Working Paper: NBER ID: w22671
Authors: Robert French; Philip Oreopoulos
Abstract: Behavioral economics incorporates ideas from Psychology, Sociology, and Neuroscience to better predict how individuals make long-term decisions. Often the ideas adopted include present or inattention bias, both potentially leading to sub-optimal outcomes. But these models also point to opportunities for effective, low-cost government policies that can have meaningful positive effects on people’s long-term well-being. The last decade has been marked by a growing interest from governments the world over in using behavioral economics to inform policy decisions. This is true of Canada as well. In this paper we discuss the increasingly important role behavioral economics plays in Canadian public policy. We first contextualize government policies that have incorporated insights from behavioral economics by outlining a collection of models of intertemporal choice. We then present examples of public policy initiatives that are based upon findings in the field, placing particular emphasis on Canadian initiatives. We also document future opportunities, challenges, and limitations.
Keywords: Behavioral Economics; Public Policy; Canada
JEL Codes: J10; J18; J24; J48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| behavioral economics (D91) | more effective government interventions (H10) |
| presumed consent policies for organ donation (K16) | significantly increase consent rates (K16) |
| simplifying processes (e.g., FAFSA application) (I23) | increased participation rates (J49) |
| interventions that increase the salience of choices (D91) | better decision-making (D91) |
| changing default enrollment options in pension plans (H55) | increased participation rates (J49) |