Thursday, December 21, 2023
Ethics of Nudging Meat Consumption
Tuesday, December 19, 2023
Is Loss Aversion a Thing?
One thing I like about working in academia is the variety of styles of corridor talk you encounter that challenge your perspective on things you think are most likely to be true. I have tried to keep a fairly Humean view on things and not get too personally wedded to empirical generalisations. Having said that, I would still be very surprised if I get to the end of my life not believing that default effects matter in several circumstances beyond purely incentive effects, or that people make decisions on financial products based on confusion at least partly engendered deliberately by the provider or clumsy regulation in several cases, or that people will generally be more sensitive to time distance of rewards at near intervals compared to far intervals etc., And for the most part but possibly to a lesser extent (as it frankly is a more abstract idea than the others) I would be surprised if I didn't believe in some version of the idea that losses matter more than gains in terms of valuation and decisions.
So it was good that my colleague Fred Basso sent me several papers questioning the basis of loss aversion, including this very thoughtful paper by Yechian (2018) arguing that the evidence for loss aversion that existed around the time prospect theory was published was unclear. A 2018 Journal of Consumer Psychology dialogue started with a paper by Gal and Rucker with the provocative title "The loss of loss aversion: will it loom larger than gains?"
A key idea in the Gal and Rucker paper is that many of the effects associated with loss aversion are only weakly associated with the core idea. And that when you think of things like the endowment effect as separate aspects of behaviour that themselves can be impacted by many things such as reference points with respect to market values, strategic behaviour, etc., then the case for loss aversion as a primary influence on human behaviour becomes a lot weaker.
The core paper in the journal is followed by a number of responses, including the one below and here by Simonson and Kivetz largely arguing that while loss aversion has a number of potential moderators that should be developed further, the case for its demise is overdone.
There are a number of recent papers that provide a more comprehensive summary of the empirical case for loss aversion than existed at the time of the above critiques. The Ruggeri et al multi-country study from 2020 replicates most of the original propositions of prospect theory though, as acknowledged by the authors, this does not itself demonstrate that loss aversion itself is the driving factor for the decisions seen in prospect theory set-ups.
Most impressively is the recent meta-analysis of 607 studies of loss aversion (from 150 published papers) by Brown, Imai, Vieider and Camerer. This work conducts a very systematic trawl through empirical estimates of loss aversion and includes controls for things like study quality and potential publication bias. Their work suggests a loss aversion parameter of approx 2/1 of the type that is discussed often in the literature is a solid rule of thumb to describe patterns from the last 40 years of studies.
I am not volunteering to do it with current other time constraints but it would clearly be interesting to go through the 150 papers identified by Brown et al from the point of view of potential moderators of loss aversion. They do this to an extent in their already very impressive paper but mostly from an international comparison, sampling design, and statistical quality perspective. There are also some interesting discussions to be had about the limits of our claims about human behaviour in a world where global high-quality probability samples allowing for measurement of the type needed to separate out moderators of effects like loss aversion are extremely difficult to achieve in practice.
Saturday, December 16, 2023
16th annual workshop on economics and psychology in Ireland.
Thanks very much to Leonhard Lades and Suhas Vijayakumar for organising the 16th annual workshop on economics and psychology in Ireland. The programme is below. I was involved in setting up and running the first decade or so of these workshops (the schedule for the first one in 2008 is here). There is a very interesting community of researchers across policy, academia, and industry in Ireland who are interested in what has increasingly come to be referred to as behavioural science and policy work. The workshop each year has consisted of a combination of regular academic talks, ideas for new centres and programmes, international keynotes from some of the foundational figures in behavioural science and policy, policy and industry presentations, and panel sessions. Several people have also revamped the Irish Behavioural Science and Policy Network that will roll out regular sessions in this area in Ireland (details here).
13:20 – 14:00: Keynote by Prof Lars Tummers on “How to Manipulate Yourself & Others”
16:40 – 17:00: Emma Howard (TUDublin) on “‘Great expectations? How vegetarian meal requestors expect to be perceived, and the impact of mentioning diet or motivation when making the request'”
Thursday, December 14, 2023
Handbook of Nudges and Society
I attended the launch on December 5th of the "Research Handbook of Nudges and Society" edited by Lucia Reisch and Cass Sunstein that took place in the Judge School at Cambridge in conjunction with the El-Erian Institute of Behavioural Economics. The table of contents is below and it represents a strong survey of current debates and state-of-the-art of the integration of behaviorally informed approaches into regulation and public policy. The abstract of my chapter with Atrina Oraee and Jet Sanders below.
Introduction to the Research Handbook on Nudges and Society 1
Cass R. Sunstein and Lucia A. Reisch
PART I FOUNDATIONS
1 Libertarian paternalism 10
Richard H. Thaler and Cass R. Sunstein
2 Nudgeability and beyond: affording people with opportunities to make the right choice 17
Denise De Ridder
3 Bias, noise and nudges 34
Olivier Sibony
4 Social norm nudging for sustainable consumption 56
John Thøgersen
5 Welfare now 70
Cass R. Sunstein
PART II APPLICATIONS
6 Shifting online incentive structures to reduce polarization and the spread of misinformation 91
Steve Rathje and Sander van der Linden
7 Animal protection and information avoidance 109
Richard Völker and Sven Grüner
8 Behavioural interventions to improve financial wellbeing: a focus on budgeting 129
Dilip Soman and Yuna Choe
9 Nudging employees for corporate sustainability: a systematic evidence map 152
Leonie Decrinis and Lucia A. Reisch
10 Smart disclosure: promise and perils 174
Oren Bar-Gill
PART III METHODS AND RESEARCH CHALLENGES
11 Nudges versus financial incentives 189
W. Kip Viscusi
12 Priceless behaviours: behavioural implications, unintended consequences and spillover effects of pricing policies 209
Mario Mazzocchi and Beatrice Biondi
PART IV POLICYMAKING
13 Nudge+: putting citizens at the heart of behavioural public policy 227
Sanchayan Banerjee and Peter John
14 Addressing inequalities with behavioral science: a taxonomy of positive deviance 242
Kai Ruggeri and Valentina Cafarelli
15 Self-nudging and the citizen choice architect 263
Samuli Reijula and Ralph Hertwig
PART V BATTLEFIELDS
16 Behavioural science: ethics, expertise and systemic risk 292
Liam Delaney, Atrina Oraee and Jet Sanders
17 The use and misuse of behavioural science in the age of COVID-19 308
Adam Oliver
18 Eight misconceptions about nudges 319
Cass R. Sunstein
Index 329