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Beware the behavioralists

Ryan Hahn's picture

In a recent op-ed in the NYT, professors George Loewenstein and Peter Ubel take a swipe at behavioral economics:

But the field has its limits. As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address. Indeed, it seems in some cases that behavioral economics is being used as a political expedient, allowing policymakers to avoid painful but more effective solutions rooted in traditional economics.

Take, for example, our nation’s obesity epidemic. The fashionable response, based on the belief that better information can lead to better behavior, is to influence consumers through things like calorie labeling...because we lack the political will to change the price of junk food, we focus on consumer behavior.

Loewenstein and Uble overlook another potential explanation beyond the political for why we choose to focus on things like consumer behavior. Somehow, it's just more intrinsically interesting to think about clever ways to 'fix' our irrational behaviors (e.g. see video of the Run Away Alarm Clock below) than to consider the intricacies of effective tax policy. Perhaps the behavioral economists can come up with a solution for our apparently excessive focus on behavioral economics?

Comments

Submitted by Anon on
The article presents something of a straw man. No behavioral economist would ever claim that it was supposed to replace conventional economic theory; its a supplement. Its there to answer some of the questions that regular economics doesn't do a good job on. Policymakers using behavioral solutions aren't trying to say that these are always better than price or incentive changes - but sometimes they're more achievable. Its very cheap to make a savings policy opt-out rather than opt-in, whereas increasing the return to savings can be very costly indeed. And yes, removing subsidies on corn would be better than labelling, but what are the political chances of getting that through? Whereas labelling is relatively cheap and achievable. We live in a second best world.

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