Abstract
Nudges are increasingly popular, in large part due to the typically low costs required to implement them. Yet most often the main cost of nudging is due not to their implementation, but rather to the opportunity costs of its successful change of the behavior of its targets. Accounting for these target opportunity costs is essential for the appropriate assessment of the welfare effects of nudges. Nonetheless, the extant literature on behavioral policies largely ignores these costs or underestimates their magnitude and, consequently, overestimates the net benefits of nudges. At times, nudges remain the most attractive policy alternative even after their opportunity costs are accounted for. On other occasions, however, traditional instruments or a no-intervention approach turn out to make more efficient policy alternatives.
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Notes
- 1.
- 2.
BIT (2018).
- 3.
- 4.
Sunstein (2016).
- 5.
Sunstein (2018a).
- 6.
European Commission (2016).
- 7.
Sunstein (2018b).
- 8.
European Commission (2017).
- 9.
Boardman et al. (2018).
- 10.
Tor (2019).
- 11.
cf. Aviram and Tor (2004).
- 12.
Sunstein (2018b).
- 13.
European Commission (2017).
- 14.
OECD (2014).
- 15.
Boardman et al. (2018).
- 16.
Sunstein (2018b).
- 17.
Of course, policy makers who face budgetary constraints are likely to be concerned with their government implementation costs irrespective of the policy assessment method they employ (cf. Levin and Belfield 2015).
- 18.
Sibony and Alemanno (2016).
- 19.
Benartzi et al. (2017).
- 20.
Benartzi et al. (2017).
- 21.
cf. Duflo et al. (2006).
- 22.
- 23.
cf. Rizzo and Whitman (2009).
- 24.
Glaeser (2006).
- 25.
- 26.
- 27.
Mueller (2003).
- 28.
- 29.
Thaler and Sunstein (2008).
- 30.
- 31.
cf. Allcott (2011).
- 32.
Altman et al. (2018).
- 33.
- 34.
Tor (2019).
- 35.
Thaler and Sunstein (2008).
- 36.
Thaler et al. (2013).
- 37.
- 38.
Slovic et al. (2006).
- 39.
Loewenstein et al. (2001).
- 40.
Dinner et al. (2011).
- 41.
- 42.
- 43.
Thunstrom et al. (2018).
- 44.
Byerly et al. (2018).
- 45.
Andor and Fels (2018).
- 46.
Thaler and Sunstein (2008), p. 13.
- 47.
- 48.
Benartzi et al. (2017).
- 49.
Benartzi et al. (2017).
- 50.
- 51.
De Jong et al. (2018).
- 52.
Camerer et al. (2003).
- 53.
Thaler and Sunstein (2008).
- 54.
Thaler and Sunstein (2008), p. 242.
- 55.
Sunstein (2018b).
- 56.
Sunstein (2018b).
- 57.
Sunstein (2018b).
- 58.
Allcott (2011).
- 59.
Allcott (2011).
- 60.
Allcott (2011), p. 1089.
- 61.
Allcott (2011).
- 62.
Allcott (2011).
- 63.
Boardman et al. (2018).
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Tor, A. (2021). The Target Opportunity Costs of Successful Nudges. In: Mathis, K., Tor, A. (eds) Consumer Law and Economics. Economic Analysis of Law in European Legal Scholarship, vol 9. Springer, Cham. https://doi.org/10.1007/978-3-030-49028-7_1
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