Abstract:

Although Behavioural Economics is a popular area among the research community and it is increasingly important in introductory Economics texts, the references to such works are usually missed in courses in Public Economics. This article aims to present a brief outline of an introduction to Behavioral Public Economics taught as a part of an annual course in Public Economics to undergraduate Law students who have previously followed an introductory course in Economics. The main objective is to present the implications for social and economic policy of going beyond the standard model that assumes self-interest and perfect rationality. Particularly, the explanations are articulated around three different sub-topics: (1) The relevance of reciprocity and social norms (based on text of Bruno Frey, Erns Fehr, Samuel Bowles and Herbert Gintis); (2) Bounded rationality: saving and pensions (based on works of Case Sunstein and Richard Thaler); (3) Self-control, stimuli and public policy: an application to the drugs issue (based on the research of Douglas Bernheim and Antonio Rangel). Each of these pieces is illustrated with examples brought from recent scientific literature (including pieces of work of authors like Samuel Bowles and Herbert Gintis, Ernst Fehr, Bruno Frey, Richard Thaler and Case Sunstein and Douglass Bernheim and Antonio Rangel), trying to provide more accessible references to students as well. In addition, in order to foster reflection on these issues among students, they had to comment on a brief article of Samuel Bowles on social norms and reciprocity (“When Economic Incentives Backfire”, Harvard Business Review, March 2009), where students were also requested to provide a real life example where social incentives operate. An ad hoc survey carried out by the teacher reveals that students were moderately interested in the lectures delivered.

Keywords:

Behavioural Economics, Public Economics, social norms, bounded rationality, self-control.