The Behavioral Foundations of Policy
Behavioral research on consumer decision-making does not demonstrate that the rational choice model of economics is fundamentally wrong, only that it is overly idealized and, in some crucial ways, misleading. People certainly do strive to make decisions that will consistently serve their own interests. But as behavioral economist Richard Thaler puts it, human beings fall well short of this ideal because they suffer from “bounded rationality, bounded will power and bounded selfishness.” To the extent that these limitations influence the way people respond to social policies and participate in social programs, the design of social policy might well be made more effective by taking these limitations into account.
Eldar Shafir, a psychologist at Princeton University and a member of RSF’s Behavioral Economics Roundtable, has organized a conference at the Woodrow Wilson School of Public Policy in October 2007 that will bring together a stellar cast of behavioral economists, social and cognitive psychologists, and legal scholars to review recent behavioral research and examine its implications for the design of social programs in a number of important policy domains. The conference included over twenty-five papers, which were published in an edited volume, The Behavioral Foundations of Public Policy.