The economist as therapist: Behavioural economics and "light" paternalism
Description
We review methodological issues that arise in designing, implementing and evaluating the efficacy of 'light' paternalistic policies. In contrast to traditional 'heavy-handed' approaches to paternalism, light paternalistic policies aim to enhance individual choice without restricting it. Although light paternalism is a 'growth industry' in economics, a number of methodological issues that it raises have not been adequately addressed.
The first issue is how a particular pattern of behavior should be judged as a mistake, and, relatedly, how the success of paternalistic policies designed to rectify such mistakes should be evaluated – i.e.,the welfare criterion that should be used to judge light paternalistic policies.
Second,paternalism, and especially light paternalism, introduces new motives for attempting to understand the psychological processes underlying economic behavior. An enhanced understanding of process can help to explain why people make mistakes in the first place,and, more importantly, provide insights into what types of policies are likely to be effective in correcting the mistakes. Third, there is an acute need for testing different possible policies before implementing them on a large scale, which we argue is best done in the field rather than the lab.
Fourth, in addition to methodological issues, there are pragmatic issues concerning who will implement light paternalistic policies, especially when they involve positive expenditures.
We discuss how economic interests can be rechanneled to supportendeavors consistent with light paternalism.
| Slides | |
| 0:00 | The Economist as Therapist: Behavioural economics and "light" paternalism |
| 2:44 | Are you to incompetent to know what's best for yourself? |
| 3:41 | In fact, people often don’t know what’s best for themselves (and when they do, often have trouble getting themselves to do it) |
| 5:44 | Traditional economics not well equipped to deal with these problems; assumes that people.. |
| 6:30 | Behavioral economics: allows for mistakes. People often... |
| 7:20 | Paternalism |
| 7:51 | However, widespread discomfort with ‘heavy-handed’ paternalism |
| 9:05 | Proposed solution: ‘light paternalism” |
| 10:48 | Common theme: using errors and biases that ordinarily hurt people to, instead, help them |
| 11:12 | An example: defaults |
| 11:28 | “Status quo bias” and defaults in organ donation (Johnson-Goldstein Sci 03) |
| 12:20 | Defaults fit the definition of both libertarian and asymmetric paternalism |
| 14:12 | Changes introduced into benefits package of large corporation.. |
| 15:41 | Enrollment (1) |
| 16:06 | Enrollment (2) |
| 16:43 | Light paternalism has diverse ramifications |
| 17:15 | 1. Need for alternative welfare criterion |
| 17:57 | Possible welfare criteria |
| 18:33 | Big problem with experience utility: adaptation |
| 21:11 | Possible welfare criteria |
| 23:19 | 2. Importance of process |
| 25:00 | Example: Save More (AR) Tomorrow plan (Benartzi & Thaler) |
| 26:39 | First implementation of SMarT plan |
| 26:55 | 3. Need for expanded field research (1) |
| 28:26 | 3. Need for expanded field research (2) |
| 29:38 | Asset allocation |
| 30:15 | 4. Channeling existing economic interests |
| 32:15 | Economist as therapist needs to identify commercial/government interests aligned with those of individuals |
| 33:40 | Some projects.. |
| 34:28 | Warfarin Adherence (project with Kevin Volpp & Stephen Kimmel) |
| 34:54 | Warfarin (Coumadin): Anti-stroke medication |
| 37:55 | Importance of process.. |
| 39:41 | Our solution.. |
| 40:24 | How do we know if they took their warfarin? |
| 41:43 | Planned study |
| 42:52 | But, first need to prove it works.. |
| 44:27 | Rates of non-adherence |
| 45:09 | Weight Loss Study |
| 46:44 | Incentive conditions |
| 48:14 | First month (1) |
| 48:29 | First month (2) |
| 48:51 | Results to date (4 months into study) (1) |
| 49:16 | Results to date (4 months into study) (2) |
| 49:22 | Saving (in progress; need partner!) |
| 50:56 | Usual Assumption: People don’t care about retirement |
| 50:58 | Alternative approach: lottery-based rewards |
| 51:34 | Conclusion |
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Hello,
Great lecture I have already linked to it from my website
http://www.simoleonsense.com
Miguel
I want to date this man's daughters.
The joy of seeing the beauty of a mind like this is... indescribable.
Thank you.
I am so excited thinking about ways of implementing his ideas in my organisation.
And, of course, my life
Thank you