ABSTRACT
Ethics, social norms and incentives come together in achieving progress towards a more efficient and responsible economy. The most effective way of changing society depends upon the particular circumstances. There has never been an easy and painless way to achieve fundamental reform, as seen from the history of the suffragettes through to the abolition of slavery and in our time, Civil Rights movements. This chapter examines somewhat agnostic view to the psychological and behavioural approaches gaining popularity in economics. They are the least cost and most effective way of overcoming market imperfections and inefficiencies. A standard economic analysis does not require members of the population to have the simplistic characteristics of homo economicus and does not have a problem in incorporating ethics and social norms into the analysis. Modern economists, perhaps in keeping with contemporary society in general, tend to be more comfortable talking about social norms than ethics. Social norms are predominantly about coordinating behaviour across individuals.
