Course Overview: The goal of the course is to equip students with concepts and tools used to design, develop and implement policies from a behavioral angle. The course examines the contribution of different methods, from laboratory to field experiment in the development of behavioral public policies. We will use the contribution made by behavioral sciences in gaining a deeper understanding of human behavior both as research outputs and as inputs that affect the design of policies.

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We will ask: How does the knowledge generated in behavioral sciences may help to design more effective policies? Conversely, how does policies shape agents’ behavioral change? We will study policies implemented by governments and organizations using a collection of case studies in different areas. We will also study the techniques used by governments to fine tune policies and applications from the lessons learned in controlled studies. Finally, we will grapple with the normative limits of behavioral interventions.

The final paper: Instructions
You need to submit a 20-page paper with a behavioral policy design or a policy trial, the document should not be longer than 20 pages in total (including tables)

Themes (examples)

  • Consumers (pricing, biases)
  • Markets (bubbles, price rules)
  • Finance (decision making, retail investors)
  • Tax compliance (or compliance, honesty)
  • Bureaucracy (corruption or motivation)
  • Public goods (green policies/health, donations, nutritional choices)
  • Poverty/development (traps, exclusion, cash or in-kind transfers)
  • Conflict (violence, reintegration)

Sections
Motivation

  1. Policy relevance (for general population, for policymakers)
  2. Academic relevance (design novelty)
  3. Background (what we know, not a full literature review)
  4. Research question (treatment effects, and behavioral channels)
  5. Hypotheses (linked with previous results or models, specific)

Design

  1. Target population (demographics, heterogeneity)
  2. Sample (accessibility, generalizability)
  3. Randomization (treatments, assignment, procedures)
  4. Treatments (number, manipulations)
  5. Procedures (experimental, cost, messages, instructions)
  6. Behavioral drivers or channels (tests, coming from the design)

Quantitative analysis

  1. Identification strategy (treatment effects, drivers and channels)
  2. Correlation versus causality (targeting one, explaining how)
  3. Econometric or statistical method (sampling, statistical power)
  4. Effects (significance versus magnitude, relevance, persistence)

Discussion (speculative)

  1. Possible results
  2. Policy lessons

A few issues

  • The use of experiments/RCT has to do with the methods used to gather evidence for policy purposes, not necessarily with the content and insights of such evidence
  • Be ambitious, provocative, and innovative
  • Professor said he has read every single behavioral paper written in the last 500 years, so do not Copy the design of a paper, mimick an intervention not valued

SYLLABUS and Reading
\January 22: The architecture of choice
Readings

  • Lunn, P. D. (2013). Behavioral economics and policymaking: learning from the early adopters. The Economic and Social Review, 43(3, Autumn), 423-449.
  • Oliver, A. (2015). Nudging, Shoving, And Budging: Behavioral Economic‐Informed Policy. Public Administration, 93(3), 700-714.
  • Sunstein, C. R. (2014). Nudging: a very short guide. Journal of Consumer Policy, 37(4), 583-588.

January 29: The Irrational Exuberance of Consumers: Prices as noisy signals
Readings

  • Huck, S. and Wallace, B. (2010). The impact of price frames on consumer decision making. UK Office of Free Trading Report 1226.
  • Reisch, L. A. and Zhao, M. (2017). Behavioral economics, consumer behavior and consumer policy: state of the art. Behavioral Public Policy, 1(2), 190-206.
  • Mehta, J. (Ed.). (2013). Behavioral economics in competition and consumer policy. ESRC Centre for Competition Policy (CCP), 4

February 5: The Irrational Exuberance of Markets: Behavioral Regulation
Readings

  • Eckel, C. C. and Füllbrunn, S. C. (2015). Thar she blows? Gender, competition, and bubbles in experimental asset markets. The American Economic Review, 105(2), 906-920.
  • Malkiel, B. G. (2003). The efficient market hypothesis and its critics. The Journal of Economic Perspectives, 17(1), 59-82.
  • Mehta, J. (Ed.) (2013). Behavioural economics in competition and consumer policy. ESRC Centre for Competition Policy (CCP), 6

February 12: Psychological Biases and Financial Regulation
Readings

  • Chater, N., Huck, S., and Inderst, R. (2010). Consumer decision-making in retail investment services: A behavioral economics perspective. Report to the European Commission/SANCO.
  • Diamond, P. and Vartiainen, H. (Eds.). (2012). Behavioral economics and its applications. Princeton University Press.Ch. 2
  • Hirshleifer, D. and Teoh, S. H. (2017). How psychological bias shapes accounting and financial regulation. Behavioral Public Policy, 1(1), 87-105

February 19: Behavioral Science and Tax Compliance
Readings

  • Congdon, W., J. R. Kling, and S. Mullainathan (2009). Behavioral Economics and Tax Policy. NBER Working Paper 15328
  • Kettle, S., Hernandez, M., Ruda, S., & Sanderson, M. A. (2016). Behavioral interventions in tax compliance: evidence from Guatemala. World Bank Policy Research WP 7690
  • Hernandez, M., Jamison, J., Korczyc, E., Mazar, N., and Sormani, R. (2017). Applying Behavioral Insights to Improve Tax Collection. International Bank for Reconstruction and Development-World Bank.

February 26: The Bright and Dark side of Bureaucracy
Readings

  • Banuri, S. and C Eckel (2012). Experiments in Culture and Corruption. Policy Research Working Paper 6064, World Bank Impact Evaluation Series
  • Banuri, S. and Keefer, P. (2016). Pro-social motivation, effort and the call to public service. European Economic Review, 83, 139-164.
  • Barr, A., Packard, T., and Serra, D. (2014).. European Economic Review, 68, 250-269.

March 12: The Provision of Public Goods: Environmental Policies and Beyond
Readings

  • Schubert, C. (2017). Green nudges: Do they work? Are they ethical? Ecological Economics, 132, 329-342.
  • Goswami, I., and Urminsky, O. (2016). When Should the Ask Be a Nudge? The Effect of Default Amounts on Charitable Donations. Journal of Marketing Research, 53(5), 829-846.
  • Stutzer, A., Goette, L., and Zehnder, M. (2011). Active decisions and prosocial behaviour: a field experiment on blood donation. The Economic Journal, 121 (556).

March 19: Health Care Policies and the Prevention of Unhealthy Choices
Readings

  • Bhargava, S., Loewenstein, G., & Benartzi, S. (2017). The costs of poor health (plan choices) & prescriptions for reform. Behavioral Science & Policy, 3 (1), 1–12.
  • Diamond, P., and Vartiainen, H. (Eds.). (2012). Behavioral economics and its applications. Princeton University Press.Ch. 6
  • Peters, J., Beck, J., Lande, J., Pan, Z., Cardel, M., Ayoob, K., and Hill, J. O. (2016). Using healthy defaults in Walt Disney World restaurants to improve nutritional choices. Journal of the Association for Consumer Research, 1(1), 92-103.

March 26: Behavioral Consequences of (and Some Remedies to) Poverty
Readings

  • Bryan, C. J., Mazar, N., Jamison, J., Braithwaite, J., Dechausay, N., Fishbane, A. & Karlan, D. (2017). Overcoming behavioral obstacles to escaping poverty. Behavioral Science & Policy, 3(1), 80-91.
  • Hoff, K. and Walsh, J. S. (2017). The whys of social exclusion: insights from behavioral economics. World Bank Policy Research Working Paper
  • World Bank (2015). Mind, Society and Behavior. 2015 World Development Report, Washington. Ch. 4

April 2: Behaviorally Inspired Development Interventions
Readings

  • Cardenas, J.C., Carpenter, J. (2008). Behavioural Development Economics: Lessons from Field Labs in the Developing World. Journal of Development Studies 44(3): 311-338.
  • Diamond, P. and Vartiainen, H. (Eds.). (2012). Behavioral economics and its applications. Princeton University Press. Ch. 3
  • World Bank (2015). Mind, Society and Behavior. 2015 World Development Report, Washington DC. Ch. 2.

April 9: Violence and behavior: Post-conflict reintegration policies  
Readings

  • Bauer, M., Cassar, A., Chytilová, J. and Henrich, J. (2014). War’s enduring effects on the development of egalitarian motivations and in-group biases. Psychological science, 25(1), 47-57.
  • Bogliacino, F., Grimalda, G., Ortoleva, P. and Ring, P. (2017). Exposure to and recall of violence reduce short-term memory and cognitive control. Proceedings of the National Academy of Sciences, 201704651.
  • Ditlmann, R. K., Samii, C. and Zeitzoff, T. (2017). Addressing Violent Intergroup Conflict from the Bottom Up? Social Issues and Policy Review, 11(1), 38-77.

April 16: The normative limits of behavioral public policies
Readings

  • Heap, S. P. H. (2017). Behavioral public policy: the constitutional approach. Behavioral Public Policy, 1(2), 252-265.
  • Reisch, L. A., Sunstein, C. R. and Gwozdz, W. (2017). Beyond carrots and sticks: Europeans support health nudges. Food Policy, 69, 1-10.

Sugden, R. (2017). Do people really want to be nudged towards healthy lifestyles? International Review of Economics, 64(2), 113-123.