From Nudging to Budging: Using Behavioural Economics to Inform Public Sector Policy

Abstract The use of behavioural economics to inform policy has over recent years been captured by those who advocate nudge interventions. Nudge is a non-regulatory approach that attempts to motivate individual behaviour change through subtle alterations in the choice environments that people face. It is argued in this article that government interventions ought to be more overt than that traditionally advocated by nudge adherents, and that governments should principally attempt to influence behaviour if the acts of those targeted are causing harm to others. With this in mind, governments can use the findings of behavioural economics, including present bias and loss aversion, to inform where and how to regulate directly against undesirable private sector activities. This behavioural economic-informed method of regulation is hereby termedbudge, to indicate that, rather than nudging citizens, behavioural economics might be used more appropriately in the public sector to help inform regulation that budges harmful private sector activities.