similarly, the testing of new methods or policy interventions before they are applied is also a cornerstone of “behavioral economic engineering” (Bolton and Ockenfels, 2012). Within this broader framework of different approaches, a wide variety of topics such as public finance and public goods are covered (see e.g. Congdon, Kling, and Mullainathan, 2011). Much of this literature, both the LP-related works and those covering other topics, can be found summarised in the 2012b volume The Behavioral Foundations of Public Policy edited by Eldar Shafir (especially note Kahneman's 2012 foreword).
13Section 1 has shown that BE has gained in relevance in the economic literature, and that there are various policy concepts discussed within the literature. It may therefore be tempting to link developments in theory and practice—but whether or not such a connection exists, and if it does, how strong it is, certainly deserves a closer look, since paradigm shifts in the theoretical literature do not, neither by necessity or immediately, automatically translate into respective turns in economic policy. In general, if a connection is observed, it is still an interesting question to research which aspects this includes, how far-reaching it is, where it started, etc. This section therefore first summarises already available research on the diffusion of said ideas, and then discusses how to systematically analyse the case at hand. Some potential measures to quantify the influence of BE in economic policy are identified and proposed, and the second subsection will document results on several case studies: the US, the UK, Germany, and selected international examples.
14Since both BE and especially LP represent fairly new developments, there is as of yet little systematic research on the diffusion of LP into economic policy. The references cited in the previous section which observed a rise of BE often also contained references to applications of BE, primarily in the spirit of LP. There are of course contributions which provide a detailed discussion of LP, its implications, and other perspectives on behavioural policy (e.g. Amir and Lobel, 2008; Rebonato, 2012; Binder, 2014a; or Schubert, 2014). However, those works usually focus on developments in academic work, and the occasional comments about developments in actual policy making and examples thereof are more of a side note. Clearly it was not the research interest of these works to investigate in a systematic manner whether there have been any shifts in economic policy related to BE—i.e. this paper’s guiding question. Nonetheless, there is research work which comprehensively deals with the question, especially with respect to which particular policies have been applied.
15Weimann (2010) analyses the link between BE and policy advise for Germany, i.e. conducts a country-specific case-study, and finds a “difficult relationship”. While the author points out that both traditional approaches to economic policy and those informed by BE have their merits, he finds that, based on a reading of expertises conducted for the German treasury, economic policy in Germany up until that point had largely neglected results from BE. However, there have been job vacancies demanding a background in BE at the German Chancellor’s office in August 2014—and indeed, most recently, research by Purnhagen and Reisch (forthcoming) already discusses the policy implementation changes following these with a focus on legal aspects. The next subsection will therefore discuss whether there were any significant changes to what Weimann had observed in the years since then.
16In a more comprehensive study for the OECD titled Regulatory Policy and Behavioural Economics, Lunn (2014) aims to answer the question of whether or not BE has influenced economic policy throughout the OECD. Overall, Lunn (2014, 9) finds and documents more than 60 instances of policy implemented in this spirit, but points out that there are large differences between countries, and that the forerunners of the new paradigm are to be found in the US and the UK (“Germany”, on the other hand, is only featured in the OECD’s list of countries in the general OECD information given in the back of the study—i.e., there is no example of a BE policy implementation listed). Overall, Lunn (2014, 12) concludes that “[t]he spread of behavioural economics in policy making has therefore been rapid, wide and, on the evidence surveyed in this review, likely to continue.” The case studies in Subsection 2.2 will allow for a closer look at this result.
17Economic policy is primarily devised and implemented by individual countries in which different administrative departments, boards of advisers etc. are key players. In addition to this, a number of important international institutions influence the process of policy making as well. This means that there is a potentially large number of actors which may or may not have an impact on everyday policy. On a more practical level concerning research on the matter, this also means that a high degree of discretion is inescapable: First of all, to select which institutions to have a closer look at, and second of all, how to weigh their individual contributions against one another in order to derive a conclusion: If organisation A is apparently LP-friendly, but B argues against it, what does that mean for policy? This problem is amplified when it comes to international comparisons due to the fact that most national institutes publish primarily in the respective national language, which is also a reason for the present paper’s particular focus of case studies.
18Clearly, this analysis can only lead to any results if particular—anecdotal as they may be—policy outcomes are included in the equation. Also, within the individual institutions, the question of when to classify a member or a contribution as BE/LP-related arises. Some discretion by the researcher will be inevitable here as well. Furthermore, it is one thing to observe that a committee advising a particular government consists mainly of behavioural economists, and another to conclude that their advices—and even more so, the thus derived actual policy outcomes—bear a distinct influence from BE, respectively LP. These are different layers which have to be considered individually. Luckily, however, it will be possible to base the assessments in the following mainly on actual statements in the relevant reports, and thereby pursue the easier task of attaching the labels not so much to persons, but rather to their advices.
19Overall, this paper strives at assessing a complicated relationship with many potentially problematic linkages: The (1) constitution of advisory bodies affects (2) their expertises respectively publications, these affect (3) the intentions of policy makers, which in turn influence (4) policy. Variable (3) is not directly measurable, and neither are the links between all of the different variables. (1), (2), and (4), however, have empirical counterparts. While it may not be possible to distil these into an overall objective quantitative measure of BE in policy making, it can still be insightful to analyse whether there have been notable developments in the most recent years for particular institutions and in actual policy implementations. This exercise obviously will still have a somewhat anecdotal nature and require a certain degree of discretion (concerning the question of which institution to select etc.), but it may be as analytical and ordered as these kinds of data allow. Certainly, this method does not require as much discretion on the part of the researcher as would be necessary if the links (especially between (2) and, via (3), (4)) were to be discussed, which would require additional assumptions as well.
- 3 If not stated otherwise, data on the committee members, numbers of publications etc. are as of Dece (...)
20Nonetheless, some results and a structuring of these is possible, and they will allow for a discussion of developments and some tentative conclusions. Following the previously outlined chain of influence, three separate categories of instances where BE, or behavioural research in general, can affect policy (especially economic policy) are discussed for each of the three primary case studies as well as in context of the additional examples provided in the next subsection. Building on those data3 which are actually empirically observable, these are:
The constitution of advisory boards/councils to particular institutions, and especially the academic backgrounds of their heads. An increase in exponents of BE and LP here hints at increased relevance of the ideas to policy making.
The publications of these institutions, especially their expertises. How many of these contain references to BE and LP? It is not possible in context of the present paper to comprehensively and qualitatively assess for all reports whether they were actually favourable to the ideas of BE and LP, as this would require reading a vast body of literature, and then elaborate on every contribution in detail. Therefore, if references to BE and LP increase, this will be considered testimony to increased discussion of the issues at least, and therefore increased diffusion in economic policy.
Actually implemented policy projects. Certainly the most anecdotal and least systematic of all categories, an attempt will be made to discuss projects which were implemented with an apparent BE/LP background.
21In this subsection, three country case studies to discuss the diffusion of BE in politics are provided first: for the US, the UK, and Germany. These are then complemented by a shorter summary of developments in major international institutions and noteworthy examples from other countries.
22There are a number of considerable examples of recent policy implementations which build on BE, especially ones related to topics discussed under the headline of LP in particular, to be found in the US. Possibly the most prominent one among these, albeit already quite an early instance, pertains to the regulatory change of 401(k) saving plans: In 2006, US congress passed the Pension Protection Act which encourages “opting out” as the standard method for these state subsidised private pension plans, i.e. that employees would be automatically enrolled (thus changing the default choice) unless they would opt out of the programme—with the intention of thus increasing private saving. The change was conducted in the spirit of BE work, such as Thaler and Benartzi (2004) and Madrian and Shea (2001) who had demonstrated the difference in enrolment rates between automatic and opt-in enrolment (see Madrian, 2014). Enrolment rates and savings through these plans greatly increased in the subsequent years (see Benartzi and Thaler, 2013).
23In the following years under President Obama, behavioural insights entered US policy on a wider scale. Already before Obama was first elected in late 2008, Shankar Vedantam (2008) had reported in The Washington Post on the later President’s connection to Thaler and others. Obama’s second campaign for the 2012 election in particular had then been directed by social and behavioural scientists (including Richard Thaler), who provided advice on publicity and voter mobilisation based on actual research results, instead of the intuition of proclaimed pundits which had characterised earlier campaigns (see Carey, 2012).4 The shift towards behaviourally informed policies that came with the new President was quickly observed in the media (see, for example, Michael Grunwald, 2009 in Time, April 2nd; Mike Dorning, 2010 in Businessweek, June 24 2010). Notable examples from early on in Obama’s first tenure include the Credit Card Accountability and Responsibility Act of May 2009, which sought to better protect consumers in financial matters after the recent crisis. Furthermore, in July 2011, the Consumer Financial Protection Bureau was formed, which explicitly aims at incorporating BE insights. According to their website, its research department “is an interdisciplinary group of economists and other behavioral researchers.”5 In an attempt to avoid the “miles per gallon illusion” (Larrick and Soll, 2008), new fuel economy labels were introduced in the US in May 2011 (further see Lunn, 2014, 26 ff.).
- 6 It is not exactly clear why Sunstein held the post only for about three years. When he announced hi (...)
24In general, behaviourally informed regulation also entered US politics in a very comprehensive manner: Also during Obama’s first tenure, Cass Sunstein was appointed Administrator of the US Office of Information and Regulatory Affairs, where he held a significant position of influence on regulatory matters for almost three years from September 2009 to August 2012.6 On that position, Sunstein also emphasised the necessity of testing regulations, both existing and new ones, for effectiveness (on his principles there, see Sunstein, 2011). Nonetheless, it should be noted that while Sunstein was certainly able to leave his mark on the implementation of health policy, financial market reforms for consumer protection etc., the question of what he actually achieved in this time is not entirely uncontroversial. Broder (2012) argues that Sunstein’s office reviewed a large majority of all regulation changes, but also points out that some of these, especially as the 2012 presidential elections neared, were not exactly in line with LP principles (also further see Steinzor, Patoka, and Goodwin, 2011). What is more, his successor as Administrator of the US Office of Information and Regulatory Affairs, Howard Shelanski, does not have a similarly strong BE background and can, at least as concerns his economics work, instead be classified as more of a “traditional” micro- or industrial economist, given his research interests and previous publications.
25It thus remains to be seen how much of the shift towards policies inspired by behavioural research which came along with Cass Sunstein will continue to persist. Given other recent developments, it is quite likely to continue, though. Since 2013, the White House Office of Science and Technology Policy has assembled its “Social and Behavioral Sciences Team” (see https://sbst.gov) led by Maya Shankar, a cognitive scientist. Already in newspaper articles mentioning the Obama administration’s first steps to creating such a team in July 2013 (see e.g. Brooks, 2013), it was pointed out that it may be regarded as akin to, at least inspired by, the UK’s “Nudge Unit” (see the next case study). Quite recently, on September 15 2015, the team was institutionalized by President Obama’s Executive Order 13707 which was headed Using Behavioral Science Insights to Better Serve the American People. In a Preface to the team’s Annual Report for 2015 (National Science and Technology Council, 2015, III), the Chair of the U.S. Science and Technology Council, John P. Holdren, states that “[t]he Obama Administration has made significant progress both in using and building evidence to improve government performance and deliver better results at a lower cost for the Nation. [...] research insights about behavior [...] have significantly improved Americans’ lives”. Holdren thus effectively claims that the behavioural insights have not only been applied in actual US policy, but indeed contributed to the benefit of the people.
26Concerning the further analysis of compositions and reports of other advisory boards connected to the White House’s economic policy, the Council of Economic Advisers (CEA) is certainly the most prominent example for the US. According to the CEA’s website,7 it “is charged with offering the President objective economic advice on the formulation of both domestic and international economic policy”. The present board, including its Chairman Jason Furman (as well as the other main members, Jay Shambaugh and Sandra Black, and the staff), does not feature any prominent and distinct representatives of BE, and this is also true of previous Chairmen and members. Richard Thaler, however, has at least served as an informal adviser to Obama, as documented by e.g. Carey (2012).
- 8 Interestingly, the reference in the report is wrong in that it mixes up the author order.
27The CEA publishes an Annual Report, which is of particular interest for this paper. The reports since 1995 are available online in digitalised versions (and prior years most likely would not contain any BE reference anyway). Among these, a number of BE references can be found: For example, the 2010 issue cites Thaler and Benartzi (2004)8 in its discussion of promoting saving behaviour on p. 120, in particular in context of the 401(k)-type saving plans. Overall, this policy implementation and its link to the behavioural literature is frequently discussed in the CEA’s reports. The 1999 (p. 244 ff., though only superficially), 2012 (p. 228 in particular) and especially 2014 (most evidently on p. 276 ff. and Box 7-2 there) reports also contain at least one BE reference, but it would be an overstatement to say that they are very concerned with BE topics. Still, it is a notable difference in contrast to Germany, as Subsection 2.2.3 will show.
28The UK is often said to have been the first major industrialized country which systematically employed behavioural insights to various policy issues on a broad scale, and a closer look at what actually happened, particularly major institutions and their actions, confirms this impression. Very shortly after David Cameron was elected Prime Minister in May 2010, the “Behavioural Insights Team” (BIT) was set up as part of the UK’s Cabinet Office (see James, 2015, 33). In fact, Bennhold (2013) points out that Cameron had already become familiar with Nudge (Thaler and Sunstein, 2008) during his time as opposition leader. The BIT, soon labelled Britain’s “Ministry of Nudges” or the “Nudge Unit” by various outside sources, would advise other government departments on how to apply behavioural science in policy making, e.g. through more realistic models of human behaviour. The BIT was specifically established to pursue the goals of making governance and regulations both more effective and less costly and to help individuals make better choices.9 The credo of the BIT is to make the desired behaviour “easy, attractive, social and timely” through policy interventions (see BIT, 2014). Furthermore, civil servants in the UK now receive at least some training in behavioural science (see Bennhold, 2013). In February 2014, the BIT was partly privatized as a “social purpose company” and has since also advised other governments and agents outside the UK.
29The BIT has been led by psychologist David Halpern since the beginning. Before his position at the BIT, Halpern was already involved in similar work on the application of behavioural insights for the UK government, namely the MINDSPACE report published on January 1st 2010 (see Dolan et al., 2010). Halpern (2015) recently published a book titled Inside the Nudge Unit, for which Richard Thaler, long-time advisor to the team, provided a foreword. It is interesting to compare the background of this UK development with what happened in the US: in both countries, behavioural insights entered policy making and administration on a national level in recent legislative periods. But whereas this step was largely under the governance of a President from the Democrats in the US, it was a Tory Prime Minister in the UK, i.e. one who could be ascribed to a more conservative background. However, it is also worth noting that David Halpern, the BIT’s Chief Executive, has previously served as Chief Analyst of the Prime Minister’s Strategy Unit between 2001 and 2007—i.e. under Tony Blair, a Labour PM; and the MINDSPACE report was prepared for a Labour-led administration under Gordon Brown. These points endorse the argument that nudging and similar behaviourally informed policies are primarily methods, and not exclusive to adherents of a particular political background.
30While advising the UK government and other agents, the BIT has left its mark on various policies (see Lunn 2014, 29 f., and the broad range of topics tackled in the team’s reports and publications). For example, alongside Her Majesty’s Courts and Tribunal Service, the BIT has devised regulations in order to increase payment rates of fees imposed by courts: Immediate successes were reaped by making payment easier through the introduction of various payment methods, and by introducing small reminders. More generally, the BIT has left its distinctive mark on the Cameron government’s consumer policy strategy, which is headlined Better Choices: Better Deals (see BIS, 2011). Many of the policy recommendations found therein take framing effects into account.
31The BIT has also raised interest by a method it has widely applied in conjunction with its policies: Randomized Controlled Trials (RCTs) in which the effectiveness of particular interventions is tested (see Haynes et al., 2013). Next to the shift towards a more realistic model of individual behaviour, this is another expression of the generally empirical approach to policy making pursued by the BIT (and behaviourally informed policy in general). For example, concerning the case of fee payment rates mentioned above, trials indicated that personalized messages increase payment rates (see BIT, 2012). Similar studies and findings were made in field experiments on tax payment compliance rates, and applying these insights indeed increased tax collection rates (see Hallsworth, 2014); Hallsworth et al., 2014). In another series of RCTs, the BIT found that subsidising loft clearance had a surprisingly large impact on households’ decisions to install better insulation—an insight which would then be used in improving policies regarding energy efficiency (see BIT, 2011). Concerning health care, the BIT has tested different approaches to increasing organ donation consent rates (BIT, 2013b) and identified ways to reduce missed hospital appointments (Hallsworth et al., 2015). Yet other series of trials identified the determinants of increased charitable donations (BIT, 2013a; Sanders, Smith, and Norton, 2013), investigated new channels for small companies to access expert advice (BIT and BIS, 2014), and approached the issue of voter registration (John, MacDonald, and Sanders, 2015). In summary, it is evident that by the BIT, behavioural research has found broad applications in UK policy making.
32However, it was not only through the BIT that behavioural insights entered policy in the UK. Already before the BIT was established, the UK Office of Fair Trading (OFT), which oversaw the enforcement of consumer and competition laws, had employed BE in its work (see OFT, 2010; Lunn, 2014, sec. 5). The OFT closed in April 1st 2014, with its task taken over by different institutions. One of these, the Financial Conduct Authority, was created in 2013. It is akin to similar organisations regarding consumer protection on financial markets in the US as documented in Subsection 2.2.1, and imbued with both a similar aim—and a similar BE background (see Erta et al., 2013). Another organisation, the Competition and Markets Authority, formally established on October 2013, also has clear links to BE.10 Overall, therefore, the diffusion of behavioural insights into UK policy has been both comprehensive and pervasive. Given that the relevant institutions are still active, it is also likely to continue.
33In Germany, individual federal ministries usually have their own academic or scientific advisory board (“wissenschaftlicher Beirat”). These boards are composed of scientists of the department’s field of activity. The work on the board is no full-time job, and usually its members are professors who also work on the (irregularly published) expertises and other advice for the ministry. In order to assess a potential influence of BE respectively LP on a ministry’s policies, it thus appears a straightforward exercise to have a closer look at these reports, especially to the treasury and the departments of economics, health and consumer protection—for these are the subject areas BE and especially LP most directly relate to.
34Therefore, three departments are of particular interest: The “Bundeswirtschaftsministerium” (ministry of economics), “Bundesfinanzministerium” (treasury), “Bundesministerium für Gesundheit” (health) and the ministry responsible for consumer protection, which was the “Bundesministerium für Verbraucherschutz, Ernährung und Landwirtschaft” (ministry of consumer protection, nutrition and agriculture) from 2001 to 2013, and has been the “Bundesministerium der Justiz und für Verbraucherschutz” (ministry of justice and consumer protection) since the new cabinet was formed after the September 2013 elections. The former ministry had a scientific advisory board for “Verbraucher- und Ernährungspolitik” (consumer and nutrition policy), whereas the new ministry of justice and consumer protection set up its own advisory board on consumer questions (“Sachverständigenrat für Verbraucherfragen”) in November 2014. The treasury and ministry of economics are the primary drivers of economic policy in general, and consumer protection concerns an area to which much of BE relates to, i.e. the demand side of markets and mistakes consumers may be prone to. The case of consumer protection is also noteworthy with respect to its change of association in 2013, i.e. to the ministry of justice: This shift of responsibilities now forms a unified body similar to the one to which Sunstein had been administrator to during Obama’s first tenure, although the German ministry is on a higher administrative level. The heads of all four respectively five ministries have been professional politicians throughout, so a look at members or expertises by the academic advisory boards is called for; there certainly was no behavioural economist leading any of the departments over the past decade.
35The advisory board to the economics ministry is a large body, comprising 41 professors at present. Armin Falk, one of the most prominent German representatives of BE, has been on the board since 2009. Since 1998 (from when the first digitalised documents are available),11 there is a total of 60 publications, 33 of which are expertises. One of only two of these which can be said to bear a faint resemblance to BE ideas is from September 2013 (Wissenschaftlicher Beirat beim Bundesministerium für Wirtschaft und Energie, 2013). It is concerned with evaluating policy measures in the greater context of basing policy on proper evidence. However, the report focuses on its conclusion that it is important to evaluate economic policy measures, and that German economic policy is doing too little in that respect as of yet. The text is rather concentrated on the method, there is no direct link (also not apparent from the references) to the fact that BE and LP are of course very corroborative to this general framework of evidence-based policy measures open to evaluation (as, for example, apparent from how policies were implemented under the UK’s BIT). Another more recent entry (Wissenschaftlicher Beirat beim Bundesministerium für Wirtschaft und Energie, 2015) cites Thaler and Sunstein (2008) in passing, but does not develop any specific ideas or respective policy recommendations. The other expertises do not contain any references either, even though some of the topics (e.g. one on implementing climate policy from February 2012, which, at least, contains references to some experimental economics literature, see Wissenschaftlicher Beirat beim Bundesministerium für Wirtschaft und Technologie, 2012, 12) have been tackled with BE approaches in other countries such as the UK already. It should be mentioned, however, that many of the topics discussed in the expertises are not primary BE topics. But even when there is the opportunity for a link, or a reference to respective literature, it is not drawn.
36The advisory board to the treasury usually is a fairly sizeable group as well, with 34 professors as members according to the latest information on their website.12 The reports available online, starting in December 1998, include 18 expertises. Within these, there is one on climate policy (Wissenschaftlicher Beirat beim Bundesministerium für Finanzen, 2010) which Weimann (2010) had already singled out as a notable exception: This one references BE results, but it views them rather sceptically. This holds similarly for a more recent report on public broadcasting stations (Wissenschaftlicher Beirat beim Bundesministerium für Finanzen, 2014) which references the theory of hyperbolic discounting (Laibson, 1997)—both sceptically, and without deriving policy insights from it. Aside from these exceptions, there are no further references to BE literature or ideas in the other respective publications. Arguably, as with the economics ministry, many of the discussed topics are not fields where BE has been applied on a large scale so far, but nonetheless, public finance, too, provides possible applications for behavioural research (see Subsection 1.2).
37The ten professors on the advisory board to the ministry of health are almost exclusively physicians.13 The members are closely connected to other organisations within the ministry, such as the Robert-Koch-Institut which aims to monitor, prevent and combat diseases threatening public health. Therefore, the board is, in a sense, very practically (and medically) oriented and, at least at present, does not tackle issues such as combating obesity through nudges, or similar cases which are discussed in the behavioural literature. Such an approach would seem to be the domain of other departments.
38The advisory board to the ministry tasked with consumer protection is, as could be expected, apparently the most open to approaches from behavioural science. Among the board’s twelve members before it was moved to the ministry of justice, two had explicitly named behavioural research (in an economics/policy context) as their main research interest on the board’s website.14 The board’s 17 publications bear frequent resemblances to BE respectively behavioural research in general, breathing the spirit of nudges and providing better and more easily accessible information to consumers. Most notable is a September 2013 article titled “Evidenzbasierung ermöglichen! Auf dem Weg zu einer realitätsnahen und empirisch fundierten Verbraucherpolitik” (Wissenschaftlicher Beirat “Verbraucher- und Ernährungspolitik” (2013); “Base it on evidence! Towards a realistic and empirically founded consumer policy”, own translation). This short contribution does not quote or refer to any particularly important BE or LP groundwork, but it definitely argues in a similar spirit, i.e. that the actual consumer is no homo oeconomicus, and that policies should be based on observations of actual behaviour. And indeed, this tendency has persisted, even after the department of consumer protection moved to the ministry of justice. The latter’s advisory board presently features several among its nine members with a strong background in BE: Andreas Oehler, who had already been on the other ministry’s board, Lucia Reisch (the chairwoman), and, most prominently, Gerd Gigerenzer, renowned psychologist and one of the most prominent figures of “old” BE. As of January 2016, there are no publications or reports available from the fairly recently established board.15
39The most important organization providing economic policy advice in Germany which is not directly associated with the government (in the sense that it is a department of or advisory board to a ministry etc.) but instead independent is the “Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung” (SVR). This board, created by law in 1963 in the spirit of the US CEA, consists of five economics professors and their staff. Among other, but relatively less important research, the SVR conducts an annual economic report (the “Jahresgutachten”) on overall economic developments in Germany and policy advice to affect these, which is then presented to the Chancellor. At present, none of the five board members can be said to be a behavioural economist or to bear any strong affirmative relation to the field, and this is also true for all the 35 previous members. Throughout the expertises since 2000, there is only one mention of the term BE (respectively its German counterpart “Verhaltensökonomik”), namely on p. 130 of the 2013/14 issue (SVR, 2013; a full-text search was conducted for all issues). LP or “nudge” get no mention at all. As concerns author references, Richard Thaler appears once in the 2007/08 issue (SVR, 2007), whereas Daniel Kahneman or many other notable behavioural economists are not quoted at all. Taking a closer look at the reports’ tables of content also shows that BE topics clearly were not among the headlines. Within the other publications of the SVR, i.e. the working paper series which was started in 2006, there are no BE-related works either. Of course the committee’s primary area of interest is macroeconomics, and areas like the regulation of individual markets, framing social security systems etc. are only secondary—but these are also important to many reports, so it is quite noteworthy that there are virtually no references to BE.
40This observation reflects that there is indeed comparatively little of BE and LP featuring in economic policy in Germany. As already documented by Weimann (2010, 280), no BE work was cited between 2005 and 2010 (i.e. while BE was gaining in importance in the literature and the idea of LP was already born) in reports to the treasury and ministry of economics. The following years up until today confirm this conclusion, which therefore stands in contrast to a prediction by economists Olaf Storbeck and Felix Holtermann, who had argued in a newspaper article from May 17th 2010 that the rise of BE was now followed by its applications (Storbeck and Holtermann, 2010). However, the advisory board to the ministry tasked with consumer protection (now with the ministry of justice) is quite different in this respect, appearing to be more open to and actively promoting the integration of behavioural research.
41However, at least so far, there is thus comparatively little impact of BE on German (economic) policy. This is also interesting in the light of a ranking compiled and published by the Frankfurter Allgemeine Zeitung (see Bernau, 2014a), in particular its details: Daniel Kahneman is identified as the most influential foreign “economist” in Germany over the twelve months preceding the publication of the ranking, i.e. late 2013 to Autumn of 2014. The overall measure is derived by a weighted cumulation of the influence in media, politics, and research. Kahneman gets his position almost exclusively from the immense number of citations (14956) of his works, also putting him on top of this particular category, whereas he was only very rarely referenced in the media (five times) or politics (two times). Many others, such as Paul Krugman—but also, interestingly and worth noting (although probably owing to the very recent Nobel Prize) Robert Shiller—score much higher on the other two categories, both compared to Kahneman, and to their score in the research category. Other primary behavioural economists, especially those connected to policy advices such as LP, e.g. Richard Thaler, do not appear among the top 30 at all. As concerns the parallel ranking of German-speaking economists of the same year (also published by the Frankfurter Allgemeine Zeitung), notable representatives such as Ernst Fehr, Armin Falk or Urs Fischbacher did not even make it into the top 100 of the list, particularly because of their lack of influence in the media and politics (see Bernau, 2014b). In the 2015 rankings (which unfortunately did not feature international economists), some interesting changes are observable: Among German-speaking economists, Ernst Fehr, who published a lot on fairness and money illusion, ranked 2nd overall. Ernst Fehr had not appeared among the top 100 in the previous year, and he gained his high place in 2015 due to a very high score for citations, whereas in politics, he was not, and in the media only hardly (six mentions), perceived at all (see Bernau, 2015b). Indeed, Bernau (2015a) headlined another article on Ernst Fehr, published shortly after the ranking, “Der Starökonom, den keiner kennt” (“the star economist nobody knows”, own translation). In the same ranking, Armin Falk ranked 8th, also due to his citation counts while similarly to Fehr scoring very low and close to the bottom of the ranking in the other two categories (one mention in media, seven in politics).
42This confirms the overall impression derived so far that despite a wide spread in the literature—including that published by German-speaking economists—BE and LP did not enter German politics and policy making yet on a wide scale. However, this may very well change over the next years: Indeed, in August 2014, Chancellor Angela Merkel was specifically searching psychologists and behavioural economists for three heads of division vacancies with the aim to govern more effectively (see Plickert and Beck, 2014). These three job openings were since filled with a psychologist, a behavioural economist and a lawyer, and the German Chancellor’s office thus has a “behavioural team” which has started its work on March 1st 2015 (see Purnhagen and Reisch, forthcoming). The team is named “Arbeitsgruppe wirksam regieren”, which literally translates to “task group effective governing”. According to a reply by minister of state Helge Braun, on behalf of the federal government, to a question concerning this team by Britta Haßelmann, member of parliament of the Green party, its aim is to improve the effectiveness of policy interventions by basing them on actual evidence, and ex-ante tests of their effectiveness (see Deutscher Bundestag, 2015, 1). As of yet, no further information on the task group’s current projects is available on the Chancellor’s office’s website, and so far, no further details were communicated in the federal government’s press conferences concerning the group either, as is evident from the protocols. Indeed, by January 2016, the most recent reference to the task group was from the April 20th 2015 press conference.
43In international perspective, the German developments are also interesting on another level. Considering that Merkel’s CDU (plus its Bavarian associate CSU) is a conservative party, but in a coalition with the social-democratic SPD, this further confirms the impression that applying behavioural insights to policy making is nothing which only those either to the left or the right of the centre of the political spectrum would resort to. In any case, it will be interesting to see what will happen after the next elections, specifically because the three jobs for the members of the “Arbeitsgruppe wirksam regieren” are limited until the end of the current legislative period, i.e. September 2017.
44This subsection provides a short and far from exhaustive overview of other notable examples of BE in economic policy. First, it tackles the issue of international organisations, discussing the role BE and LP play in published works of four major international players, i.e. the OECD, IMF, World Bank and the European Union (as represented by its Commission). Furthermore, particularly notable examples from other countries than the three discussed before are listed and discussed in short.
45The OECD naturally publishes a number of economic policy volumes, and in recent years, these have frequently contained references to, and particular inferences from, BE. The Consumer Policy Toolkit from (2010) draws on BE in discussing the question of how to device and implement consumer protection. This version of the toolkit is still the most recent one, so the past five years have at least seen no retraction of the expressed ideas on part of the OECD. The overview by Lunn (2014) already referred to earlier not only provides a documentation of actual policy implementations picking up BE ideas, but also an outline of how to derive policy lessons from BE in general, and instances of applications in particular. Searching for BE among the titles, abstracts and keywords of items in the OECD’s iLibrary (http://www.oecd-ilibrary.org/) returns some more such reports with 18, partly overlapping results in total. Extending the search on full texts returns seven articles which contain the term “nudge” (the most recent one from 2011), and 14 items with “libertarian paternalism” (the earliest instance being the 2010 Consumer Policy Toolkit). Cass Sunstein was quoted in 52 items between 2001 and 2015. However, the two contributions mentioned above are the most notable and comprehensive ones. While not an overwhelming number of contributions, they nonetheless show that BE is on the OECD’s agenda.
- 16 The search was only conducted for English items in order to prevent possible double counting of tra (...)
46Searching the IMF’s eLibrary (http://www.elibrary.imf.org/) for “behavioral economics” returned a fairly high number of results, with the oldest one from March 2003. There is one book publication (Blanchard et al., 2012), which also includes BE in its reassessment of economic policy that had been put on the agenda after the financial and economic crisis of 2007ff. There are another nine chapters from other books, as well as 32 articles, mostly from the IMF’s Finance & Development series, and particularly issue 46/3 from September 2009 there.16 Searching for “libertarian paternalism”, however, returned no results.
47In the World Bank’s Open Knowledge Repository (https://openknowledge.worldbank.org/), 77 archived entries are found when searching for BE. The problems discussed cover a wide range, from topics such as financial capability (similar to major themes discussed in the IMF publications) over public sector reforms to designing a green growth strategy. The earliest publication among these results is from 2000, but the majority is more recent. Most of the entries (49) are flagged as policy research working papers, so BE is certainly discussed in the context of, respectively with a direct link to, economic policy here as well. Whereas the term LP does not explicitly feature in any work, “nudge” appears in four (three of which are policy research working papers), with the oldest one from 2012. The impression that BE has recently been put on the World Bank’s agenda is particularly strengthened when considering the World Development Report 2015 (The World Bank, 2014): Already its subtitle Mind, Society and Behavior suggests what immediately becomes clear from a glance at the content, namely that there is a wide and evident impact of BE notions and ideas on economic policy suggested by the World Bank, which even recommends a redesign of development policy based on these concepts (see p. 2 already).
48The European Union, as represented by its Commission (EC), has also already initiated work on topics related to BE and economic policy. Overall, the term “nudge” appears most frequently in the context of environment, food and natural resources, i.e. matters of a healthy diet, sustainability, etc. In a very comprehensive report of several hundred pages, Chater, Huck, and Inderst (2010) open a BE perspective on consumer decision making in retail financial (particularly investment) services, a sector which (or rather: the regulation of which) has been discussed very frequently following the crisis after 2007 (also see the respective institutions installed in the US and UK, as documented in Subsections 2.2.1 and 2.2.2). In a short but more general report, Bavel et al. (2013) discuss how results from behavioural science may be applied to and can be useful for policy making in the EU, starting from the premise that understanding people’s behaviour better matters greatly to improving policies. Furthermore, the EC hosted three pertinent conferences: one already on November 28th 2008 titled “How Can Behavioural Economics Improve Policies Affecting Consumers?”, another one on November 22nd 2010 under the headline “Behavioural Economics, so What: Should Policy-Makers Care?”, and the third one on “Applying behavioural insights to policy-making” on September 30th 2013. Concerning practical applications, the EU has enforced a ban on pre-ticked default boxes for online purchases since mid-2014—recognizing the power of default options and aiming at consumer protection (see Lunn, 2014, 15). Browsing the website of the EC’s in-house science service, the Joint Research Centre (https://ec.europa.eu/jrc/), further confirms that BE has entered the stage here—once more particularly with respect to public health. In cooperation with European policy-makers, academics and other NGOs, the European Brands Organisation, a lobby organisation for around 1800 companies from 21 European countries, has very recently launched the website http://www.nudgingforgood.com/ on December 2nd 2015. This further demonstrates that the issue is generally on the agenda in European politics.
49Moving once again to individual countries, one example from Australia is particularly notable because of its date: As early as August 8th/9th 2007, the Australian Government’s Productivity Commission hosted a roundtable on “Behavioural Economics and Public Policy”. The conference proceedings (Productivity Commission, 2008) contain papers by Eldar Shafir, Bruno Frey and others, who had visited the roundtable together with government officials, journalists and consumer group representatives. The conference was held before the publication of Nudge, but the term LP had already been coined (and is featured in the proceedings multiple times—as well as the word “nudge”, in an Economist quote). Interestingly, however, searching for “behavioural economics” on the Commission’s website returns little more results than these proceedings (only three in total). One of these appears to not be related to BE at all at a closer look. Therefore, it is questionable whether Australian policy as advised by the Commission actually bore the mark of BE/LP, despite the early discussion and acknowledgement of its potential, as documented in the proceedings. However, the Australian Department of Finance and Deregulation argued in (2012) that employing BE insights in policy “is encouraged to be explored further” (p. 56). What is more, since December 2012 the British BIT has helped to build up a similar team in Australia (see BIT, 2015, 47 ff.).
50All examples thus far have in common that they were initiated by a state authority or well-established international organisation. Therefore, the case of Denmark is particularly noteworthy as well, for here, a more bottom-up approach has been pursued in the past few years: The “iNudgeYou” project, a not-for-profit organisation, aims to improve awareness of possible policy tools related to nudging and of their respective advantages, pointing out the variety of different topics where they may be employed (see Lunn, 2014, 35); also see their website http://inudgeyou.com/). This kind of grassroots project is related to “The European Nudge Network” which was borne out of the “Danish Nudging Network” on June 27, 2014 and at present appears to be a fairly small and loose connection. The Norwegian “GreeNudge” group has a similar background and philosophy with a focus on issues of climate change (see Kallbekken, Sælen, and Hermansen, 2012).
51The observations collected and assembled into this paper demonstrate that BE has entered economic policy (advice) in many areas in developed countries, especially in the US and in the UK. Clearly, it cannot be said that BE-related advice has diffused completely into economic policy everywhere (even concerning the core topics discussed within LP in particular), but it does find its applications especially in the areas which are primary topics of interest in the theoretical literature. At the same time, there is quite significant variation among the different countries in the way the respective national policies approach and implement BE results. This was highlighted by comparing the two cases of the US and UK on the one hand, and Germany on the other: Both the US and the UK can easily be considered forerunners of the application of BE (or more general, behavioural research) in economic policy, whereas Germany can be placed somewhere on the other end of that spectrum, with no particularly notable previous examples on the federal level, and a policy advice which, at least until very recently, has not actively integrated particular insights from behavioural research yet.
52The results presented in this paper generally confirm previous research on the influence of BE on economic policy in recent years and expand its scope. What is more, the comparison of different countries has highlighted that in their actual application, LP and other policy-related ideas from BE are not limited to one side of the political spectrum: Indeed, in the US they are employed by a Democrat President, in the UK by a Tory Prime Minister, and Germany has recently done some first steps in the same direction under a Chancellor leading a coalition of the major conservative and social democratic parties. In addition to the observation of the status quo, the results in this paper provide a basis for an educated guess on the trend of the next few years, namely that the inflow of ideas from BE into economic policy is likely to continue, given its wide spread and discussion among many advisory boards and international institutions (also see Sunstein, 2016). However, the paper also sheds some more light on the fact that there are important differences between countries, and that the development is not uniform even among the OECD world—even given, for example, the OECD’s own work on using BE in economic policy.
- 17 In a—so far rare—example which is able to tackle this question, Chetty et al. (2014) show for Denma (...)
53Despite the field of research being so new and there already being other works in a similar direction, there are still open venues for further research. This is particularly evident for the question of country-specific differences, such as those between the US/UK and Germany. It should be interesting to extend this more detailed analysis to a greater number of OECD countries, which was not possible to the same extent in this paper due to language barriers. Further research topics include the issue of how it was possible for BE to diffuse into economic policy so quickly in some cases (and why not in others—picking up country differences once more): For example, it may be worthwhile to investigate within a larger country sample whether or not there is any correlation between the degree of trust in a “strong state” and its employing of LP and similar policies. The small anecdotal sample considered for the case studies in this paper interestingly points at a negative correlation, with LP exercising a greater influence in the US than in Germany so far. However, it might be argued that the more subtle methods LP employs are of course easier to implement in a country relatively more sceptic of state intervention, whereas in continental Europe, the government could as well justify stronger forms of paternalism. Clearly, this is an interesting and promising research field which includes questions discussed within political science and requires data on these additional variables. In general, the methodological and normative aspects of behaviourally informed policy interventions deserve a more detailed discussion (see Bogliacino, Codagnone, and Veltri, 2015). Another very important research question relates to the estimation of the actual effects of the particular policies conducted within the spirit of behavioural public policy or LP, especially in the long run. For example, if changed retirement savings programmes increase the volumes saved in these, do they also increase overall household saving in the long run, or are other forms of saving cut or crowded out instead?17 This is just a short selection of the many exciting research questions this field offers.
Paper presented at the "Economics and psychology in historical perspective" conference in Paris, December 17th-19th 2014. I thank the audience at the session, in particular D. Wade Hands and Michiru Nagatsu, for their feedback and comments. Additionally, the reports by three anonymous referees were indispensable in improving the paper further. Comments by Johannes Schwarzer are greatly appreciated as well. All remaining errors are, of course, entirely my own.