Cookies on this website
We use cookies to ensure that we give you the best experience on our website. If you click 'Continue' we'll assume that you are happy to receive all cookies and you won't see this message again. Click 'Find out more' for information on how to change your cookie settings.

To understand human decision-making, policymakers have traditionally turned to classical economic theory. However, human behavior often deviates from the expectation of rationality put forward by these classical approaches. One area where these deviations are clearly observable is in economic and consumer choices. Mapping out these examples of consumer irrationality has helped establish the field of behavioral economics over recent decades, catalyzed through early work by Daniel Kahneman and Amos Tversky on risk in the 1970s. The study of factors that influence consumer decisions has led to a better understanding of questions such as why people avoid paying taxes, often save too little for their future, or spend money in ways that fail to improve their well-being. These insights have provided new opportunities for developing efficient, evidence-based policies aimed at tackling problems from improving consumer protection to encouraging tax compliance and waste reduction.

Type

Chapter

Book title

Psychology and Behavioral Economics Applications for Public Policy

Publisher

Routledge

Publication Date

22/09/2021

Keywords

Business & Economics