Josh Wright has an interesting comment on the WSJ’s article the other day on the apparent waning of the influence of behavioral economics in the Obama Administration. In fact, Josh observes something that I noted about the article as well–the example given of the supposed influence of BE (the divergence of interests between landlords and tenants with respect to energy-saving appliances) actually has nothing to do with BE and in fact is a classic example of standard neoclassical analysis.
Josh also raises the key point behind all of this–what happens if the “nudge” provided by the government doesn’t actually get people to do what regulators want them to do? Do we just nudge harder? At what point does a nudge turn into a shove–or when do we just skip nudging and instead shove for people’s own good?
If it is possible to know what people “really” want to do, or what regulators think people should do for their own good, it isn’t clear why we wouldn’t just compel them to do it if they won’t do it themselves (the paternalistic slippery-slope observed by Rizzo and Whitman).
Allan Walstad says:
The nudge of the camel’s nose.
March 10, 2010, 10:58 amDotar Sojat says:
Once the Nanny decides how you should live and what you should do/not do, they really don’t care what you think or want. If they control the apparatus of government, they will use whatever means necesary to force your behavior.
March 10, 2010, 11:04 amElliot says:
I think we are seeing the answer to that question right now. Shoving goes in two directions, and the Tea Party folks are winding up for the Mother Of All Shoves.
(And who is “we”. Who is “the people”.)
March 10, 2010, 11:09 amConstantin says:
what happens if the “nudge” provided by the government doesn’t actually get people to do what regulators want them to do?
Rahm shows up in your shower.
(Tickle fights optional.)
March 10, 2010, 11:09 amAssistant Village Idiot says:
There is always the privately-held opinion that our people would nudge artfully, but those other guys can’t be trusted. In NH, we have one of the most nudgeogenic conditional discharge statutes in mental health. Most mental health providers, good liberals all, assent in theory to the idea of targeted, minimal requirements for individuals under involuntary commitment. In practice, however, there is a constant racheting up of requirements including ridiculous intrusions as they grow more frustrated.
We are all susceptible to incrementally increasing our nudgeing.
March 10, 2010, 11:28 amRowerinVA says:
What government should do – R’s and D’s should both agree on this – is make darn sure that doing the “right” thing is easy. Remove government disincentives to doing whatever government thinks is the best course. This is the bare minimum required for government to be rational and not hypocritical.
What’s astounding is that government so often forgets to do even this. Try paying taxes on small business employees. Huge red tape. Why not a single, automatically generated, internet-based payment for all taxes (state, local, federal income, SSA, WC, UI) in one shot? Instead, merely attempting to comply is very expensive, causing many people rationally to pay off the books. Private businesses don’t make it really, really difficult to pay them. Why do we tolerate this from governments?
I’d take government “nudge” plans as to the new issues more seriously if government didn’t constantly nudge in the wrong direction on so many of the old issues.
March 10, 2010, 12:18 pmorca says:
The Tea Party candidate got 19% in Texas’ recent Republican gubernatorial primary…not much of a shove.
March 10, 2010, 12:49 pmElliot says:
‘The Tea Party candidate got 19% in Texas’ recent Republican gubernatorial primary…not much of a shove.”
OK. Ignore the phenomenon. That tactiic worked so well in filling the Kennedy seat it should work just as well everywhere else.
March 10, 2010, 12:55 pmyankee says:
Well, if you believe there’s value in letting people choose for themselves, it’s completely consistent to support libertarian paternalism but not coercive paternalism.
March 10, 2010, 12:59 pmpete says:
Yeah, because voters who hate out of control government spending are going to throw out the governor who has kept the state’s budget balanced while keeping the state tax rate one of the lowest in the nation. Especially when you compare how out of control Texas’ budget and unemployment rate is with states like Michigan or California.
March 10, 2010, 1:01 pm1040 says:
Thankfully, Florida Republicans need to know not just what the right nudges are, but also what is the right way to generate taxes.
An excerpt:
March 10, 2010, 2:02 pmgeokstr says:
Seems to me that the proper direction for both nudges and shoves should be upward, from the people to their leaders, not the other way around.
When it comes down from government instead, eventually the sheep will disappoint the shepherds and that’s when the eggs start getting broken, to mix a metaphor with a quote from Vladimir himself, one of the world’s foremost shovers.
March 10, 2010, 4:43 pmAnon says:
What looks irrational from the outside can be a valid and reasonable expression of personal preference.
March 10, 2010, 6:15 pmGambling, as a form of entertainment, as opposed to the expression of an addictive behavoir, might be decent example.
In my state, the state lottery runs a variety of games, but the one with the highest mathematical expection is 50 cents for each dollar play. Is playing irrational? Maybe not if you value the chance to win $500 tomorrow more higly than the dollar you have in your pocket now.
Ricardo says:
Well, OK. Try talking to some of the people who are frequent lottery participants sometime, though, and ask them about their household finances. You will find a fair number of them are deeply in debt at high interest rates. Betting on the lottery as a way for you to get out of your debts is very irrational.
March 10, 2010, 9:27 pmJeremyKidd says:
Elliot:
I’ll admit, in advance, that I may have misunderstood your entire point. However, it seems to me that your comparison is inapt, in that the Tea Party movement is a group of individuals acting collectively, but outside formal government, whereas the current understanding of “nudge” or “shove,” especially in the context of the original post, refers to the government using its monopoly on force.
Could you explain your comparison in a little more detail?
March 11, 2010, 10:00 amGordo says:
I recently read How Markets Fail, by John Cassidy, who makes a pretty compelling case regarding the failure of the neoclassical economic model, and the need to incorporate some of the “behavioral economics” insights into our financial system.
I would be interested in any counter-arguments from the neo-classicists out there, who are legion at the Volokh Conspiracy.
March 11, 2010, 12:30 pmElliot says:
“whereas the current understanding of “nudge” or “shove,” especially in the context of the original post, refers to the government using its monopoly on force.”
Sure. I guess I’m expanding the meaning of “nudge” and “shove” to include consequences for both government and the voters.
When the government people are frustrated that their nudges don’t work, and decide to shove, their targets shove back, but when they do it can be with much greater force.
I was especially intrigued by the line in the opening post saying, “ it isn’t clear why we wouldn’t just compel them to do it if they won’t do it themselves..” When people think they are being compelled against their will, they strike back. Call it a nudge, shove, vote, movement, or whatever…
March 12, 2010, 10:34 pmbuilt in dishwashers reviews says:
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April 15, 2010, 6:31 pm