Judging Nudging: Understanding the Welfare Effects of Nudges Versus Taxes

John List, Matthias Rodemeier, Sutanuka Roy and Gregory Sun

Framed Field Experiments from The Field Experiments Website

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. 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. We find that nudges are more efficient in the market for cigarettes, while taxes are more efficient in the energy market. For influenza vaccinations, optimal subsidies likely outperform nudges. Importantly, two key factors 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). Combining nudges and taxes does not always provide quantitatively significant improvements to implementing one policy tool alone.

Date: 2022
New Economics Papers: this item is included in nep-ene, nep-pbe, nep-pub and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://s3.amazonaws.com/fieldexperiments-papers2/papers/00765.pdf

Related works:
Working Paper: Judging Nudging: Understanding the Welfare Effects of Nudges Versus Taxes (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:feb:framed:00765

Access Statistics for this paper

More papers in Framed Field Experiments from The Field Experiments Website
Bibliographic data for series maintained by Francesca Pagnotta ().