University of California, Berkeley
To develop and deploy methodologies for quantifying the costs and benefits of nudges, accounting for their psychological effects
This grant funds a series of experiments designed by University of California, Berkeley economist Dmitry Taubinsky, to examine the welfare effects of nonfinancial policy interventions (NPIs). NPIs, more commonly known as “nudges,” are policy interventions designed to increase the attractiveness of prosocial behaviors through means other than decreasing the financial cost of that behavior. Examples include informational labels on products, salient reminders, default options, and praise and public recognition for desired behavior. Because nudges involve motivating people using nonfinancial means, quantifying the costs and benefits of NPIs is conceptually challenging. What if some people really liked what they were doing before they were nudged? What if some people don’t like being nudged at all, regardless of whether what is suggested would be good for them? What’s needed is a larger theoretical framework for evaluating the costs and benefits of nudges, a framework that includes the larger psychological costs that nudging may impinge on those who find themselves subject to it. In a series of experiments, Taubinsky will begin to develop such a framework, focusing on three issues. First, what is the proper way to measure whether information nudges are well targeted in the sense that they change the behavior of people making the biggest mistakes? Second, what is the proper way to measure the psychological costs and benefits of motivating behavior by leveraging shame and pride through public recognition? And third, what is the proper way to measure the discomfort that some people experience when moral suasion and other social factors create demands to act in prosocial ways? Grant funds will allow Taubinsky to field a series of experiments on each topic, along with a detailed analysis of his findings. Three peer-reviewed articles are anticipated.