Skip to main content

Exploring the (behavioural) political economy of nudging


In recent years, a novel, specifically institutional approach to public regulation has become popular, particularly in the Anglo-Saxon world: ‘Libertarian Paternalism’ promises to tackle society's problems in a way that increases welfare without compromising people's freedom and autonomy. The key instrument advanced by this programme is nudges. Although nudges’ ethical quality has been discussed at length, the political economy driving their implementation by self-interested (and possibly boundedly rational) policy makers and bureaucrats has been largely neglected so far. This paper elaborates on how this gap might be filled.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the or variations. ‘’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Exploring the (behavioural) political economy of nudging
      Available formats
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Exploring the (behavioural) political economy of nudging
      Available formats
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Exploring the (behavioural) political economy of nudging
      Available formats
Corresponding author
Hide All
Akerlof, G. A. (1989), ‘The Economics of Illusion’, Economics and Politics, 1: 115.
Amir, O. and Lobel, O. (2008), ‘Stumble, Predict, Nudge: How Behavioral Economics Informs Law and Policy’, Columbia Law Review, 108: 20982138.
Angner, E. (2015), ‘Behavioral Welfare Economics, Libertarian Paternalism, and the Nudge Agenda’, (last accessed December 16, 2016).
Arad, A. and Rubinstein, A. (2015), ‘The People's Perspective on Libertarian-paternalistic Policies’, Working Paper.
Baldwin, R. (2014), ‘From Regulation to Behaviour Change: Giving Nudge the Third Degree’, Modern Law Review, 77: 831857.
Baron, J. and McCaffery, E. J. (2008), ‘Starving the Beast: The Political Psychology of Budget Deficits’, in Garrett, E., Graddy, E. and Jackson, H. E. (eds.), Fiscal Challenges. Cambridge: Cambridge University Press, pp. 221241.
Bernheim, D. B. (2016), ‘The Good, the Bad and the Ugly: A Unified Approach to Behavioral Welfare Economics’, Journal of Cost Benefit Analysis, 7: 1268.
Bhargava, S. and Loewenstein, G. A. (2015), ‘Behavioral Economics and Public Policy 102: Beyond Nudging’, American Economic Review, Papers & Proceedings, 105: 396401.
Bohnet, I., Van Geen, A., and Bazerman, M. (2014), ‘When Performance Trumps Gender Bias: Joint vs. Separate Evaluation’, Management Science, 62: 12251234.
Bovens, L. (2009), ‘The Ethics of Nudge’, in Grüne-Yanoff, T. and Hansson, S. O. (eds.), Preference Change: Approaches from Philosophy, Economics and Psychology, Berlin: Springer, pp. 207220.
Bowles, S. (1998), ‘Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions’, Journal of Economic Literature, 36: 75111.
Bruns, H., Kantorowicz-Reznichenko, E., Klement, K., Luistro Jonsson, M., and Rahali, B. (2016), ‘Can Nudges be Transparent and Yet Effective?’, Working Paper, (last accessed December 16, 2016).
Bubb, R. and Pildes, R. H. (2014), ‘How Behavioral Economics Trims its Sails and Why’, Harvard Law Review, 127: 15931678.
Buchanan, J. M. (1999), ‘The Foundations for Normative Individualism’, in The Logical Foundations of Constitutional Liberty, vol. 1. Indianapolis: Liberty Fund, pp. 281291.
Camerer, C., Issacharoff, S., Loewenstein, G. A., O'Donoghue, T., and Rabin, M. (2003), ‘Regulation for Conservatives: Behavioral Economics and the Case for “Asymmetric Paternalism”’, University of Pennsylvania Law Review, 151: 12111254.
Caplan, B. C. (2001), ‘Rational Irrationality and the Microfoundations of Political Failure’, Public Choice, 107: 311331.
Caplan, B. C. (2013), ‘Nudge, Policy and the Endowment Effect’, Blog Post, (last accessed December 16, 2016).
Carr, N. (2011), The Shallows: What the Internet is Doing to Our Brains, New York: Norton.
Chetty, R. (2015), ‘Behavioral Economics and Public Policy: A Pragmatic Perspective’, American Economic Review, Papers & Proceedings, 105: 133.
Cowen, T. and Sunstein, C. R. (2016), ‘Conversation with Tyler: Cass Sunstein’, (last accesed December 16, 2016).
Deci, E. L. and Ryan, R. M. (2000), ‘The “What” and “Why” of Goal Pursuits: Human Needs and the Self-determination of Behavior’, Psychological Inquiry, 11: 227268.
De Marneffe, P. (2006), ‘Avoiding Paternalism’, Philosophy and Public Affairs, 34: 6894.
Dworkin, G. (2016), ‘Paternalism’, The Stanford Encyclopedia of Philosophy. (last accessed December 16, 2016).
Felsen, G., Castelo, N., and Reiner, P. B. (2013), ‘Decisional Enhancement and Autonomy: Public Attitudes Toward Overt and Covert Nudges’, Judgment and Decision Making, 8: 202213.
Fishbach, A. and Trope, Y. (2005), ‘The Substitutability of External Control and Self-control in Overcoming Temptation’, Journal of Experimental Social Psychology, 41: 256270.
Frank, R. H. (2008), ‘Review of Nudge: Improving Decisions About Health, Wealth and Happiness’, Ethics, 119: 202208.
Frey, B. S. and Eichenberger, R. (1994), ‘Economic Incentives Transform Psychological Anomalies’, Journal of Economic Behavior and Organization, 23: 215234.
Frey, B. S., Benz, M. and Stutzer, A. (2004), ‘Introducing Procedural Utility: Not Only what, but Also How Matters’, Journal of Institutional and Theoretical Economics, 160: 377401.
Fumagalli, R. (2016), ‘Decision Sciences and the New Case for Paternalism: Three Welfare-related Justificatory Challenges’, Social Choice & Welfare, 47: 459480.
Furedi, F. (2011), ‘Defending Moral Autonomy Against an Army of Nudgers’, Spiked (Online). (last accessed December 16, 2016).
Gayer, T. and Viscusi, W. K. (2015), ‘Behavioral Public Choice: The Behavioral Paradox of Government Policy’, Harvard Journal of Law & Public Policy, 38: 9731007.
Glaeser, E. L. (2004), ‘Psychology and the Market’, American Economic Review, 94: 408413.
Glaeser, E. L. (2006), ‘Paternalism and Psychology’, University of Chicago Law Review, 73: 133156.
Grüne-Yanoff, T. (2012), ‘Old Wine in New Casks: Libertarian Paternalism Still Violates Liberal Principles’, Social Choice and Welfare, 38: 635645.
Grüne-Yanoff, T. and Hertwig, R. (2016), ‘Nudge versus Boost: How Coherent are Policy and Theory?’, Minds and Machines, 26: 149183.
Guala, F. and Mittone, L. (2015), ‘A Political Justification of Nudging’, Review of Philosophy and Psychology, 6: 385395.
Hagman, W., Andersson, D., Västfjall, D., and Tinghög, G. (2015), ‘Public Views on Policies Involving Nudges’, Review of Philosophy and Psychology, 6: 439453.
Haidt, J. and Pinker, S. (2016), ‘Moral Psychology: An Exchange’, in New York Review of Books, April 7, (last accessed December 16, 2016).
Hallsworth, M., List, J. A., Metcalfe, R. D., and Vlaev, I. (2014), ‘The Behavioralist As Tax Collector: Using Natural Field Experiments to Enhance Tax Compliance’, NBER Working Paper 20007.
Halpern, D. (2015), Inside the Nudge Unit, London: WH Allen.
Halpern, D. and Nesterak, M. (2014), ‘Nudging the UK: A Conversation with David Halpern’, The Psych Report. (last accessed December 16, 2016).
Hansen, P. G. (2016), ‘The Definition of Nudge and Libertarian Paternalism – Does the Hand Fit the Glove?’, European Journal of Risk Regulation, 7: 155174.
Hansen, P. G. and Jespersen, A. M. (2013), ‘Nudge and the Manipulation of Choice’, European Journal of Risk Regulation, 3: 328.
Hausman, D. M. and Welch, B. (2010), ‘Debate: to Nudge or Not to Nudge?’, Journal of Political Philosophy, 18: 123136.
Hersch, J. (2005), ‘Smoking Restrictions As a Self-control Mechanism’, Journal of Risk and Uncertainty, 31: 521.
Hertwig, R. and Ryall, M. D. (2016), ‘Nudge vs. Boost: Agency Dynamics Under “Libertarian Paternalism”’, Working Paper.
Jolls, C., Sunstein, C. R., and Thaler, R. H. (1998), ‘A Behavioral Approach to Law and Economics’, Stanford Law Review, 50: 14711550.
Jung, J. Y. and Mellers, B. A. (2016), ‘American Attitudes Toward Nudging’, Judgment and Decision Making, 11: 6274.
Kahneman, D. (2011), Thinking – Fast and Slow, London: Penguin.
Kandel, E. (2006), In Search of Memory: The Emergence of a New Science of Mind, New York: Norton.
Kirchgässner, G. (2015), ‘Soft Paternalism, Merit Goods, and Normative Individualism’, European Journal of Law and Economics, doi: 10.1007/s10657-015-9500-5 (last accessed December 16, 2016).
Klein, D. B. (1994), ‘If Government is so Villainous, how Come Government Officials Don't Seem Like Villains?’, Economics and Philosophy, 10: 91106.
Koppell, J. G. S. and Steen, J. A. (2004), ‘The Effects of Ballot Position on Election Outcomes’, Journal of Politics, 66: 267281.
Kramer, A. D. I., Guillory, J. E., and Hancock, J. T. (2014), ‘Experimental Evidence of Massive-scale Contagion Through Social Networks’, Proceedings of the National Academy of Science, 111: 87888790.
Kruger, J. and Dunning, D. (1999), ‘Unskilled and Unaware of it – How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-assessments’, Journal of Personality and Social Psychology, 6: 11211134.
Leggett, W. (2014), ‘The Politics of Behaviour Change: Nudge, Neoliberalism, and the State’, Policy and Politics, 42: 319.
Le Grand, J. and New, B. (2015), Government Paternalism, Princeton: Princeton University Press.
Lepenies, R. and Malecka, M. (2015), ‘The institutional consequences of nudging - nudges, politics and the law’, Review of Philosophy and and Psychology, 6: 427437.
Loewenstein, G. A. and Adler, D. (1995), ‘A Bias in the Prediction of Tastes’, Economic Journal, 105: 929937.
Loewenstein, G. A. and Haisley, E. C. (2008), ‘The Economist as Therapist: Methodological Ramifications of ‘Light’ Paternalism’, in Caplin, A. and Schotter, A. (eds.), The Foundations of Positive and Normative Economics, Oxford: Oxford University Press, pp. 210–148.
Loewenstein, G. A. and Ubel, P. (2010), ‘Economists Behaving Badly’, in New York Times, July 15, p. A31.
Loewenstein, G. A., Bryce, C., Hagman, D., and Rajpal, S. (2015), ‘Warning: You are About to be Nudged’, Behavioral Science & Policy, 1: 3542.
Lusk, J. L., Marette, S., and Norwood, F. B. (2014), ‘The Paternalist Meets his Match’, Applied Economic Perspectives and Policy, 36: 61108.
Maguire, E. A., Gadian, D. G., Johnsrude, I. S., Good, C. D., Ashburner, J., Frackowiak, R. S. J., and Frith, C. D. (2000), ‘Navigation-related Structural Change in the Hippocampi of Taxi Drivers’, Proceedings of the National Academy of Sciences, 97: 43984403.
McCrudden, C. and King, J. (2016), ‘The Dark Side of Nudging: The Ethics, Political Economy, and Law of Libertarian Paternalism’, in Kemmerer, A., Möllers, C., Steinbeis, M., and Wagner, G. (eds.), Choice Architecture in Democracies – Exploring the Legitimacy of Nudging. Oxford/Baden-Baden: Hart and Nomos.
McKenzie, C. R. M. (2004), ‘Framing Effects in Inference Tasks – and Why they are Normatively Defensible’, Mind & Cognition, 32: 874885.
Mols, F., Haslam, S. A., Jetten, J., and Steffens, N. K. (2015), ‘Why a Nudge is Not Enough: A Social Identity Critique of Governance by Stealth’, European Journal of Political Research, 54: 8198.
Pedersen, S. K., Koch, A. K., and Nafziger, J. (2014), ‘Who Wants Paternalism?’ Economics Bulletin, 66: S147S166.
Pommerehne, W. W. and Schneider, F. (1978), ‘Fiscal Illusion, Political Institutions and Local Public Spending’, Kyklos, 31: 381408.
Qizilbash, M. (2012), ‘Informed Desire and the Ambitions of Libertarian Paternalism’, Social Choice and Welfare, 38: 647658.
Rachlinski, J. J. (2003), ‘The Uncertain Psychological Case for Paternalism’, Northwestern University Law Review, 97: 11631225.
Rebonato, R. (2012), Taking Liberties, London: Palgrave Macmillan.
Reisch, L. and Sunstein, C. R. (2016), ‘Do Europeans like nudges?’, Working Paper.
Reiss, J. (2013), Philosophy of Economics: A Contemporary Introduction, London: Routledge.
Rizzo, M. and Whitman, D. G. (2009), ‘Little Brother is Watching You: New Paternalism On the Slippery Slopes’, Arizona Law Review, 51: 685739.
Schnellenbach, J. (2012), ‘Nudges and Norms: On the Political Economy of Libertarian Paternalism’, European Journal of Political Economy, 28, 266277.
Schnellenbach, J. (2016), ‘A Constitutional Economics Perspective on Soft Paternalism’, Kyklos, 69: 135156.
Schnellenbach, J. and Schubert, C. (2015), ‘Behavioral Political Economy: A Survey’, European Journal of Political Economy, 40: 395417.
Schubert, C. (2014), ‘Evolutionary Economics and the Case for a Constitutional Libertarian Paternalism’, Journal of Evolutionary Economics, 24: 11071113.
Schubert, C. (2015a), ‘Opportunity and Preference Learning’, Economics and Philosophy, 31: 275295.
Schubert, C. (2015b), ‘On the Ethics of Public Nudging: Autonomy and Agency’, Working Paper, (last accessed December 16, 2016).
Schubert, C. (2017), ‘Green Nudges: Do they Work? Are they Ethical?’, Ecological Economics, 132: 329342.
Schubert, C. and Cordes, C. (2013), ‘Role Models that Make you Unhappy: Light Paternalism, Social Learning and Welfare’, Journal of Institutional Economics, 9: 131159.
Selinger, E. and Whyte, K. (2011), ‘Is There a Right Way to Nudge? The Practice and Ethics of Choice Architecture’, Sociology Compass, 5 (10): 923935.
Shaw, T. (2016), ‘The Psychologists Take Power’, in New York Review of Books. February 26, (last accessed December 16, 2016).
Smith, N. C., Goldstein, D. G., and Johnson, E. J. (2013), ‘Choice Without Awareness: Ethical and Political Implications of Defaults’, Journal of Public Policy and Marketing, 32: 159172.
Sugden, R. (2015), ‘Opportunity and Preference Learning: A Reply to Christian Schubert’, Economics and Philosophy, 31: 297303.
Sunstein, C. R. (2013), ‘The Storrs Lectures: Behavioral Economics and Paternalism’, Yale Law Journal, 122: 18261898.
Sunstein, C. R. (2014), Why Nudge?, New Haven: Yale University Press.
Sunstein, C. R. (2015), ‘Nudging and Choice Architecture: Ethical Considerations’, Discussion Paper 809, Harvard Law School.
Sunstein, C. R. (2016), The Ethics of Influence. Government in the Age of Behavioral Science, Cambridge: Cambridge University Press.
Sunstein, C. R. and Reisch, L. A. (2013), ‘Green by Default’, Kyklos, 66, 398402.
Sunstein, C. R. and Thaler, R. H. (2003), ‘Libertarian Paternalism is Not an Oxymoron’, University of Chicago Law Review, 70: 11591202.
Tannenbaum, D., Fox, C. R., and Rogers, T.. (2014), ‘On the Misplaced Politics of Behavioral Policy Interventions’, Working Paper. (last accessed December 16, 2016).
Thaler, R. H. (2015a), ‘Misbehaving’, in The Making of Behavioral Economics. New York: W.W. Norton.
Thaler, R. H. (2015b), ‘The Power of Nudges, for Good and Bad’, The New York Times, October 31, (last accessed December 16, 2016).
Thaler, R. H. and Sunstein, C. R. (2003), ‘Libertarian Paternalism’, American Economic Review, Papers and Proceedings, 93: 175179.
Thaler, R. H. and Sunstein, C. R. (2008), Nudge: Improving Decisions about Health, Wealth and Happiness, New Haven: Yale University Press.
Thaler, R. H. and Benartzi, S. (2013), ‘Behavioral Economics and the Retirement Savings Crisis’, Science, 339 (6124): 11521153.
The Economist. (2016), ‘Bringing Light to the Grey Economy’, October 15th. (last accessed December 16, 2016).
Volokh, E. (2003), ‘The Mechanisms of the Slippery Slope’, Harvard Law Review, 116: 10261136.
White, M. D. (2013), The Manipulation of Choice: Ethics and Libertarian Paternalism, New York: Palgrave.
Whitehead, M., Jones, R., Howell, R., Lilley, R., and Pykett, J. (2014), ‘Nudging All Over the World - Assessing the Global Impact of the Behavioural Scienvces on Public Policy’, Available at: (last accessed December 16, 2016).
White House. (2015), ‘Executive Order – using Behavioral Science Insights to Better Serve the American People’, (last accessed December 16, 2016).
Whitman, D. G. and Rizzo, M. (2015), ‘The Problematic Welfare Standards of Behavioral Paternalism’, Review of Philosophy and Psychology, 6: 409425.
Yeung, K. (2012), ‘Nudge as Fudge’, Modern Law Review, 75: 122148.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed