The Value of Behavioral Policies

John List, Matthias Rodemeier, Sutanuka Roy and Gregory K. Sun

No 35567, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Behavioral interventions have become central to modern public policy, but their empirical promise remains contested because estimated treatment effects often appear small. We argue that a policy response is economically meaningful only relative to the response generated by alternative policies. We assemble more than 1,200 estimates from over 600 studies comparing “nudges” and traditional price interventions in the markets for cigarettes, alcohol, influenza vaccination, electricity, and residential water. Translating nudge effects into equivalent price changes, we find that behavioral interventions often correspond to enormous fiscal interventions, from an 11% tax on electricity to a 100% subsidy on influenza vaccinations. Nudges are also more cost-effective than price instruments in all markets, but cost-effectiveness does not predict the welfare ranking of policies. Using a behavioral extension of the Marginal Value of Public Funds, we show that nudges have high welfare returns at the margin, while price instruments often generate larger total surplus at scale.

JEL-codes: D61 D83 H21 I12 I18 Q41 Q48 (search for similar items in EconPapers)
Date: 2026-07
Note: EEE PE
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