Abstract
This chapter presents a novel methodology for diagnosing policy-relevant behavioral mechanisms: the MSI framework, whereby the acronym stands for motivation, self-control, and inattention problems. This framework is motivated by the fact that, while individuals respond to financial incentives, they also respond to a broad range of behavioral mechanisms. As such, public policies designed for the “ideal citizen” usually face important limitations. This chapter introduces the MSI framework, explaining each behavioral mechanism and providing examples of how they manifest in widespread social problems across a range of applications.
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Notes
- 1.
This occurs when the individual exhibits reluctance to accept a deal with an uncertain return, rather than another deal with a more certain but possibly lower expected return. This mechanism has implications for the demand for insurance, for example, since this product is useful for preventing losses, but only makes sense when the buyer is risk-averse.
- 2.
See https://www.aplaudaumprofessor.com/. Similar initiatives are the campaigns “honor a teacher,” “thank a teacher,” and “thank you, teacher.”
- 3.
In economics, we call temporal inconsistencies when the intertemporal dimension of public policies is taken into account, so that a decision that seems optimal in the short run may not be so in the long run. According to its creators (Finn E. Kydland and Edward C. Prescott), intertemporal inconsistency would happen because individuals’ expectations about the policies to be followed in the future by the government have a great impact on the present behavior of policies, so that if citizens are sure that the government will maintain a certain policy, which is well accepted, then the government can “afford” to deviate from this policy in the short run, because individuals will continue to believe that the policy holds in the long run. Analogously, applied to the behavioral sciences, this is when they will have certain behaviors in the long run, but this is not when the “future” arrives.
- 4.
Present bias is a leading explanation for important public problems such as low savings. Your “present self” might not be so willing to save today, deferring the costs of foregoing consumption to the “future self” – who she thinks will willfully bear these costs.
- 5.
Economists split present-biased subjects into “sophisticated” ones, those who anticipate that they will not follow through on past plans even in the future, and “naive” ones, who do not anticipate their intertemporal inconsistencies.
- 6.
Inequality aversion represents preferences that value an equitable distribution of resources. Inequity-averse subjects are willing to punish others who deviate from that behavior, even at a cost.
- 7.
Reciprocity represents preferences that value treating others the same way they feel they are treated by them. Negative reciprocity entails that subjects may respond to offers considered unfair in a harsh and even cruel way, while negative reciprocity entails that, when they feel well-treated, people respond with fair offers.
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Lichand, G., Serdeira, A.d.P., Rizardi, B. (2023). Diagnosing Behavioral Mechanisms Behind Public Problems: The MSI Framework. In: Behavioral Insights for Policy Design. Springer, Cham. https://doi.org/10.1007/978-3-031-33034-6_4
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