Applying Insights from Behavioral Economics to Policy Design
Brigitte C. Madrian
Annual Review of Economics / NBER · 2014
Abstract
Reviews how behavioral insights—especially defaults, simplification, framing, and the timing of decisions—can be deployed to improve policy outcomes in savings, health, and education, and where their effects are largest.
Methodology
A structured review of field evidence on behavioral policy interventions, comparing the effect sizes of defaults, active-choice requirements, and information/simplification interventions.
Findings
Defaults are consistently among the most powerful and low-cost interventions (automatic enrollment dramatically raises participation), while information and financial-education interventions are comparatively weak; the effectiveness of a nudge depends heavily on context and the strength of pre-existing preferences.
Applied nudge
Reach for defaults and friction-reduction before information campaigns—changing the path of least resistance moves far more behavior than telling people what to do.
Citation
Madrian, B. C. (2014). Applying insights from behavioral economics to policy design. Annual Review of Economics, 6, 663-688.
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