This year, the PFC’s annual conference will focus on “Behavioral Economics, Law, and Health Policy” (the call for abstracts deadline is next week). Apropos, last week, Reuters featured a story by Jill Priluck “The Overselling of Behavioral Economics,” which itself seems to be a press release for a new article by NYU’s Rick Pildes and Ryan Bubb, called “How Behavioral Economics Trims its Sails and Why.” In several fields, including consumer finance, Pildes and Bubb chronicle examples where policymakers tried to put behavioral economics principles into practice, and seem to have failed to produce desired results or have caused unintended consequences. Some of their examples are controversial (in terms of both the interventions tried and the success of the outcomes), but those points are best addressed by the experts in those fields.
As health law considers its relationship to behavioral economics, I think a larger point is in order. Allow me to be provocative: there is no such thing as behavioral economics.
Instead, the core of what we have called “behavioral economics” is just a set of observations (usually from lab experiments) where idealized and assumption-laden economic models have failed to actually predict human behavior. At least at this stage of its development, behavioral economics is best understood as a negative project, not a positive one. Of course, we do put labels on those documented failures like “regret aversion” or “social norming” or “optimism bias,” and it is then tempting to make things out of those labels. Instead, when the limits of those simplistic economic models are found, that should simply return social scientists and policymakers to a domain of open-minded common sense about how people will actually behave when we take them outside the lab and try to regulate them.
While the behavioral economics literature does provide its own theoretical frameworks, which can generate new hypotheses, the best teaching of behavioral economics is simply fallibilism and empiricism. That is why the “Nudge Unit” (aka Behavioral Insights Team) in the United Kingdom has prioritized the use of randomized experimentation to evaluate every “nudge” that it tries, and the sister initiative here in the United States is doing likewise. I am optimistic of that approach.