Introduction to Behavioural Economics for Policy

Thursday, 29th of July
Friday, 30th of July

Full day sessions

Location: Meetings on The Terrace


Behavioural economics is an increasingly important part of modern policy analysis and economics. It allows policy makers to use psychological insights to increase the explanatory power of economic analysis.
The objective of this course is to provide participants with an appreciation of the principles of behavioural economics and demonstrate how these principles can be used in public policy analysis. To do this the course will help participants understand:
• the strengths and limitations of the standard model of economics (e.g., expected utility or exponential discounting) and how alternative models informed by behavioural economics (e.g., prospect theory or present bias) complement and extend these classical theories;
• the main principles of behavioural economics and how they apply to policy problems, such as: choice under uncertainty (risk preferences); choice over time (time preferences); choice over interpersonal allocations (social preferences); and judgment under uncertainty (probability assessments); and
• how to apply these principles to policy analysis through the use of empiricism and evaluation.
Detailed case studies will be reviewed with practical frameworks that participants will be able to use by the end of the course.

Course objectives

On completion of this course participants will:
• have an understanding of key behavioural economics terms and concepts;
• be able to apply behavioural economic thinking to current policy issues;
• be able to apply existing behavioural frameworks and toolkits to policy analysis;
• understand the basics of how to test policy interventions in the field; and
• appreciate how behavioural economics can be used in many areas in the public sector

Session outline and delivery

1. Principles of behavioural economics
1.1. Behavioural economic basics
1.2. Comparison with standard model of economics
1.3. Behavioural economic principles for public policy
1.3.1. Choice under uncertainty Prospect theory Reference-dependence
1.3.2. Choice over time Time discounting Time preferences
1.3.3. Choice over interpersonal allocations Fairness in economics The role of self-serving biases
1.3.4. Judgment under uncertainty Heuristics and biases (e.g. availability bias and anchoring)

2. Applications of behavioural economics
2.1. Behavioural economics in public policy
2.1.1. Health/COVID-19 case study
2.1.2. Unemployment case study
2.1.3. Tax case study
2.1.4. Energy case study
2.2. Behavioural economic frameworks
2.2.1. BASIC
2.2.3. EAST
2.3. Evaluating behavioural economics in public policy
2.3.1. Randomised controlled trials
2.3.2. Quasi-experimental methods

Target Audience and assumed background

This course will be most helpful to policy advisors with little or no experience of behavioural economics. No prior economics experience is required, but this course is also useful for policy advisors with economic training who are looking to include the principles of behavioural economics in their toolkit.

Course Costs

This course is provided by the Government Economics Network (GEN) at a cost of $300 plus GST per person.