Behavioural Economic Policy

Question 1

Name 2 Pros of Behavioural Economic Policy

Answer 1

• Improvement in social welfare, as irrational consumers often make suboptimal decisions
• Behavioural Economic Policies are often less invasive than ‘shove’ policies
• Different tactic to other policies

Question 2

Name 2 Cons of Behavioural Economic Policy

Answer 2

• Policies are often unpredictable and costly, leading to Government Failure
• These policies are often based on fallacies and biases, and individuals might all react differently
• This can be seen as manipulative and too ‘paternalistic’
• Administrative and enforcement costs

Question 3

What are some of the Evaluation points for Behavioural Economic Policy

Answer 3

• Weigh up the Costs and Benefits argument -> Physical cost and opportunity cost Vs Impact
• Surely information provision can provide the same thing, but more targeted
• ‘Shove’ policies are tried and tested, and are more reliable
• Behavioural Economic Policy can be used ALONG SIDE ‘Shove’ policies