Bounds of reason : Exploring behavioral public policy interventions
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- NTNU Handelshøyskolen 
Policymakers regularly use the price mechanism to influence individual behavior, as prescribed by standard economic theory. While useful, there are situations where these traditional policy interventions are surprisingly ineffective or even counterproductive. To address these shortcomings, researchers within the field of behavioral economics have begun to explore the boundaries of traditional incentives and where appropriate suggesting a complementary set of policy interventions that does not rely exclusively on reward and punishment. This thesis is a part of this ongoing pursuit to help define boundaries and to clarify the possibilities of these methods in order to optimize cost efficiency of future policy interventions. The title of the thesis is “Bounds of reason: exploring behavioral public policy interventions” consist of a brief introduction and four articles; each evaluating specific aspects of other-regarding behavior such as generosity avoidance (opting out), motivational crowding out, nudging, and gender differences in preference for efficiency. The four articles measure recycling behavior but under different circumstances. In the first paper we explore how recycling behavior change when an option to donate the recycling deposit to charity is introduced. People responded by recycle less; the monetary value of recycling actually drops by 18 percent. In the second paper we explore what happened when the central bank removed the SEK 0.5 coin from circulation, forcing retailers to increase the deposit on cans from SEK 0.5 to SEK 1, something that slowly increased the expected value of recycling over a two-year period. People responded by initially recycle more but as the expected value of recycling kept increasing, they actually started to recycled less, indicating an S-shaped supply curve. These two studies that was just mentioned are natural field experiments but we also conduct two randomized field experiments. Using randomized field studies, we first explore the absolute effectiveness, as well as the relative effectiveness, of four different nudging strategies that are commonly used in the literature. The four nudging strategies was about equally effective, increasing donation from 3% to about 6.2 to 7.5 percent across both age and gender. In the last paper, which is single authored, I investigate gender differences in preferences for effectiveness. By matching donation with increased efficiency (1:2, 1:4 and 1:6) I find that there is a liner increase in donation as efficiency increase. This increase is, however, only driven by a larger proportion of women donating to charity while men’s proportion stay the same across treatments.