THE BEHAVIORAL ECONOMICS GUIDE 2016

making, i.e. behavioral design (e.g. Naumof, 2015). For example, carmakers and insurance
companies can go beyond road safety nudges by using psychological insights in the behavioral
design of automobiles, leading to potentially more sustainable behavior change, due to
technological change. Behavioral design applies to the entire decision-making context to
support action, including the product itself, the user, the surrounding decision-making
environment, and the action the user is taking (Wendel, 2013). This approach benefits from a
broader conception of human behavior and behavior change, such as the interaction between
natural and social science approaches embraced by the UK’s Behavioural Design Lab.
The question of whether nudges or choice architecture design produces lasting changes in
behavior is of essential importance to BE practitioners in the public sector, especially in regulated
markets such as financial services, where BE principles have been (nominally) embraced. The
depth of political commitment to BE in principle, rather than as an expedient, remains open to
question (see Shafir’s comments in the Financial Regulation section below). The continuing impact
of BE in the public policy domain is considered next.
Behavioral Science and Public Policy
The practical uses of behavioral economics and related disciplines are increasingly evident in
public policy. In this domain, BE can help in the development of new policy tools, improve
predictions about existing policies’ effects, and generate new welfare implications (Chetty, 2015).
In September of 2015, an event at the Brookings Institution discussed policy lessons from
behavioral economics in the domains of labor, tax, personal finance, and health. The same
month, and occurring a year after the creation of the Social and Behavioral Sciences Team,
President Obama signed an executive order on “using behavioral science insights to better serve
the American people.” The team has already implemented a number of successful programs
that encourage behaviors ranging from college enrollment to double-sided printing.
An initiative with more international scope was launched by the World Bank, which created a
new Global Insights Initiative (GINI). Its mission is to assist governments in the application and
testing of behavioral insights, recognizing the complementary nature of traditional economic
interventions and behavioral approaches in problems relating to development. The World Bank
has adopted a more culturally informed approach to BE. The lead economist in the bank’s
research department, Karla Hoff (World Bank, 2016), refers to this perspective as the “Second
Strand of Behavioral Economics.”
In Europe, the European Commission’s behavioral consumer research framework has already
produced a few interesting insights into domains such as food labels, online gambling, and bank
fees. A 2016 report by the European Commission’s Joint Research Centre provides an account of
European behavioral initiatives and makes recommendations for the future (Sousa Lourenço et
al., 2016). Furthermore, a new round of EC-funded projects kicked off in 2016 and will be
undertaken by a handful of research partnerships, including a consortium led by the London
School of Economics.
The UK’s Behavioural Insights Team (BIT), or ‘Nudge Unit’, remains one of the organizations at
the forefront of policy-oriented behavioral research and application. Shortly after the
publication of last year’s BE Guide, David Halpern (2015), head of the BIT, published the book
Behavioral Economics Guide 2016 8