Should Governments Invest More in Nudging?

June 05, 2017 by Shlomo Benartzi, John Beshears, Katherine L. Milkman, Cass R. Sunstein, Richard H. Thaler, Maya Shankar, Will Tucker-Ray, William J. Congdon, Steven Galing

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Governments are increasingly adopting behavioral science techniques for changing individual behavior in pursuit of policy objectives. The type of “nudge” interventions that governments are now adopting alter people’s decisions without coercion or significant changes to economic incentives. We calculated ratios of impact to cost for nudge interventions and for traditional policy tools, such as tax incentives and other financial inducements, and we found that nudge interventions often compare favorably with traditional interventions. We conclude that nudging is a valuable approach that should be more often in conjunction with traditional policies, but more calculations are needed to determine the relative effectiveness of nudging.