The weird thing is, I think most economists would consider this a “no shit” type of statement. However, it is an AER paper, so maybe the modeling is one way to push back against some of the Behavioral people.
But yeah, nudges aren’t always going to be welfare enhancing. Laws and taxes are, essentially nudges. I don’t think Jim Crow would be considered good. And plenty of nudges (calorie counts on menus) lead to behavior that is unexpected.
DarkSkyKnight on
I don’t like the nutrition labeling example because a behavioralist can easily argue that WTP based on myopic preferences don’t take into account second-order effects such as healthcare burden. Their main point is not wrong though, and they seem to have talked about this in the actual paper.
solomons-mom on
This is one of the most stupid things I have read, and economists say the darndest things.
>Instead, moderate consumers who do pay attention to them may feel guilty and stop drinking sugary drinks altogether, even though drinking them in moderation isn’t harmful.
>”Standard economic analysis would then lead us to conclude that despite lowering sugary drinks consumption, this label is actually bad for society because it ends up influencing exactly the wrong people,”
Consuming 150 cal disaccharides either A) reduces appitite and therefore crowds out consumption of higher-value food, or B) adds 150 of junk to someone. Some drinking moderate 2-3 sodas a week will gain five pounds a year, or 50 pounds a decade.
3 Comments
The weird thing is, I think most economists would consider this a “no shit” type of statement. However, it is an AER paper, so maybe the modeling is one way to push back against some of the Behavioral people.
But yeah, nudges aren’t always going to be welfare enhancing. Laws and taxes are, essentially nudges. I don’t think Jim Crow would be considered good. And plenty of nudges (calorie counts on menus) lead to behavior that is unexpected.
I don’t like the nutrition labeling example because a behavioralist can easily argue that WTP based on myopic preferences don’t take into account second-order effects such as healthcare burden. Their main point is not wrong though, and they seem to have talked about this in the actual paper.
This is one of the most stupid things I have read, and economists say the darndest things.
>Instead, moderate consumers who do pay attention to them may feel guilty and stop drinking sugary drinks altogether, even though drinking them in moderation isn’t harmful.
>”Standard economic analysis would then lead us to conclude that despite lowering sugary drinks consumption, this label is actually bad for society because it ends up influencing exactly the wrong people,”
Consuming 150 cal disaccharides either A) reduces appitite and therefore crowds out consumption of higher-value food, or B) adds 150 of junk to someone. Some drinking moderate 2-3 sodas a week will gain five pounds a year, or 50 pounds a decade.