People and policy

behavioural economics and its policy implications

Research output: Contribution to journalArticle

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Abstract

The standard approach of economic modelling and policy analysis is to assume that people are homo economicus: a rational and self-interested economic man. However, a well-documented body of evidence suggests that human decision makers depart from this assumption in several interesting ways. This paper explores three key behavioural aspects – loss aversion; present-biased preferences; and social preferences. It considers the evidence to support them; how behavioural economists have modified economic models to capture the implications of each modification; and how they offer new insights on the scope and efficacy of a wide range of policy interventions.
Original languageEnglish
Pages (from-to)93-106
Number of pages14
JournalFraser of Allander Economic Commentary
Volume38
Issue number3
Publication statusPublished - 4 Mar 2015

Fingerprint

Policy implications
Economic modelling
Efficacy
Policy analysis
Loss aversion
Economists
Homo economicus
Economic policy
Social preferences
Economic man
Policy intervention
Decision maker
Present-biased preferences

Keywords

  • behavioural economics
  • loss aversion
  • reference-dependent preferences
  • present-biased preferences
  • social preferences
  • procrastination
  • reciprocity
  • public policy

Cite this

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title = "People and policy: behavioural economics and its policy implications",
abstract = "The standard approach of economic modelling and policy analysis is to assume that people are homo economicus: a rational and self-interested economic man. However, a well-documented body of evidence suggests that human decision makers depart from this assumption in several interesting ways. This paper explores three key behavioural aspects – loss aversion; present-biased preferences; and social preferences. It considers the evidence to support them; how behavioural economists have modified economic models to capture the implications of each modification; and how they offer new insights on the scope and efficacy of a wide range of policy interventions.",
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People and policy : behavioural economics and its policy implications. / Dickson, Alex; Fongoni, Marco.

In: Fraser of Allander Economic Commentary, Vol. 38, No. 3, 04.03.2015, p. 93-106.

Research output: Contribution to journalArticle

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