Applications of Behavioral economics in European Commission

Geary behavioural economics blog points (alas the blog has closed down) European Health and Consumer Directorate, in particular its consumer division, has been taking an active interest in behavioural economics. There have been two conferences (link here and here) discussing the subject and its applications.

There is a nice paper  by Emmanuele Ciriole, economist with the division summarising the policy applications. As one cannot extract text from pdf, I can just point to some highlights.

The paper begins with some basics of beh eco and how it does not mean more regulation. It just says how framing and nudging choices can help people make better economic decisions.

The study then looks at how beh eco is being used in Europe. There have been couple of interesting studies looking at how beh. eco can be used to understand pricing and retail investment services. Then there are studies to understand people towards using more environment friendly goods. Then there are studies going on in privacy and digital economy.

Its Competition wing used beh eco insights to give a landmark judgement on Microsoft.

The European Commission welcomes the implementation by Microsoft of its commitment to give consumers in the European Union the opportunity to choose from a variety of browsers to access and surf the Internet. From the beginning of March, users of Windows PCs who have Internet Explorer as default web browser are being provided with a browser Choice Screen, designed to give them an effective and unbiased choice between their default and competing web browsers. This should ensure competition on the merits and allow consumers to benefit from technical developments and innovation both on the web browser market and on related markets, such as web-based applications.

This allowed people to make a choice for themselves rather than being nudged to use Internet explorer which was a default browser packaged with Microsoft OS. This led to no antitrust fees and programming cost for Microsoft.

There are some nice insights from other studies as well.

I was just thinking, why not have such a division in India as well. The division could look at improving the state of affairs and simplify choice architecture.  The government could propose setting up an office like this which looks at which ways could behavioral economics be used. It could just help redoing many of our rules/regulations in a least costly manner. It could also add to the much-needed debate on public policy issues in the country.

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