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Consumers (19-11-2010)

Commission eyes behaviour research to ´road-test´ consumer policy

On 22 November, top international researchers, EU policy makers and consumer advocates are gathering in Brussels for the conference "Behavioural Economics: So What? Should Policy Makers Care". A major pilot study on consumer decision-making in retail investment serviceswill be presented and will feed into the debate.

The conference

The conference looks at possible concrete applications of behavioural consumer research in testing, optimising and streamlining consumer policies.

The key questions to be tackled include:

  • What behavioural economics call tell us about consumers that economic models or surveys cannot?
  • Are there relevant examples where the behavioural approach has significantly improved the effectiveness of policy measures?
  • Which key factors influence consumer decisions?

The Behavioural Economics conference can be followed live via web streaming from the conference site.

The site also includes the detailed programme of the conference sessions and the press programme.

An off-the-record press briefing with the top panellists will be organised at 13.30h.


What is behavioural economics?

Here are some known "weird facts" that behavioural economics can explain:

  • If doctors want patients to protect themselves from the sun, it is more effective to warn them against pimples than against skin cancer;
  • During the crisis, two thirds of Americans thought their house had not fallen in value, even though 75% of houses had.
  • If a candidate is listed first on an election ballot, s/he can get up to a 4% increase in votes purely by default.

Classical economics offers an oversimplified view of consumers as selfish, rational and independent.

Behavioural economics studies how people actually make everyday choices.

It suggests that consumers may follow herding instincts, excessively trust experts' advice and rely on biased advice.

This may lead them to poor choices, especially when buying increasingly complex products such as investment funds which they struggle to compare.


Why is the EU Commission studying this?

EU consumer policy aims to empower consumers to make the best choices for themselves.

Behavioural economics could become, in the future, the equivalent to what the "wind tunnel" is for cars: a tool to test, optimise and streamline EU policies so that they maximise consumer welfare.


A case study: consumers buying investment services

A major behavioural study on consumer decision-making in retail investment services will feed into the debate.

The study sheds light on how EU consumers take decisions when buying products such as investment funds. It reports on experiments conducted with 6,000 consumers in eight EU countries. The full study will be made public on the day of the conference (22 November 2010).


Find out more:
The
conference site includes more background on behavioural economics and all practical details on the event itself.