Encouraging consumers to switch to lower-rate mortgages is important both for the individual consumer's finances and for functioning competitive markets, but switching rates are low. Given the complexity of mortgages, one potential regulatory intervention that may increase switching rates is to provide independent advice on how to select good mortgage products and how to navigate the switching process. Working with a government consumer protection agency, we conducted an experiment with mortgage-holders to test whether such advice alters perceptions of switching. The experiment tested how the attributes of the offer, perceptions about the switching process, individual feelings of competence and comprehension of the product affect willingness to switch to better offers, both before and after reading the official advice. The advice made consumers more sensitive to interest rate decreases, especially over longer terms. It also increased consumers’ confidence in their ability to select good offers. Overall, the findings imply that advice from policy-makers can change perceptions and increase switching rates. Moreover, the experiment demonstrates how lab studies can contribute to behaviourally informed policy development.

This study examines how moral intuitions toward debt relief vary depending on whether a debt contract involves one country borrowing from another country or an individual borrowing from a bank. Participants respond to a vignette describing a basic debt dispute between a debtor and a lender. A judge in charge of settling the dispute decides to allow debt relief and participants express how fair they find the decision. Treatments vary (1) the debt context (international or person-bank), (2) the responsibility of lenders and debtors (whether their situations stem from bad luck or poor choices) and (3) whether a lender's profit motive is made salient. Results show that, across both international and person-bank debt, debt relief is perceived as being fairer when debtors are unlucky and when lenders are careless; profit salience, however, does not affect the perceived fairness of debt relief in either debt context. Results, when integrated with those from an initial related study, also point to anti-bank sentiment increasing the perceived fairness of debt relief when an individual borrows from a bank and to a consistent across-context ranking of the perceived fairness of debt relief in the scenario.

Nudges are increasingly being proposed and used as a policy tool around the world. The success of nudges depends on public acceptance. However, several questions about what makes a nudge acceptable remain unanswered. In this paper, we examine whether policy alternatives to nudges influence the public's acceptance of these nudges: Do attitudes change when the nudge is presented alongside either a more paternalistic policy alternative (legislation) or a less paternalistic alternative (no behavioral intervention)? In two separate samples drawn from the Swedish general public, we find a very small effect of alternatives on the acceptability of various default nudges overall. Surprisingly, we find that when the alternative to the nudge is legislation, acceptance decreases and perceived intrusiveness increases (relative to conditions where the alternative is no regulation). An implication of this finding is that acceptance of nudges may not always automatically increase when nudges are explicitly compared to more paternalistic alternatives.

Under what circumstances will members of the public hold positive attitudes toward new or higher taxes? While some scholars have posited that the practice of “earmarking” – designating tax revenues for a particular purpose – can increase support for taxes, the existing literature has not identified the conditions under which earmarking will prove effective in this regard. Here, we draw upon previous research on consumer behavior to hypothesize that support for earmarked taxes will be stronger when such taxes satisfy the criterion of “source–use alignment” (i.e., when the connection between the revenue source and the use for which those revenues are earmarked accords with familiar consumer fairness norms). Evidence in support of this hypothesis comes from two experiments on a sample of US residents matched to Census data, in which subjects were randomly assigned to read descriptions of hypothetical earmarked taxes with varying levels of alignment. Individuals consistently expressed stronger support for earmarked taxes that achieved source–use alignment as compared to earmarked taxes that did not satisfy the source–use alignment criterion. Our theory and results not only help to explain why some earmarked taxes are more popular than others, but also suggest a means for increasing public support for taxes.

This article argues that nudges can often be turned into self-nudges: empowering interventions that enable people to design and structure their own decision environments – that is, to act as citizen choice architects. Self-nudging applies insights from behavioral science in a way that is practicable and cost-effective, but that sidesteps concerns about paternalism or manipulation. It has the potential to expand the scope of application of behavioral insights from the public to the personal sphere (e.g., homes, offices, families). It is a tool for reducing failures of self-control and enhancing personal autonomy; specifically, self-nudging can mean designing one's proximate choice architecture to alleviate the effects of self-control problems, engaging in education to understand the nature and causes of self-control problems and employing simple educational nudges to improve goal attainment in various domains. It can even mean self-paternalistic interventions such as winnowing down one's choice set by, for instance, removing options. Policy-makers could promote self-nudging by sharing knowledge about nudges and how they work. The ultimate goal of the self-nudging approach is to enable citizen choice architects’ efficient self-governance, where reasonable, and the self-determined arbitration of conflicts between their mutually exclusive goals and preferences.

Consumers, employees, students and others are often subjected to ‘sludge’: excessive or unjustified frictions, such as paperwork burdens, that cost time or money; that may make life difficult to navigate; that may be frustrating, stigmatizing or humiliating; and that might end up depriving people of access to important goods, opportunities and services. Because of behavioral biases and cognitive scarcity, sludge can have much more harmful effects than private and public institutions anticipate. To protect consumers, investors, employees and others, firms and private and public institutions should regularly conduct Sludge Audits to catalogue the costs of sludge and to decide when and how to reduce it. Sludge often has costs far in excess of benefits, and it can hurt the most vulnerable members of society.

This paper compares the effects of two types of behaviorally informed policy – nudges and boosts – that are designed to increase consumer demand for insurance against low-probability, high-consequence events. Using previous findings in the behavioral sciences literature, this paper constructs and implements two nudges (an ‘informational’ and an ‘affective’ nudge) and a statistical numeracy boost and then elicits individual risk beliefs and demand for flood insurance using a contingent valuation survey of 331 participants recruited from an online labor pool. Using a two-limit Tobit model to estimate willingness to pay (WTP) for flood insurance, this paper finds that the affective and informational nudges result in increases in WTP for flood insurance of roughly $21/month and $11/month relative to the boost, respectively. Taken together, the findings of this paper suggest that nudges are the more effective behaviorally informed policy in this setting, particularly when the nudge design targets the affect and availability heuristics; however, additional research is necessary to establish sufficient conditions for this conclusion.

Microcredit – joint-liability loans to the poorest of the poor – has been touted as a powerful approach for combatting global poverty, but sustainability varies dramatically across banks. Efforts to improve the sustainability of microcredit have assumed defaults are caused by free-riding. Here, we point out that the response of other group members to delinquent groupmates also plays an important role in defaults. Even in the absence of any free-rider problem, some people will be unable to make their payments due to bad luck. It is other group members’ unwillingness to pitch in extra – due to, among other things, not wanting to have less than other group members – that leads to default. To support this argument, we utilize the Ultimatum Game (UG), a standard paradigm from behavioral economics for measuring one's aversion to inequitable outcomes. First, we show that country-level variation in microloan default rates is strongly correlated (overall r = 0.81) with country-level UG rejection rates, but not free-riding measures. We then introduce a laboratory model ‘Microloan Game’ and present evidence that defaults arise from inequity-averse individuals refusing to make up the difference when others fail to pay their fair share. This perspective suggests a suite of new approaches for combatting defaults that leverage findings on reducing UG rejections.

A criticism of behavioural nudges is that they lack precision, sometimes nudging people who – had their personal circumstances been known – would have benefitted from being nudged differently. This problem may be solved through a programme of personalized nudging. This paper proposes a two-component framework for personalization that suggests choice architects can personalize both the choices being nudged towards (choice personalization) and the method of nudging itself (delivery personalization). To do so, choice architects will require access to heterogeneous data. This paper argues that such data need not take the form of big data, but agrees with previous authors that the opportunities to personalize nudges increase as data become more accessible. Finally, this paper considers two challenges that a personalized nudging programme must consider, namely the risk personalization poses to the universality of laws, regulation and social experiences, and the data access challenges policy-makers may encounter.

A multi-item questionnaire concerning lay people's attitudes toward organ procurement without consent from executed prisoners was given to several hundred respondents. The items ranged from all-out condemnation (“It is tantamount to murder”) to enthusiasm (“It is great to have this organ supply”). Overall, we found two guiding principles upheld by most respondents: (1) Convicts have as much a right to their bodies and organs as other people, so the practice should be judged by the same standards as those that guide organ procurement from any donor. Procuring organs without consent is wrong. (2) Benefiting from those organs should be held to more lenient standards than are demanded for their procurement. So, benefitting from these ill-gotten organs should be tolerated.

Sex crime in subways poses an ever-present threat to Japanese commuters. This paper proposes a simple and viable adjunct to the current tactics by harnessing the potential of the watching eyes effect to deter sexual harassment. It attempts to observe the human biological sensitivity to gaze and to explore its application to the specific Japanese context where powerful informal control exists. The paper also identifies the possible advantages and limitations of such measure, with the goal of stimulating more discussion over evidence-based behavioural interventions in deterring crimes. A tentative proposal is composed to summarize and demonstrate a number of behaviourally informed suggestions regarding the practical implementation and configuration of the proposed measure.

Behavioural public policy analysts have examined cases of individuals’ failures of reason or judgement to attain their ends and have used these to justify ‘means’ paternalism: a form of government intervention that tries to save individuals from the consequences of those reasoning failures and to enable them better to achieve those ends. This has been challenged on a number of grounds, including too great a focus on choice-preserving interventions such as nudges, the privileging of future preferences over current ones and the possibility of state failures as damaging to individual well-being as the original reasoning failure. This paper summarizes the principal arguments in favour of means paternalism and then addresses these challenges.