Behavioral economics and neuroeconomics meet economic policy
Deadline for submission: September 15th, 2011 Planned publication of the issue: 2012
Recent research at the intersection of neurosciences, psychology and economics has lead to attach more and more importance to constrained rationality, emotions and social preferences, changing our understanding of how individuals take decisions and act. Over the past twenty years, behavioral economists, and subsequently neuroeconomists have established themselves in various fields of economic theory and have gained audience. They may appear likely candidates to take over from the neoclassical mainstream. However, the development of behavioral economics is not confined to and enrichment of our understanding and modeling of economic behavior. It also carries with it tremendous consequences on the way to design (economic) policy.
There has been a wealth of interest in the policy implications of behavioral economics in recent years, which acme has been a debate on asymmetric paternalism (or libertarian paternalism) leading to “regulation for conservatives” (Camerer and others). Others have uphold that senses of fairness and cooperation should lead to policies favoring other modes of production and exchange, potentially superseding policies based upon market and competitive behavior.
Today, the most studied fields of application of behavioral economics and neuroeconomics are social welfare programs, regulation of the labor market, monetary policies, consumption and saving regulations, macroeconomic policy, climate change, justice, education, public health.
Debates over the challenges that policy design must meet are not confined to individual searchers. A number of organizations devote increasing resources to organize conferences and promote research groups to design new tools and opportunities available to policymakers. Policy recommendations are themselves relying on different behavioral “principles” considered, and are more or less relevant in different economic situations. Thus, some policy recommendations derive from the idea of a status quo bias or from a tendency to procrastinate, while others are inspired by the dispositions of individuals to cooperate or express their sense of fairness.
The changes implied by behavioral economics and neuroeconomics raise many historical, philosophical, ethical and methodological issues. Œconomia intends to publish a panel of articles dealing with these issues. Three lines of research offer themselves.
First, from a historical point of view, many questions are at stake. How did behavioral economists and neuroeconomists establish behavioral economics and
neuroeconomics as possibles sources for framing economic policy? Is the behavioral turn a source for new developments or a way to legitimize a more systematic use and scientific basis for intuitive and common sense practices in regulation programs? How did it spread from microeconomic policy to macroeconomic policy design? What has been the interplay between economists, neuroscientists and psychologists in converting organizations to behavior-based policies? How did neuroeconomics became among the most visible of behavioral economic programs, and did it have specific effects on the kind of policy design and content associated with behavioral economics?
Second, when seen as sources for economic policy behavioral economics and neuroeconomics raise important philosophical and ethical issues. What are the normative criteria and the welfare conceptions underpinning different policy proposals? On which conceptions of human autonomy and liberty are they grounded? From this perspective, it seems that the rational autonomous individual of the neoclassical paradigm is leaving room for another kind of economic subject, whose theory has yet to be completed.
Third, at least two methodological issues are at stake. The first one is about the capacity to design adequate systems of information and control to implement policies based upon behavioral economics and neuroeconomics. The second one deals with the tools for appraising policy effects and the potential effects of those systems upon social and economic welfare.