Foundations of Behavioral Economics and the Nudge Agenda
Behavioral economics and the so-called nudge agenda have never been hotter than following Richard H. Thaler s Nobel award in late 2017. They have also never been more hotly debated. Unfortunately, the debate is often unproductive - the reason being that it is associated with demonstrably false assumptions and considerable conceptual confusion. The aim of the present project is to examine what behavioral economics and the nudge agenda are, and to assess various arguments for and against. This work is important because it promises a better understanding of contemporary economics, where it is coming from and what it is going. But it is also important because many governments (including that of Sweden) are in the process of implementing the nudge agenda through so-called "nudge units," and research can shed light on their promise and limitations. The main output of the project is a book manuscript, to be published by a major academic publisher, that will argue that the differences between orthodox and behavioral economics are smaller than many people think. None of this means that behavioral economics and the nudge agenda are free from problems, but the problems are by and large the same as those of neoclassical economics. The author has separate PhDs in philosophy and economics, and has previously published a successful textbook in behavioral economics. The book synthesizes about 15 years of work on the topic.
Final report
The project, which was approved on June 7, 2018, was run mainly during calendar year 2019. For this period, I was employed at the Institute for Futures Studies in Stockholm. The Institute provided effectively ideal conditions for interdisciplinary, policy-relevant research at the highest level. The period did indeed prove to be highly productive. During the term of the grant I had around ten opportunities to present my ideas in front of varied audiences in Sweden and abroad (see below). Two of the more extensive trips, to Santa Fe and San Diego, were funded by the grant. Within the context of the project, I planned a longer research visit to the University of North Carolina—Chapel Hill. The University has a sizable contingent of philosophers working in my area, Philosophy, Politics, and Economics. The visit was scheduled to coincide with the annual conference of the international PPE Society in New Orleans. The entire trip, which was scheduled for March 2020, had to be cancelled for the obvious reason.
My work has resulted in a book manuscript to be published by Princeton University Press, with a foreword by the leading behavioral economist George Loewenstein, from Carnegie Mellon University. The book offers a survey and general assessment of behavioral economics and the so-called nudge agenda, both of which have attracted a great deal of attention as of late.
The text is divided into two parts. The first one focuses on descriptive theory: the effort to integrate modern psychology into the foundations of contemporary economics. The principal conclusion of this part is that the effort, contrary to what some critics alledge, has become almost completely accepted within mainstream economics. Just like Milton Friedman once said that “We’re all Keynesians now,” at this point we could truly say: “We’re all behavioral economists now.”
The second part focuses on normative applications, where the descriptive theory is used to articulate and justify a range of political and other interventions – often described as “nudges.” The principal conclusion of this part is the fundamental principles of the nudge agenda are effectively identical to the fundamental principles of design (including industrial design), as a means of promoting human welfare by improving the world in which we live and work. The entire program, then, comes across as mostly harmless – a lot less promising than its proponent claim, but a lot less threatening than its critics charge. Because the fundamental principles of design are immediately intuitive and at any rate widely accepted, this conclusion offers further support for the thesis that we’re all behavioral economists now.
Meanwhile, I’ve published a small number of other texts, all of which are open access and at least to some extent aimed at a wider audience (see Appendix). An article in the Journal of Economic Methodology quickly attained the highest Altmetric rating ever attained in the Journal. An article in the Swedish-language popular-philosophy outlet Filosofisk tidskrift explored some problems with a prominent contemporary proposal for a Swedish “nudge unit.” And a brief essay in the daily newspaper Expressen explored some ideological undercurrents in contemporary Swedish politics.
Beyond these texts, the project has led to a much larger and broader social network than I had before. My time at the Institute afforded me the opportunity to get to know and exchange ideas with the other employees. There are about 50 of them, including a sizable minority of philosophers like myself. During internal seminars, lunch and coffee breaks, I had the opportunity to explore all sorts of issues, and the feedback that I received turned out to be invaluable. In addition, the Institute offers a dense calendar of conferences, workshops, and seminars with external speakers. As an employee I was invited to most of these, which allowed me to meet a whole range of top-notch researchers from across the globe.
Finally, the Institute has a highly competent Media Department, which helped me raise my profile in social and established media. Thanks for their efforts, I was interviewed a few times by local newspaper, and was invited to appear on the radio and television a couple of times. The media operation also advertised my work in social and other channels, which helped me gain readers and followers on Twitter and Instagram. The Media Department is ready to assist when I launch the book, which means that I will continue to benefit from their work even after the end of the grant.
Although I’ve returned to my day job at Stockholm University, I will retain an affiliation as Researcher at the Institute, which means that we will continue to associate, presumably for mutual benefit, both in the long and the short run.
APPENDIX: PRESENTATIONS
“Nudging – möjlighet eller hot?” Kulturhuset i Borås (2020)
“Are We All Behavioral Economists Now?,” Allied Social Sciences Association Meetings (San Diego, 2020)
“Why the Science of Well-Being Needs the Philosophy of Well-Being — and Vice Versa,” Copenhagen University (2019). Also delivered at the Rotman Institute for Philosophy, University of Western Ontario (2019).
“We’re (Still) All Behavioral Economists Now,” Soul of Economics Conference (University of Zürich, 2019)
“The Objectivity of Rationality,” Objectivity in Social Research Workshop (University of Bergen, 2019)
“Nudging as Design,” Normative Ethics and Welfare Economics Conference (University of Pennsylvania, 2018)
“What is Economics About?,” Stockholm Region Workshop on Economics and Philosophy (Stockholm University, 2018)
“Nudging as Design,” Keynote Address at the Applied Ethics of Nudging Conference (University of Stirling, 2018)
“Why Science Needs Philosophy – And Vice Versa,” Workshop on Economics and Philosophy (Santa Fe, 2018)
My work has resulted in a book manuscript to be published by Princeton University Press, with a foreword by the leading behavioral economist George Loewenstein, from Carnegie Mellon University. The book offers a survey and general assessment of behavioral economics and the so-called nudge agenda, both of which have attracted a great deal of attention as of late.
The text is divided into two parts. The first one focuses on descriptive theory: the effort to integrate modern psychology into the foundations of contemporary economics. The principal conclusion of this part is that the effort, contrary to what some critics alledge, has become almost completely accepted within mainstream economics. Just like Milton Friedman once said that “We’re all Keynesians now,” at this point we could truly say: “We’re all behavioral economists now.”
The second part focuses on normative applications, where the descriptive theory is used to articulate and justify a range of political and other interventions – often described as “nudges.” The principal conclusion of this part is the fundamental principles of the nudge agenda are effectively identical to the fundamental principles of design (including industrial design), as a means of promoting human welfare by improving the world in which we live and work. The entire program, then, comes across as mostly harmless – a lot less promising than its proponent claim, but a lot less threatening than its critics charge. Because the fundamental principles of design are immediately intuitive and at any rate widely accepted, this conclusion offers further support for the thesis that we’re all behavioral economists now.
Meanwhile, I’ve published a small number of other texts, all of which are open access and at least to some extent aimed at a wider audience (see Appendix). An article in the Journal of Economic Methodology quickly attained the highest Altmetric rating ever attained in the Journal. An article in the Swedish-language popular-philosophy outlet Filosofisk tidskrift explored some problems with a prominent contemporary proposal for a Swedish “nudge unit.” And a brief essay in the daily newspaper Expressen explored some ideological undercurrents in contemporary Swedish politics.
Beyond these texts, the project has led to a much larger and broader social network than I had before. My time at the Institute afforded me the opportunity to get to know and exchange ideas with the other employees. There are about 50 of them, including a sizable minority of philosophers like myself. During internal seminars, lunch and coffee breaks, I had the opportunity to explore all sorts of issues, and the feedback that I received turned out to be invaluable. In addition, the Institute offers a dense calendar of conferences, workshops, and seminars with external speakers. As an employee I was invited to most of these, which allowed me to meet a whole range of top-notch researchers from across the globe.
Finally, the Institute has a highly competent Media Department, which helped me raise my profile in social and established media. Thanks for their efforts, I was interviewed a few times by local newspaper, and was invited to appear on the radio and television a couple of times. The media operation also advertised my work in social and other channels, which helped me gain readers and followers on Twitter and Instagram. The Media Department is ready to assist when I launch the book, which means that I will continue to benefit from their work even after the end of the grant.
Although I’ve returned to my day job at Stockholm University, I will retain an affiliation as Researcher at the Institute, which means that we will continue to associate, presumably for mutual benefit, both in the long and the short run.
APPENDIX: PRESENTATIONS
“Nudging – möjlighet eller hot?” Kulturhuset i Borås (2020)
“Are We All Behavioral Economists Now?,” Allied Social Sciences Association Meetings (San Diego, 2020)
“Why the Science of Well-Being Needs the Philosophy of Well-Being — and Vice Versa,” Copenhagen University (2019). Also delivered at the Rotman Institute for Philosophy, University of Western Ontario (2019).
“We’re (Still) All Behavioral Economists Now,” Soul of Economics Conference (University of Zürich, 2019)
“The Objectivity of Rationality,” Objectivity in Social Research Workshop (University of Bergen, 2019)
“Nudging as Design,” Normative Ethics and Welfare Economics Conference (University of Pennsylvania, 2018)
“What is Economics About?,” Stockholm Region Workshop on Economics and Philosophy (Stockholm University, 2018)
“Nudging as Design,” Keynote Address at the Applied Ethics of Nudging Conference (University of Stirling, 2018)
“Why Science Needs Philosophy – And Vice Versa,” Workshop on Economics and Philosophy (Santa Fe, 2018)