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Productivity Commission roundtable on behavioural economics and public policy: keynote dinner address

8 Apr 2008
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Behavioural economics is economists satisfying themselves intellectually of truths about economic agents' behaviour that are readily understood by marketers and politicians. It is the scientific study of intuition which, because of the way the human brain has evolved, heavily influences our decision making. Behavioural economics reveals conventional economics to be normative rather than positive. Economists' belief in individualism, freedom of choice and a limited role for government rest more heavily on the assumption of rationality than most realise. The insights of behavioural economics may be used to reframe essentially unchanged policy prescriptions to make them more politically palatable, or to change the policies being prescribed. Progress towards the latter could involve greater study of forms of consumption, acknowledging the influence of the pursuit of social status, rethinking the model of labour supply to acknowledge the utility derived from work and the extreme disutility of unemployment, and recognition of the pervasiveness of self-control problems.

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2008
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