Nudges – light-touch interventions aimed to help people achieve socially desirable outcomes – can take place without individuals being aware of them. It would seem to be ethically superior to tell individuals that they are being nudged, encouraging them to be aware of the reasons for the official interest in their behaviours. Aided by internal reflection, individuals may make informed choices whether to go along with officially-preferred options or not. In general, this paper adopts this line of argument, justifying self-awareness from the liberal belief in autonomy of the person. However, awareness and/or reflection are not always necessarily ethically superior to passivity, as in cases where manipulation is also present with information provision, when there is framing of deliberative exercises, and where there is harm done to others due to reflectively-driven actions. Most of the time self-awareness is to be preferred, but not always.

Two concepts shaped and continue to shape the discussion on the limits of a liberal and democratic state. First, Mill's harm principle, according to which the fundamental justification for a state exercising power over individuals is to prevent harm being done to others. Second, the distinction between the public sphere, where liberal democracies can intervene, and the private sphere, where individuals are, in principle, free to do as they like. I argue that both concepts have to be revisited in the context of today's ‘ultra-processed’ world, in which sophisticated technologies and highly engineered products reach deep into the private sphere, exploiting human psychology and jeopardizing citizens’ health and welfare in the interest of maximizing profit. In this ultra-processed world, where the distinction between the public and the private spheres is blurred, systemic interventions such as regulation and taxation, often criticized as paternalistic, are necessary to minimize harm. However, they must be complemented by interventions informed by behavioural science that modify and guide individual behaviours. Beyond the soft paternalism of nudging, people can be empowered to self-nudge – a non-paternalistic approach that enables them to design and structure their own decision environments and choice architectures as they see fit.

Public policies often involve “norm nudging”, the use of norm information to steer individual behavior in a prosocial direction. Analysis of social norm messaging often concentrates on the outcome measure: the potential change in behavior. The cognitive and psychological processes that underlie individuals’ response to norm information, especially the inferences they draw, are usually overlooked. This knowledge gap may lead to adverse consequences, such as messages backfiring. To (factually) justify norm nudging interventions, it is essential that policymakers understand the complex mechanisms that link context, social expectations and preferences, and how the interpretation of different types of messages affects behavior.

In this article, the confidence that has been placed in hard and, in particular, soft paternalistic measures in the field of behavioural public policy is questioned. The four purported limitations of human reasoning – i.e. limited imagination, willpower, objectivity and technical ability – are considered, but ultimately it is concluded that these are insufficient justifications for paternalistic intervention, for two principal-related reasons. First, it is impossible for a policy maker to discern what people desire for their own lives, and second, so long as they are not harming others, people ought to be free to pursue their own desires. The vision for the future of behavioural public policy proposed here is thus consistent with classical liberal, and in particular, Millian thought: i.e. aim to educate people on the pros and cons of their actions and inactions so that they are better equipped to live the lives they wish to lead but do not interfere directly in guiding them towards any particular end.

This paper offers an interpretation of the behavioural evidence that casts doubt over whether people always have preferences or, if they do, that they are stable. If people do not have preferences in this sense, then the usual policy evaluation standard of preference satisfaction cannot be used in these cases. The paper then develops, to fill this gap, a Millian policy framework where policy is judged by whether it advances what Mill understands by individual liberty in On Liberty. This yields many recognisable policies but offers a different evaluative standard for them. It also yields some policy innovations: e.g. a basic income and a flat tax.

Robert Sugden has advanced various critiques of behavioural welfare economics, offering the notion of opportunity as an alternative. We agree with much of Sugden's critique but argue that his approach would benefit from a broadening of the informational base beyond opportunities to include people's concern for decision processes. We follow Amartya Sen in arguing that the process through which choices are made (process freedom) is something individuals care about beyond the availability of choice options (opportunity freedom) as they value a sense of agency. We argue that individuals’ agentic capabilities are crucial for people's process freedom and hence for their sense of agency. In the final section of the paper, we sketch the institutional implications of our argument, i.e. what a joint consideration of opportunities and agentic capabilities means for behavioural public policy.

Behavioural economists often claim that their policy recommendations are justified by cost–benefit analysis (CBA), but without adequate explanation of the methodology they have in mind. I sketch the outlines of a CBA methodology that is compatible with the findings of behavioural economics and is in accord with my account in Sugden (2018) of a well-functioning market as a network of opportunities for mutually beneficial transactions. The key idea is that the CBA of a project is concerned only with effects that are not transmitted through voluntary interactions. I illustrate this proposal by considering the appraisal of fuel economy mandates.

Parochialism, by which we mean in-group preferences and out-group prejudice, has the potential to influence public policy. In-group preferences and out-group prejudice can lead individuals to evaluate a policy based on how that policy affects the groups they belong to rather than on the basis of their ideological priors or the impact of that policy on society at large. Unchecked, parochialism likely leads to problematic policies and perverse social outcomes. While the evidence suggests that this bias can be mitigated if issues are framed in ways that encourage reflection as opposed to unreflective immediate responses, policy makers face incentives to leverage parochialism rather than combat it. The solution may instead require limiting policy makers and our ability to make decisions for others and promoting an institutional environment that encourages our interacting with diverse others rather than insularity. Stated another way, limited government and open society may be the path beyond our parochialism.

A substantial experimental literature in behavioral economics and psychology finds that individuals rely on heuristics and cognitive biases when they make decisions. These heuristics and biases impact the choices of individuals from all walks of life, including police officers entrusted with the power to enforce laws. Individuals act within an institutional context. We examine how the institutions that structure American policing interact with the heuristics and biases of individual police officers. We then suggest institutional changes that may result in better performance from boundedly rational police officers.