Document Type
Article
Publication Title
Public Choice
Publication Date
8-2019
ISSN
ISSN: 0048-5829
Page Number
465
Keywords
benefit-costs, policy, financial incentives
Abstract
This article outlines benefit-cost criteria for nudges and behavioral norms for a wide range of policy situations. The principal benefits from well-designed policies usually derive from promoting efficient behaviors, but counterpart costs may also be generated by discouraging efficient behaviors. The distinguishing economic characteristic of nudges is not only that they are less intrusive interventions that nudge rather than mandate behavior, but that they exploit additional policy dimensions other than financial incentives. Policies utilizing financial incentives have a cost advantage over nudges to the extent that they involve transfers, which are not net social costs. Failure to understand this cost distinction has led to overestimation of the cost-effectiveness of nudges compared to financial incentives. Financial incentives are flexible and can be varied continuously on a single dimension. Nudges usually involve indivisible components, but their stringency sometimes can be varied by utilizing nudges on multiple policy dimensions.
Recommended Citation
W. Kip Viscusi,
Efficiency Criteria for Nudges and Norms, 191 Public Choice. 465
(2019)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/1687