Behavioral Economics Policy Impact and Future Directions (2023) / Chapter Skim
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These scholars observed, for example, that people lack complete self-control, make inconsistent choices over time, show selective attention, and respond unconsciously to an array of influences. People also do not necessarily prioritize, or accurately assess, the benefits and costs of different actions, particularly those that accrue over long time intervals; their decisions are often influenced by the social context in which they are made; they respond unconsciously to the way a choice is framed and presented; and they have limited capacity to overcome logistical obstacles that stand in the way of an objectively optimal choice.
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The committee was charged to review evidence about the application of behavioral economics to key public policy objectives in a range of domains and synthesize what has been learned from this body of work, to suggest guiding principles for future work and applications, and to offer direction for future research. To carry out its charge, the committee explored the history and theoretical foundation of the field and the available research in six public policy domains: health, retirement benefits, social safety net benefits, climate change, education, and criminal justice.
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The committee applied these five core principles in our examination of research in the six selected policy domains and reached two conclusions. Conclusion 11-1: Core principles of behavioral economics have been tested repeatedly across six domains -- health, retirement benefits, social safety net benefits, climate change, education, and (to a lesser extent)
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The research demonstrating positive effects for behavioral economics interventions typically shows modest effect sizes. However, as is particularly evident in the work on climate change -- a challenge of unmeasurable magnitude -- the application of combinations of individually modest interventions can cumulatively bring important changes and benefits for relatively little cost.
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Despite strong evidence across domains and contexts that intervention strategies based on behavioral economics can have significant effects on important policy objectives, it is challenging to apply this evidence beyond the scale and setting of a focused research study. A substantial number of individual studies of interventions have been carried out across the six domains we explored, but far fewer studies have followed up promising results with replication studies and systematic efforts at scale.
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Specific changes in the way behavioral economics research is typically funded and conducted will strengthen the field. Recommendation 12-1: Researchers, funders of research, university leaders, and journal editors in behavioral economics should take steps to support the replicability and generalizability of behavioral econom ics research, more fully acknowledge publication bias and take steps to detect its presence, and counter publication bias using a variety of approaches.
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Specifically, research is needed to: • advance behavioral design and intervention design methods to better link behavioral principles and insights to specific inter vention and policy goals; • advance methods for conducting pilot and rapid-cycle studies; • accumulate more evidence on how findings from one setting can be applied to other settings or at broader scales; • realize the potential for artificial intelligence and machine learning approaches to improve tailoring and targeting; • bring cutting-edge adaptive trial design approaches to behav ioral economics studies; and • incorporate empirical methods from other disciplines and fields that can enrich behavioral economics research. Recommendation 14-4: Researchers, funders of research, and enti ties that support or sponsor behavioral units in organizations should prioritize research and practice initiatives that increase the impact of behavioral economics findings through implementation, scale-up, and evaluation of potentially successful interventions and policies.
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In the context of complex regulatory structures, for example, there may be behavioral solutions to challenges that are not primarily the result of individual behavioral biases. Behavioral economists can consider not only a broad range of solutions to behavioral biases but also how to apply behavioral solutions even when there is no clear problem of cognitive bias.
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