People and policy : behavioural economics and its policy implications

Dickson, Alex and Fongoni, Marco (2015) People and policy : behavioural economics and its policy implications. Fraser of Allander Economic Commentary, 38 (3). pp. 93-106. ISSN 2046-5378

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The standard approach of economic modelling and policy analysis is to assume that people are homo economicus: a rational and self-interested economic man. However, a well-documented body of evidence suggests that human decision makers depart from this assumption in several interesting ways. This paper explores three key behavioural aspects – loss aversion; present-biased preferences; and social preferences. It considers the evidence to support them; how behavioural economists have modified economic models to capture the implications of each modification; and how they offer new insights on the scope and efficacy of a wide range of policy interventions.


Dickson, Alex ORCID logoORCID: and Fongoni, Marco ORCID logoORCID:;