Nudging fully explained (in Spanish)

Smart Regulator Prof. J. Ponce (Barcelona) has just published (in the Acts of the 9th congress of the Spanish association of professors of administrative law) a full-length study entitled "Nudging, administrative simplification and good regulatory governance: the 21st century administrative law and its relations with social sciences." (caution: pdf file 3.7Mb).
Prof. Ponce investigates how the new social sciences tools can help administrative law, including the use of discretionary powers by public authorities, be more efficient in this century. New insights from behavioural sciences into motivations that move the citizen must be factored into a modernised approach to designing and implementing regulation. Nudging is one of these new promising techniques, to be deployed alongside RIA and consultation.

The potential of behavioural economics for regulation (OECD)

At its November session, the OECD Regulatory Policy Committee (RPC) inaugurated a new workstream devoted to tapping the insights of behavioural economics (BE) for better regulatory design. As the topic was new for some delegates, the floor was given to two top experts in the field, Alberto Alemanno and Peter Lunn, for a general presentation of the current situation regarding BE.

Alberto has published "Nudging Legally - On the Checks and Balances of Behavioural Regulation" on SSRN.

Peter Lunn's paper commissioned by OECD, which includes a full bibliography, will shortly be published. It offers an international review of the initial applications of behavioural economics to regulation using some 60 cases, which shows that behavioural findings are having an impact on the content of and the method for designing regulation.

Further work of the OECD on this topic is likely to focus on international comparisons of economically significant cases and best practices of behaviourally-informed regulation.

The new concepts have been layed out in "Libertarian Paternalism" by R. Thaler and Cass Sunstein.

For an update on other topics discussed at the RPC recent session, experts should frequently visit the well-devised section on regulatory policy "Latest Documents" of the OECD website.

"Behaviourally-informed" regulation on the rise

A fascinating article by top-expert Alberto Alemanno on the more frequent use of this new kind of smart regulation: Here is the abstract: "As behavioural sciences are unearthing the complex cognitive framework in which people make decisions, policymakers seem increasingly ready to design behaviourally-informed regulations to induce behaviour change in the interests of the individual and society. After discussing what behavioural sciences have to offer to administrative law, this paper explores the extent to which administrative law may accommodate their findings into the regulatory process. After presenting the main regulatory tools capable of operationalizing behavioural insights, it builds a case for integrating them into public policymaking. In particular, this paper examines the challenges and frictions of behavioural regulation with regard both to established features of administrative law, such as the principle of legality, impartiality and judicial oversight and more innovative control mechanisms such as the use of randomized control trials to test new public policies. This analysis suggests the need to develop a legal framework capable of ensuring that behavioural considerations may inform the regulatory process while at the same time guaranteeing citizens' constitutional rights and freedoms vis-à-vis the Regulatory State."

"Nudging in Europe" (Workshop 12-13 December)

Top expert Alberto Alemanno is organising (with A.L. Sibony) a workshop on how EU regulators can use recent insights of behavioural sciences to design smarter regulation. The event will take place in Liège on 12-13 December, and Alberto is calling for contributions (deadline 1 October).
The announcement contains the promise of fruitful exchanges, and is well worth reading, even if you cannot attend. Here is an extract:
"A growing body of evidence suggests that insights from the behavioural sciences - from psychology and behavioural economics to neurosciences - can help design public policies that work better, cost less, and help people to achieve their goals. By showing that individuals deviate in predictable ways from neoclassical assumptions of rationality, behavioural sciences may help policy makers and administrative agencies to design policies that accommodate how people really behave, not how they are assumed to behave.
Under both UK Prime Minister Cameron and US President Obama, policy makers have recently been encouraged to draw on behavioural and social sciences insights in the design or implementation of new regulations." (for the rest, go to Alberto's blog).

Behavioural science for smart regulators (update)

Complianceforregulators.com is, according to its self-presentation, "a one-stop source for regulators seeking information, inspiration and empowerment, in pursuit of compliance." It is managed by Telita Snyckers-Nørgaard, an experienced management consultant. She has recently posted an interesting analysis of compliance under the catchy title "From the psychologist's couch: 16 concepts that (probably) motivate the people we regulate." It seems to draw from behavioural economics which is now a required input for regulators. See also our posts on the importance of behaviour study for EU smart regulation, and nudging regulatory technique. To discover "the ostrich effect" or the "'hyperbolic discounting", follow the link above. Consultant-speak or something for smart regulators?

Behavioural insights for smarter regulation (EU)

On the LinkedIn Smart Regulation forum, A. Alemanno informs us that DG SANCO has responded - on behalf of the European Commission - to his editorial "Nudging Europe” (see previous blog item) Published in the current issue of European Voice, the response lists a number of instances in which the European Commission (and the co-legislators) would have integrated behavioural insights into its policymaking. In a short analysis of the Commission's response, published on his blog Alberto argues that the Commission's cannot claim to have systematically introduced behavioural insights, though some ad hoc usage has occurred over the last few years in several DGs. Both the response and the new development make most interesting reading.

"Nudging:" a new regulatory technique (A. Alemanno)

Associate Professor of law at HEC Paris and top regulatory expert Alberto Alemanno explains in his op-ed published last week in European Voice why the European Commission should include behavioural insights in the design of regulatory proposals (print copy). (Excerpts): "In recent years, findings in behavioural sciences have highlighted the complex cognitive framework in which people make decisions. In particular, behavioural economics, by refuting the neoclassical assumption of human full rationality, has revealed a set of psychological biases capable of explaining why too often people make choices that seem to go against their best interests... These findings have important implications not only for the well-being of European citizens but also for regulatory policy... Under both US President Barack Obama and UK Prime Minister David Cameron, policymakers have recently been encouraged to draw on behavioural and social-science insights in the design or implementation of new regulations, an approach commonly called ‘nudge'. Inspired by ‘libertarian paternalism', it enables the creation of public policies that steer citizens towards making positive decisions as individuals and for society while preserving individual choice... Besides a few isolated initiatives displaying some behavioural consideration (eg, revision of the tobacco products directive, consumer information regulation, behavioural advertising), the EU has not yet shown a commitment to integrating behavioural research into its policymaking. Given the potential of this regulatory approach to produce effective, low-cost and choice-preserving policies, this seems inadequate, especially given the EU's commitment to smart regulation, a commitment stated in its Europe 2020 Strategy."
Other sources on nudging include Cass Sunstein's book written with R. Thaler "Nudge." For more news on the concept and technique, see the Nudge blog.

Smart regulation relevance re-affirmed (EU Council)

EU presidencies are influential in nudging agendas and conclusions of the European Council, though of course official texts represent the consensus. The press release (see section page 11 and text of conclusions) published yesterday (30 May 2011) following the Competitiveness Council puts smart regulation back right at the top of the agenda, from which it had seemed to decline in recent presidencies. Council recognises the success of better regulation and asks that MS "move up one notch" and "systematically apply smart regulation principles throughout the EU policy-making process."
The Council adopted conclusions on "smart regulation", underlining, among other elements, the continuous need of reducing administrative burdens for businesses to what is strictly necessary, in order to allow them to work and compete more effectively. Ministers also put emphasis on the need to establish mechanisms which would allow the Council to conduct impact assessments. In particular, the conclusions provide with orientations, addressed to the national governments, the European Parliament and the European Commission, for:
– improving the implementation and enforcement of existing EU legislation;
– ensuring high quality of new legislation through impact assessments, simplification and reduction of unnecessary administrative burdens, in particular for SMEs; and
– making EU law more clear, easily understandable and accessible to all citizens.
In addition, Member States backed the Presidency’s proposal on easing the financial reporting burden of micro-entities and adopted conclusions on 12 concrete actions of the Single Market Act, but could not reach an agreement on the creation of the European Private Company (see presidency press release).