One of the most interesting things about behavioural economics is that it is quite practical. The findings can apply in the public sphere. Such application can often be very direct. Furthermore, many of the ideas generated in behavioural economics are simple tweaks. Tweaks can be very cheap to implement. This, therefore, can make the ideas popular with politicians. After all if you can improve the effectiveness of public policy without more tax why wouldn’t you? What then is the role of behavioural economics in Canada? Especially the impact on public policy.
Research discusses work by agencies in the Canadian government. In doing this the authors divide actions into “low-touch” and “high-touch” nudges. They then say, “…low-touch nudges are often cheaper to implement and focus on making decisions more salient and simpler for the individual” (French and Oreopoulos, 2016). There seems little reason not to do low-touch nudges. These might be redesigning forms to make them easier to fill in. Such actions can often be close to costless. Any benefits gained are a bonus.
High-touch nudges are more expensive. The authors give the example of motivational interviewing. This helps jobseekers move into work. This is beyond what we might normally think of as nudges. Still, governments often already fund this. What is changing is the use of data to inform policy. What works, given how people actually behave, drives policy choices. The policy is tested to check its impact.
These high-touch nudges are likely to be expensive. As such, one may argue about whether these represent good things for public agencies to do. Yet, these are being conducted. Given this hopefully public agencies will try to help people as effectively as they can for the money invested.
The Potential In Canada (And Beyond)
I think the use of behavioural insights to inform action is an exciting trend of recent years. It is, therefore, interesting to see how the authors detail what Canadian agencies are up to.
For more on public policy see here.
Read: Robert French and Philip Oreopoulos (2016) Applying Behavioural Economics to Public Policy in Canada, NBER Working Paper 22671