ABSTRACT
This chapter explores the relationship between behavioural economics and economic policy via five case studies that cover a wide range of policy areas and behavioural insights. First, it considers Katona’s work on the macroeconomic significance of shifting consumer confidence and its significance for Keynesian demand-management policies. Second, it considers the rise and fall of the behavioural theory of the firm and X-efficiency theory and their relationship with Japanese management systems and neoliberal/managerialist policies of microeconomic reform. Third, it examines behavioural approaches to non-price competition in relation to problems of deindustrialization in the UK from the 1970s onwards. Fourth, it considers the ‘heuristics and biases’ underpinnings of the libertarian-paternalist ‘nudge’ approach to economic policy and contrasts the nudge philosophy with more education-based ‘boost’ approaches to enhancing consumer well-being. Finally, it considers the potential role of behavioural insights in relation to contemporary environmental challenges.
