It's Friday night and I'm getting ready for a night of clubbing. Just one more post ...
I just reviewed a nudge style paper, and it was cool, but the extensions don't seem to be there:
Or take a recent study in Sacramento, Calif., that tried to curb household electricity consumption. (Prime Minister Cameron has repeatedly cited this research.) While traditional energy bills inform customers only about their own consumption, these bills directly compared them with their neighbors. The hope was that homeowners would compete to use less energy. But usage fell only about 1.5%. That won't do much for energy independence or to fight climate change.
There are two problems with these reforms inspired by behavioral economics. The first is that the nudges of policy makers must compete against the nudges of the marketplace. A fast-food meal might contain a frightening number of calories, but it's also delicious. (Fat and sugar taste good.) In these cases, the nudge that appeals to our irresponsible side often wins.
The second problem is that such nudges are ill-equipped to solve thorny societal problems. Take energy consumption. As the behavioral economists George Loewenstein and Peter Ubel have pointed out, the most effective way to reduce energy consumption is to increase its cost through higher taxes on carbon. That solution, of course, isn't popular or trendy, which is why most politicians aren't interested. Nevertheless, such an old-fashioned fix, rooted in the assumptions of classical economics, would be far more effective than a redesigned electricity bill. Sometimes, we don't need a nudge. We need a shove.
via online.wsj.com
So, say we impose voluntary contribution type climate policies but we force firms to opt-out instead of allowing them to opt-in. Would we get more voluntary contributions?
