This post is by Francesco Guala (pictured above), Professor of Economics at the University of Milan. In this post, he presents a paper he wrote with Luigi Mittone, Professor of Economics at the University of Trento, and which was published in the journal Review of Philosophy and Psychology. A reply to their article by Cass Sunstein is also available in the same journal.
‘Behavioural economics’ is a research programme that aims at making economic models psychologically more realistic. After many years ‘in the wild’, behavioural economists are now part of the mainstream and have succeeded at bringing microeconomics in line with the developments of cognitive psychology.
Up until recently, however, behavioural economists had been rather shy regarding the normative (i.e. policy) implications of their research. All of this has changed in 2008 with the publication of Nudge, the best-selling book by Cass Sunstein and Richard Thaler. Nudge is not only an impressive showcase for the best social policies inspired by behavioural economists. It also offers a philosophical framework to justify the use of behavioural interventions. The framework is called ‘Libertarian Paternalism’: nudges are libertarian because they influence people’s behaviour without limiting the range of options available to them; they are paternalistic because they help people choose the options that are good for them.