The Evolution of Behavioral Economics in Policy Design: A Critical Review (2015–2025)

Maher Asaad Baker

MPRA Paper from University Library of Munich, Germany

Abstract: Purpose This paper provides a critical synthesis of the key developments in the application of behavioral economics (BE) to public policy from 2015 to 2025. It analyzes the field's institutionalization, the evolution of its core concepts, and the significant critiques that have shaped its modern trajectory. Design/methodology/approach This article is a comprehensive literature review, synthesizing findings from published academic papers, institutional reports, and meta-analyses. It systematically maps empirical findings across policy domains and critically examines ethical, methodological, and practical challenges. Findings The review finds that BE has matured from a novel tool into an established field. Mechanisms like defaults, framing, and friction reduction have been widely deployed with varying success. This period has also been defined by a critical reckoning with the replication crisis and ethical debates concerning autonomy. The field is responding by integrating with computational social science and artificial intelligence, moving toward more interdisciplinary and empowering approaches. Originality/value This review offers a nuanced, critical analysis of a pivotal decade in behavioral public policy. It moves beyond cataloging interventions to provide a coherent narrative of institutionalization, challenge, and adaptation. The paper concludes that the field's value lies in fostering a more realistic, evidence-based, and human-centric paradigm for policy design.

Keywords: behavioral economics; literature review; policy design; nudge; choice architecture; public policy; policy design (search for similar items in EconPapers)
JEL-codes: B40 D03 D04 D90 H00 (search for similar items in EconPapers)
Date: 2025-09-19
New Economics Papers: this item is included in nep-hpe, nep-nud, nep-pke and nep-reg
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