In recent years, public officials have shown a growing interest in using evidence from the behavioural sciences to promote policy goals. Much of the discussion of behaviourally informed approaches has focused on ‘nudges’; that is, non-fiscal and non-regulatory interventions that steer (nudge) people in a specific direction while preserving choice. Less attention has been paid to boosts, an alternative evidence-based class of non-fiscal and non-regulatory intervention. The goal of boosts is to make it easier for people to exercise their own agency in making choices. For instance, when people are at risk of making poor health, medical or financial choices, the policy-maker – rather than steering behaviour through nudging – can take action to foster or boost individuals’ own decision-making competences. Boosts range from interventions that require little time and cognitive effort on the individual's part to ones that require substantial amounts of training, effort and motivation. This article outlines six rules that policy-makers can apply in order to determine under which conditions boosts, relative to nudges, are the preferable form of non-fiscal and non-regulatory intervention. The objective is not to argue that boosts are better than nudges or vice versa, but to begin to spell out the two approaches’ respective conditions for success.

Can we educate decision-makers to make better decisions? In the present paper, I argue that we can in at least two broad ways: (1) teaching concrete knowledge about a specific decision or decision type; and (2) teaching more abstract decision-making competencies that are thought to lead to better decisions. Teaching knowledge can be done using decision aids and similar techniques that provide important information about a specific choice (e.g. a medical treatment option). In these cases, information presented using evidence-based techniques to improve comprehension and use of information will have greater effects on judgements and choices. Teaching more abstract decision competencies, on the other hand, involves formal schooling (with the bulk of formal education falling during childhood) or training in a specific competency that is important to decision processes and outcomes; I use numeracy interventions as an exemplar.

Why are some nudges ineffective, or at least less effective than choice architects hope and expect? Focusing primarily on default rules, this essay emphasizes two reasons for this. The first involves strong antecedent preferences on the part of choosers. The second involves successful “counternudges,” which persuade people to choose in a way that confounds the efforts of choice architects. Nudges might also be ineffective, and less effective than expected, for five other reasons: (1) some nudges produce confusion in the target audience; (2) some nudges have only short-term effects; (3) some nudges produce “reactance” (though this appears to be rare); (4) some nudges are based on an inaccurate (though initially plausible) understanding on the part of choice architects of what kinds of choice architecture will move people in particular contexts; and (5) some nudges produce compensating behavior, resulting in no net effect. When a nudge turns out to be insufficiently effective, choice architects have three potential responses: (1) do nothing; (2) nudge better (or differently); and (3) fortify the effects of the nudge, perhaps through counter-counternudges, or perhaps through incentives, mandates, or bans.

Advisors, such as physicians, financial advisors, lawyers and accountants, often face a conflict of interest – that is, a clash between their professional and personal interests. Such conflicts can lead to biased and corrupt advice. In this paper, I focus on how conflicts of interest can cause good people to unintentionally cross ethical boundaries and how we can avoid succumbing to this bias. I first discuss two mechanisms through which advisors may convince themselves to accept conflicts of interest while vehemently believing that they remain unbiased: (1) a sense of entitlement; and (2) a sense of invulnerability created by their belief in their own professionalism. I then discuss several proposed policy solutions to manage conflicts of interest, such as education and training, sanctions, second opinions and disclosure policies. These proposed solutions for dealing with conflicts of interest are largely based on inaccurate intuitions regarding the psychological processes that underlie them; consequently, these policies tend to fail or have unintended consequences. In the absence of eliminating conflicts of interest, solutions that are more likely to be successful consist of identifying and changing the professional norms that exert powerful influences on employee behaviour.

Conventional economic policy focuses on ‘economic’ solutions (e.g. taxes, incentives, regulation) to problems caused by market-level factors such as externalities, misaligned incentives and information asymmetries. By contrast, ‘nudges’ provide behavioural solutions to problems that have generally been assumed to originate from limitations in human decision making, such as present bias. While policy-makers have good reason for exploiting the power of nudges, we argue that these extremes leave open a large space of policy options that have received less attention in the academic literature. First, there is no reason that solution and problem need have the same theoretical basis: there are promising behavioural solutions to problems that have causes that are well explained by traditional economics, and conventional economic solutions often offer the best line of attack on problems of behavioural origin. Second, there is a wide range of hybrid policy actions with both economic and behavioural components (e.g. framing a tax or incentive in a specific way), and there exist many societal problems – perhaps the majority – that arise from both economic and behavioural factors (e.g. firms’ exploitation of consumers’ behavioural biases). This paper aims to remind policy-makers that behavioural economics can influence policy in a variety of ways, of which nudges are the most prominent but not necessarily the most powerful.

Why does public conflict over societal risks persist in the face of compelling and widely accessible scientific evidence? We conducted an experiment to probe two alternative answers: the ‘science comprehension thesis’ (SCT), which identifies defects in the public's knowledge and reasoning capacities as the source of such controversies; and the ‘identity-protective cognition thesis’ (ICT), which treats cultural conflict as disabling the faculties that members of the public use to make sense of decision-relevant science. In our experiment, we presented subjects with a difficult problem that turned on their ability to draw valid causal inferences from empirical data. As expected, subjects highest in numeracy – a measure of the ability and disposition to make use of quantitative information – did substantially better than less numerate ones when the data were presented as results from a study of a new skin rash treatment. Also as expected, subjects’ responses became politically polarized – and even less accurate – when the same data were presented as results from the study of a gun control ban. But contrary to the prediction of SCT, such polarization did not abate among subjects highest in numeracy; instead, it increased. This outcome supported ICT, which predicted that more numerate subjects would use their quantitative-reasoning capacity selectively to conform their interpretation of the data to the result most consistent with their political outlooks. We discuss the theoretical and practical significance of these findings.

Counter to the traditional assumption of neoclassical economics that individuals are rational Homo oeconomici that always seek to maximize their utility and follow their ‘true’ preferences, research in behavioural economics has demonstrated that people's judgements and decisions are often subject to systematic biases and heuristics, and are strongly dependent on the context of the decision. In this article, we briefly review the transition of research from neoclassical economics to behavioural economics, and discuss how the latter has influenced research in consumer behaviour and consumer policy. In particular, we discuss the impacts of key principles such as status quo bias, the endowment effect, mental accounting and the sunk-cost effect, other heuristics and biases related to availability, salience, the anchoring effect and simplicity rules, as well as the effects of other supposedly irrelevant factors such as music, temperature and physical markers on consumers’ decisions. These principles not only add significantly to research on consumer behaviour – they also offer readily available practical implications for consumer policy to nudge behaviour in beneficial directions in consumption domains including financial decision making, product choice, healthy eating and sustainable consumption.

Most applications of behavioral economics, finance, and accounting research to policy focus on alleviating the adverse effects of individuals’ biases and cognitive constraints (e.g. through investor protection rules or nudges). We argue that it is equally important to understand how psychological bias can cause a collective dysfunction – bad accounting policy and financial regulation. We discuss here how psychological bias on the part of the designers of regulation and accounting policy (voters, regulators, politicians, media commentators, managers, users, auditors, and financial professionals) has helped shape existing regulation, and how an understanding of this process can improve regulation in the future. Regulatory ideologies are belief systems that have evolved and spread by virtue of their ability to recruit psychological biases. We examine how several psychological factors and social processes affect regulatory ideologies.

Some object to paternalism when it forecloses options – when it makes it impossible, or at least very difficult, to pursue a particular course of action. This is because some argue that liberty is intrinsically valuable, and that to have liberty is to have options; thus, to lose options is to lose something intrinsically valuable. On that account, even if the loss of an option can be justified by gains of other intrinsically valuable things, it should be regarded as a loss. I argue that, in fact, some options have no value, so that their loss is not in itself even pro tanto bad. And, when losing options makes it more likely that we will achieve greater welfare, the loss of options is an unqualifiedly good thing. Thus, coercion, which removes some options, is not necessarily a bad thing in itself, and its loss can often be easy to justify.

It is commonly assumed in affluent, Western, democratic societies that by enhancing opportunities for choice, we enhance freedom and well-being, both by enabling people to get exactly what they want and by enabling people to express their identities. In this paper, we review evidence that the relationships between choice, freedom, and well-being are complex. The value of choice in itself may depend on culture, and even in cultural contexts that value choice, too much choice can lead to paralysis, bad decisions, and dissatisfaction with even good decisions. Policy-makers are often in a position to enhance well-being by limiting choice. We suggest five questions that policy-makers should be asking themselves when they consider promulgating policies that will limit choice in the service of enhanced well-being. The relationships between choice, freedom, and well-being are not simple, and an appreciation of their complexity may help policy-makers target their interventions more effectively.

Wholesale prices for electricity vary significantly due to high fluctuations and low elasticity of short-run demand. End-use customers have typically paid flat retail rates for their electricity consumption, and time-varying prices (TVPs) have been proposed to help reduce peak consumption and lower the overall cost of servicing demand. Unfortunately, the general practice is an opt-in system: a default rule in favor of TVPs would be far better. A behaviorally informed analysis also shows that when transaction costs and decision biases are taken into account, the most cost-reflective policies are not necessarily the most efficient. On reasonable assumptions, real-time prices can result in less peak conservation of manually controlled devices than time-of-use or critical-peak prices. For that reason, the trade-offs between engaging automated and manually controlled loads must be carefully considered in time-varying rate design. The rate type and accompanying program details should be designed with the behavioral biases of consumers in mind, while minimizing price distortions for automated devices.

Viewed from both an ethical and practical perspective, it is clearly desirable that public sector allocative and regulatory decisions should, so far as possible, reflect the preferences of individual members of society. It is therefore hardly surprising that, in appraising proposed safety improvements, public sector bodies have displayed an increasing tendency to estimate the benefits of such improvements on the basis of values of safety defined in such a way as to reflect the preferences and attitudes to safety of individual members of the public. However, given the technical complexity of many public sector safety decisions, it is also necessary to rely on expert analysis and informed judgement in reaching such decisions, so that preference-based values of safety should be regarded as being only one input to the decision-making process. In addition, the definition and estimation of the values themselves raise a number of practical and ethical questions. The purpose of this paper is to consider the role that preference-based values of safety can realistically be expected to play in these decision-making processes, given these difficulties and limitations.

One interpretation of the evidence on how people actually behave is that they sometimes/often do not have well-defined preferences. Although this makes public policy based on preference satisfaction problematic, it does not count against policy intervention per se. This paper argues instead that it shifts the object of intervention to the rules that constrain and enable action (away from the outcomes arising from those actions). This is the constitutional approach to public policy. Drawing on the constitutional tradition in political theory that values individuals for their individuality, the paper develops an argument for a basic income and a constitutionally constrained tax system. The key feature of this system is its simplicity. This should appeal on behavioural grounds to anyone who is concerned with using the tax and benefit system in public policy and not just those who are persuaded by the argument here for the constitutional approach to public policy.