Home > Uncategorized > Beyond behavioral economics: the self-governance of nudging

Beyond behavioral economics: the self-governance of nudging

from Maria Alejandra Madi

Looking back, after the Second World War, new theoretical and applied work in economics fostered empirical techniques that included structural estimation, the development of input-output methods and linear programming. Among the theoretical advances, the Keynesian revolution, the mathematical modeling of the business cycle, game theory, dynamic modeling, new models of consumer behavior and general equilibrium analysis can be highlighted.

What is significant about these changes is that, as theoretical and empirical work became more formal and mathematical, the conceptions of economic theory and of its relationship to various types of applied work changed. “Measurement without theory”, as Rutledge Vining explained, means that empirical work was needed in order to discover the appropriate theory. The ensuing debates were dominated by this view, that also included Milton Friedman’s contribution that turned out to be one of the most widely read methodological essays in economics.

By the 1970s, mainstream economics was centered on mathematical modeling of maximizing agents and econometric models were widely spread in applied work. Consequenlty, economics was becoming more methodologically homogeneous despite the protests from heterodox economists. In this setting, new theories for specific fields in economics were developed. As Backhouse and Cherrier claimed, there has been a process of unification and fragmentation in economics.  read more

  1. political economist
    March 20, 2019 at 3:10 am

    Of course, there is also contractual self-nudging for people of two minds. For example you can make a weight-loss contract with yourself and specify your own terms.

  2. Ikonoclast
    March 20, 2019 at 8:53 am

    I don’t see how nudging is beyond behavioral economics if it is trying to influence economic behaviors. Also, how is nudging not sly manipulation? One could even call nudging, subliminal behavior modification, like subliminal advertising which is often banned. Of course, it would not possible to ban nudging. It would be too difficult to define, prove and subject to compliance.

    A cynic might say nudging is what most humans do all the time when not using violence. Also, spontaneous nudging and organized, institutionalized or corporate nudging might look very different.

    I’m not sure what the self-governance of nudging would look like. Does it mean lots of libertarians allowed to slyly manipulate each other under a minarchist state? Could it just as easily mean commune members gently reeducating each other?

    However, please ignore me if I have failed entirely to understand the topic.

  3. Helen SAKHO
    March 22, 2019 at 3:04 am

    I must admit I, too, am rather confused. Very good questions.

  4. Ikonoclast
    March 22, 2019 at 2:19 pm

    I refer to the sentence:

    “However, on behalf of the human cognitive biases, people need a helping hand of the government to be rational and exercise self-control.”

    It might be better to word this differently. Maybe we could try the simple:

    “People need a helping hand from other people to be rational and exercise self-control.”

    This puts the issue in its socially embedded context and does not presume any particular kind of state. It does recognize community and the fundamental human need to be part of a nurturing and mutually helping community. Having said that we do need certain democratic state actions, for example banning junk food advertising.

    Modern temptations like drugs, junk food, consumer items and various entertainment medias along with advertising itself are all socially engineered to bombard people with more temptations and more endorphin-promoted addictions than they ever evolved to deal with, as hunter-gatherer homo sapiens wandering the plains of north-east Africa only about 200,000 years ago. It’s no wonder many people struggle to resist when the entire neoliberal ideology promotes all these things. The full course of civilization has affected human evolution (increased prevalence of the gene for continued lactase enzyme production for example) but the rise of modern capitalism is way too recent for us to have evolved traits of resistance to all its hedonistic blandishments. Indeed the junk food assault is barely 2 generations old (40 to 50 years).

  5. lobdillj
    March 22, 2019 at 3:02 pm

    Nudging…what an interesting concept. This practice is absent in science and math. It is an essential distinction between science and economics.

  6. Maria Alejandra Madi
    March 22, 2019 at 3:42 pm

    Hi,

    Thanks for your clarification.

    I understand your argument. But in my relfection , the wording cannot be… People need a helping hand from other people to be rational and exercise self-control.”

    Nudging, according to Thaler and Sunteins´s proposal requires a Libertarian Paternalist state helping people to act rationally.

    Maria

    • March 23, 2019 at 1:16 am

      If nudging doesn’t do it, one is nicked for a few bucks at an increasing rate per incident.

  7. Ken Zimmerman
    March 29, 2019 at 6:27 am

    Behavioral economics exists for two reasons. One, to give economics a “new look” without changing any of the basics of the profession. Two, to provide economists with another way to ascend both the academic ladder and the policy control ladder. Economists preach the same old crap but put on a new tailored suit to look brand new. Every social science has at one time or another attempted this show. Economics is grabbing for a lot more than the others ever tried to, however.

    In “Nudge: Improving Decisions About Health, Wealth, and Happiness,” Richard H. Thaler and Cass R. Sunstein, write, “As we shall see, small and apparently insignificant details can have major impacts on people’s behavior. A good rule of thumb is to assume that ‘everything matters.’ In many cases, the power of these small details comes from focusing the attention of users in a particular direction.” Interesting but not new. Psychologists have studied and clinicians have used cues to treat for nearly 100 years. Thaler and Sunstein write, “both business and governments can use the power of social influence to promote many good (and bad) causes.” Both psychologists and sociologists have for some time considered how cues and other forms of subtle signaling can affect people’s actions. Thaler and Sunstein mention only three forms of such signaling, information, peer pressure, and priming. In the end the only contributions Thaler and Sunstein make, beyond the other social sciences is to add a new term to the literature, “choice architects” and to claim the cues they list can be used to change people’s choices. It’s been shown that cues can affect the behavior of people, but it’s not been shown that cues can affect the choices people make. In other words, people can be behaviorally modified to perform one action rather than another but it’s unlikely that people’s cultural understandings and history of choices can be changed by cues, or what Thaler and Sunstein call nudges. That’s why cues (nudges) work for hitting the urinal but not for urinating outdoors rather than indoors. (read the book; it’s explained there)

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