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Behavioural Economics and Public Policy-Making

Author

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  • Byrne, Shane

    (Central Bank of Ireland)

  • Devine, Kenneth

    (Central Bank of Ireland)

  • McCarthy, Yvonne

    (Central Bank of Ireland)

Abstract

In recent years, insights from behavioural economics have increasingly been used to inform public policymaking. This has been underpinned by an appreciation of the ways in which human decision-making can be influenced by psychological biases and cognitive limitations that have the potential to lead individuals to costly and systematic errors in all facets of life, including in relation to financial products. In response, many public authorities are now seeking to design the instruments of policy to better fit the behavioural realities of the people they are designed to serve, in an effort to remediate adverse consumer and systemic outcomes, and to enhance policy effectiveness. This Article reviews the recent growth in the application of behavioural insights, the ways in which biases can impact decision making, specifically in the financial domain, and why it matters for policymakers, including the Central Bank.

Suggested Citation

  • Byrne, Shane & Devine, Kenneth & McCarthy, Yvonne, 2022. "Behavioural Economics and Public Policy-Making," Quarterly Bulletin Articles, Central Bank of Ireland, pages 85-103, January.
    • Handle: RePEc:cbi:qtbart:y:2022:m:01:p:85-103
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    File URL: https://www.centralbank.ie/docs/default-source/publications/quarterly-bulletins/quarterly-bulletin-signed-articles/behavioural-economics-and-public-policy-making.pdf?sfvrsn=7
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    Cited by:

    1. Byrne, Shane & Devine, Kenneth & McCarthy, Yvonne, 2022. "Interrupting inertia: evidence from a mortgage refinancing field trial," Economic Letters 9/EL/22, Central Bank of Ireland.

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