Seminar in Economics | with Matthias Rodemeier
Welcome to this Higher Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Matthias Rodemeier, an Assistant Professor at Bocconi University who will present
"Judging Nudging: Understanding the welfarwe effects of nudges versus taxes"
Abstract
While behavioral non-price interventions (“nudges”) have grown from academic curiosity to a bona fide policy tool, their relative economic efficiency remains under-researched. We develop a unified framework to estimate welfare effects of both nudges and taxes, while allowing for normative ambiguity about how nudges map into utility. We showcase our approach by creating a database of more than 300 carefully hand-coded point estimates of non-price and price interventions in the markets for cigarettes, influenza vaccinations, and household energy. While nudges are effective in changing behavior in all three markets, they are not necessarily the most efficient policy. When nudges are debiasing, they are more efficient in the market for cigarettes, while taxes are more efficient in the vaccine and energy market. Interestingly, these conclusions also often hold when nudges are deceptive rather than debiasing. We identify two key factors that govern the difference in results across markets: i) an elasticity-weighted standard deviation of the behavioral bias, and ii) the magnitude of the average externality. Nudges dominate taxes whenever i) exceeds ii). Finally, we consider cases in which nudges cause direct psychic costs or benefits to consumers.
More about the Speaker
The seminar takes place at Stockholm School of Economics, Sveavägen 65, room 720.
Please contact nicola.donohoe@hhs.se if you have any questions.