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  Consumer Affairs – Behavioural Economics, so What: Should Policy-Makers Care? slide

Behavioural Economics, so What: Should Policy-Makers Care?

Albert Borschette Centre
36, Rue Froissart
1040 Brussels

Monday November 22 2010


The aim of the conference is to understand how behavioural economics could be used to influence public policy and regulatory design across the Commission, in a way that benefits EU consumers and citizens. The conference should attract a wide audience from the national and international policy-making, research, NGOs and business communities.

The conference is the second of our series of Behavioural Economics events. The first one took place in 2008 and attracted a wide audience. This conference will be an opportunity to present the results of the joint MARKT SANCO pilot behavioural study on retail investment services. The approach used in this first behavioural study could form the basis of a framework contract to be used by all Commission services to carry out behavioural experiments to road test regulatory or policy remedies. In addition, the conference will be an opportunity to review and discuss how the behavioural approach is being used by other national and international institutions (including the UK Office of Fair Trading and the US Office of Information and Regulatory Affairs) to gather useful evidence to inform policy-making. Indeed, the insights of behavioural economics could be applied to any policy that seeks to shape behaviour of individuals. Businesses already rely on thorough knowledge of individual behaviours to increase their sales. If policymakers want to influence behaviours, they should follow suit and master these innovative approaches.

The conference presentations and discussions will tackle several key questions, among which:

  • What behavioural economics call tell us about consumers that economic models or surveys can't?
  • Are there relevant examples where the behavioural approach has significantly improved the effectiveness of policy measures?
  • What are the main individual and external factors explaining decision-making in retail investment services?
  • Are consumers well-informed and numerate, so to be able to make optimal choices?
  • How did the US Government go about regulating some markets in the past, and how behavioural economics is going to change the old approach?


Behavioural economics is a sub-branch of economics that is challenging the received economic wisdom. Whereas orthodox economics is based on the idea that people can be treated as selfish, rational and independent agents, behavioural economics qualifies these assumptions. Behavioural economics studies how people actually make choices, drawing insights from both psychology and economics. It develops more realistic assumptions, produces better simulations of the real world functioning and, eventually, delivers more useful predictions.

Behavioural economics analyses individual's decision-making processes using replicable laboratory and field experiments. It attempts to fill the gap between standard economic theories and the real economy. Through its new insights on people's most basic economic behaviours, it improves our understanding of how the economy works. In practical terms, behavioural economics warns against taking purely "rational models" as a sufficient guide to public policy.

At European level, behavioural economics is implicitly starting to be incorporated in policymaking and this has led to some cases of debiasing through law. The cooling-off period, found in much of EU consumer acquis, and the health claims proposal are two significant examples. In addition, an in-depth review of the behavioural literature provided evidence for the inclusion of a ban on pre-checked boxes in the recent proposal for a Consumer Rights Directive. Finally, the useful contribution of behavioural economics has explicitly been recognised by DG Competition as part of the solution in a recent Microsoft case, when designing the browser ballot box. Similarly, Regulatory bodies across of the world (e.g., US Federal Trade Commission (FTC), UK Office for Fair Trading, OECD, Australian Productivity Commission) have already started to take behavioural economics into serious consideration and have already carried out behavioural studies to inform some of their regulatory policies.

For more background information, please refer to the "Useful Links" page.

First conference on Behavioural Economics: How Can Behavioural Economics Improve Policies Affecting Consumers?

Third conference on Behavioural Economics: Applying behavioural insights to policy-making

This conference is being organised by the European Commission, DG Health and Consumers

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