Consumer - Policy Flashcards
Policy is a course or principle of _____, adopted or proposed by a _______, party, _______ or individual.
Specifically, consumer policy is that which deals with the purchase and use of _____ and _____. It is about changing consumer _____-_____ behaviour (choices and actions
How policy-makers approach consumer policy depends on the ________ they make about human ______-_______.
action
government
business
goods
services
decision-making
assumptions
decision-making
Traditional policy models
What are the 3 traditional approaches to consumer policy?
- restrictions (banning)
- incentives (subsidies, fees/penalties)
- increased information (making informed decisions)
The Competition and Consumer Act 2010 ______ consumers, and the Australian Competition and Consumer Commission is an ________ authority to ensure compliance
protects
independent
Data privacy is now a huge issue, and the government has a Privacy Act which _____ the management of personal ______, including that companies must take ______ with regard to data breaches. Yet, things like Cambridge Analytica still occur.
regulates
information
action
Traditional policy models
Describe some traditional policy approaches to Energy Conservation, and their pitfalls
- carbon regulation
- Incentives for renewable energy
- Increased information to persuade people to conserve energy
Name some critiques of these
- carbon regulation overall
- carbon tax
- emissions trading schemes
(often revoked by subsequent governments) - Incentives for renewable energy
- ceiling insulation rebate, solar panel rebate (but detracts from intrinsic motivation. Rebates are also $$$) - Increased information to persuade people to conserve energy through education and mass media (but information does not translate into action. Eg: privacy emails)
Traditional policy models
What assumption does traditional policy models make and what has been proposed as an alternative?
- Traditional policy approaches assume a “rational choice” model of bx
- People are sophisticated decision-makers who are logical, maximise their self-interest and utility (fictional Econs)
- Hence, it makes sense to use restrictions (punishments), incentives (maximisers) and information (I know what I should do and why and I’m going to do it)
- However, people are often NOT like this…and behavioural economics sees decision-makers as “humans”, who are NOT always logical, but are impulsive, emotional, and make decisions based on systematic biases and heuristics (this is often due to being time-poor)
- Hence, the context should be changed to influence behaviour
Behaviourally informed approaches
Describe the “two systems” described in “Thinking Fast and Slow”
System 1 fast unconscious automatic prone to heuristics/short-cuts MOST of the time we are here Influenced by context
System 2
slow
conscious
controlled
Behaviourally informed approaches
So it seems restrictions, incentive, and information are designed for “_____”, but behavioural economics focuses on humans and how _______ processes influence economic ______-______.
Psychologists can apply their knowledge of how ______ and ________ influence consumer decision-making and develop interventions to “______” consumers. This changes the ________ to direct the consumer to make more desirable choices and actions.
Econs
psychological
decision-making
biases
heuristics
nudge
environment
Behaviourally informed approaches
A choice architecture is _____ in the manner in which different options are _____ to the decision-maker.
A nudge is an _______ to change the manner of presenting ______.
designing
presented
intervention
options
Behaviourally informed approaches
Behaviourally informed approaches are evidence-based, predominantly using _____. Their methods are _____ (develop intervention, conduct study, incorporate improvements, repeat).
Importantly, these approaches are choice-______ (you can still choose not to do it)
Eg: using their stairs instead of the escalator - both are there and you still have a choice
RCTs
iterative
preserving
Behaviourally informed approaches - Nudging for Energy Conservation
What is the status-quo bias?
Give an example
We go with the pre-set default
eg: default setting on washing machine is on cold cycle to be more environmentally friendly
Behaviourally informed approaches - Nudging for Energy Conservation
What is loss aversion? Give an example of using loss-frame messages.
Loss aversion is the idea that losses loom larger than gains
(strong focus on “what’s it going to cost me?”)
Instead of “save $50 when you turn off the lights…”
use
“You’re currently losing $50 a month by keeping the lights on”
Behaviourally informed approaches - Nudging for Energy Conservation
Light bulbs changing colour when they’ve been on for too long is an example of ______, where our ______ is drawn to stimuli that are novel, ______ and simple. (eg: giving consumers some visual ______ or prompts)
Salience
attention
accessible
reminders
Behaviourally informed approaches - Nudging for Energy Conservation
Using normative social influence (social norms/validation/proof) involves:
- _______ norms: other people are conserving energy (but what about if you’re already doing the right thing?)
- ______ norms: other people approve of conserving energy (emotion faces)
descriptive
injunctive
Behaviourally informed approaches - Nudging for Energy Conservation
Describe the findings from the Schulz et al., (2007) study comparing descriptive and injunctive norms
measured both short and long-term energy consumption
Californian households either allocated to
(1) descriptive norm only - their own energy use compared to average or
(2) descriptive and injunctive norm - descriptive PLUS happy or sad face for those less/more than average consumption
- found that those with above average energy consumption sig. decreased energy consumption with descriptive norm. They further decreased their use with the injunctive norm, but there was not a sig. difference here.
- the households below average baseline consumption INCREASED their usage with the descriptive norm only (boomerang effect). However, it only slightly increased (or no sig. change) with the injunctive norm (counteracted the boomerang effect).
