research topics behavioral economics

Behavioral Economics Research Paper Topics

This list of behavioral economics research paper topics is intended to provide students and researchers with a comprehensive guide for selecting research topics in the field of behavioral economics. The importance of choosing a pertinent and engaging topic for your research paper is paramount, and this guide is designed to facilitate this crucial process. We offer an extensive list of topics, divided into ten categories, each with ten unique ideas. Additionally, we provide expert advice on how to select a topic from this multitude and how to write a compelling research paper in behavioral economics. Lastly, we introduce iResearchNet’s professional writing services, tailored to support your academic journey and ensure success in your research endeavors.

100 Behavioral Economics Research Paper Topics

Choosing a research paper topic is a critical step in the research process. The topic you select will guide your study and influence the complexity and relevance of your work. In the field of behavioral economics, there are numerous intriguing topics that can be explored. To assist you in this process, we have compiled a comprehensive list of behavioral economics research paper topics. These topics are divided into ten categories, each offering a different perspective on behavioral economics.

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• The role of heuristics in decision-making
• Prospect theory and its applications
• Time inconsistency and hyperbolic discounting
• The endowment effect and loss aversion
• Mental accounting and its implications
• The role of anchoring in economic decisions
• Framing effect in marketing strategies
• The paradox of choice: More is less
• Nudge theory in public policy
• Trust game in behavioral economics
• The role of emotions in economic decisions
• Overconfidence bias in financial markets
• Decision-making under uncertainty
• The impact of social norms on economic behavior
• The role of fairness and inequality aversion in economic decisions
• The effect of cognitive dissonance on consumer behavior
• The impact of stress on economic decisions
• The role of regret and disappointment in economic decisions
• The effect of peer influence on economic behavior
• The role of culture in economic decision-making
• The use of nudges in public policy
• The impact of behavioral economics on tax policy
• The role of behavioral economics in health policy
• Behavioral insights in environmental policy
• The influence of behavioral economics on education policy
• The role of behavioral economics in social welfare policy
• The impact of behavioral economics on retirement policy
• Behavioral economics and traffic policy
• The role of behavioral economics in energy policy
• The influence of behavioral economics on housing policy
• The role of behavioral biases in personal financial decisions
• The impact of financial literacy on economic behavior
• Behavioral economics and retirement savings
• The role of behavioral economics in credit card debt
• The impact of behavioral economics on investment decisions
• Behavioral economics and insurance decisions
• The role of behavioral economics in household budgeting
• The impact of behavioral economics on mortgage decisions
• Behavioral economics and financial planning
• The role of behavioral economics in financial education
• The role of behavioral economics in pricing strategies
• Behavioral economics and consumer choice
• The impact of behavioral economics on advertising
• Behavioral economics and product design
• The role of behavioral economics in sales strategies
• Behavioral economics and customer loyalty
• The impact of behavioral economics on branding
• Behavioral economics and e-commerce
• The role of behavioral economics in business negotiations
• Behavioral economics and corporate decision-making
• The role of behavioral economics in health behaviors
• Behavioral economics and healthcare decisions
• The impact of behavioral economics on health insurance choices
• Behavioral economics and preventive health care
• The role of behavioral economics in obesity and diet choices
• Behavioral economics and smoking cessation
• The impact of behavioral economics on medication adherence
• Behavioral economics and mental health
• The role of behavioral economics in exercise and physical activity
• Behavioral economics and alcohol consumption
• The role of behavioral economics in promoting sustainable behavior
• Behavioral economics and energy conservation
• The impact of behavioral economics on recycling behavior
• Behavioral economics and water conservation
• The role of behavioral economics in climate change mitigation
• Behavioral economics and sustainable transportation
• The impact of behavioral economics on sustainable consumption
• Behavioral economics and green investments
• The role of behavioral economics in biodiversity conservation
• Behavioral economics and waste reduction
• The role of behavioral economics in digital marketing
• Behavioral economics and online shopping behavior
• The impact of behavioral economics on social media usage
• Behavioral economics and cybersecurity
• The role of behavioral economics in technology adoption
• Behavioral economics and online privacy decisions
• The impact of behavioral economics on mobile app usage
• Behavioral economics and virtual reality
• The role of behavioral economics in video game design
• Behavioral economics and artificial intelligence
• The role of behavioral economics in educational choices
• Behavioral economics and student motivation
• The impact of behavioral economics on study habits
• Behavioral economics and school attendance
• The role of behavioral economics in academic performance
• Behavioral economics and college enrollment decisions
• The impact of behavioral economics on student loan decisions
• Behavioral economics and teacher incentives
• The role of behavioral economics in educational policy
• Behavioral economics and lifelong learning
• The role of neuroscience in behavioral economics
• Behavioral economics and inequality
• The impact of behavioral economics on economic modeling
• Behavioral economics and big data
• The role of behavioral economics in addressing social issues
• Behavioral economics and virtual currencies
• The impact of behavioral economics on behavioral change interventions
• Behavioral economics and the sharing economy
• The role of behavioral economics in understanding happiness and well-being
• Behavioral economics and the future of work

This comprehensive list of behavioral economics research paper topics provides a wide range of options for your research. Each category offers unique insights into the different aspects of behavioral economics, from fundamental concepts to future directions. Remember, the best research paper topic is one that not only interests you but also has sufficient resources for you to explore. We hope this list inspires you and aids you in your journey to write a compelling research paper in behavioral economics.

Introduction to Behavioral Economics

Behavioral economics is an intriguing and dynamic field that bridges the gap between traditional economic theory and actual human behavior. It integrates insights from psychology, judgment, and decision-making into economic analysis, providing a more accurate and nuanced understanding of human behavior.

Traditional economic theory often assumes that individuals are rational agents who make decisions based on maximizing their utility. However, behavioral economics challenges this assumption, recognizing that individuals often act irrationally due to various cognitive biases and heuristics. These deviations from rationality can significantly impact economic decisions and outcomes, making behavioral economics a critical field of study.

Research papers in behavioral economics allow students to delve deeper into specific areas of interest, contributing to their personal knowledge and the broader academic community. These papers can explore a wide range of topics, from understanding the role of cognitive biases in financial decision-making to examining the impact of behavioral interventions on public policy.

The importance of behavioral economics extends beyond academia. It has real-world implications in various sectors, including policy-making, business, finance, and healthcare. By understanding the psychological underpinnings of economic decisions, we can design better products, policies, and interventions that align with actual human behavior.

How to Choose a Behavioral Economics Topic

Choosing a research topic is a critical step in the research process. The topic you select will guide your study, influence the complexity and relevance of your work, and determine how engaged you are throughout the process. In the field of behavioral economics, there are numerous intriguing topics that can be explored. Here are some expert tips to assist you in this process:

• Understanding Your Interests: The first step in choosing a research topic is to understand your interests. What areas of behavioral economics fascinate you the most? Are you interested in how behavioral economics influences policy making, or are you more intrigued by its role in personal finance or marketing? Reflecting on these questions can help you narrow down your options and choose a topic that truly engages you. Remember, research is a time-consuming process, and your interest in the topic will keep you motivated.
• Evaluating the Scope of the Topic: Once you have identified your areas of interest, the next step is to evaluate the scope of potential topics. A good research topic should be neither too broad nor too narrow. If it’s too broad, you may struggle to cover all aspects of the topic effectively. If it’s too narrow, you may have difficulty finding enough information to support your research. Try to choose a topic that is specific enough to be manageable but broad enough to have sufficient resources.
• Assessing Available Resources and Data: Before finalizing a topic, it’s important to assess the available resources and data. Are there enough academic sources, such as books, journal articles, and reports, that you can use for your research? Is there accessible data that you can analyze if your research requires it? A preliminary review of literature and data can save you from choosing a topic with limited resources.
• Considering the Relevance and Applicability of the Topic: Another important factor to consider is the relevance and applicability of the topic. Is the topic relevant to current issues in behavioral economics? Can the findings of your research be applied in real-world settings? Choosing a relevant and applicable topic can increase the impact of your research and make it more interesting for your audience.
• Seeking Advice: Don’t hesitate to seek advice from your professors, peers, or other experts in the field. They can provide valuable insights, suggest resources, and help you refine your topic. Discussing your ideas with others can also help you see different perspectives and identify potential issues that you may not have considered.
• Flexibility: Finally, be flexible. Research is a dynamic process, and it’s okay to modify your topic as you delve deeper into your study. You may discover new aspects of the topic that are more interesting or find that some aspects are too challenging to explore due to constraints. Being flexible allows you to adapt your research to these changes and ensure that your study is both feasible and engaging.

Remember, choosing a research topic is not a decision to be taken lightly. It requires careful consideration and planning. However, with these expert tips, you can navigate this process more effectively and choose a behavioral economics research paper topic that not only meets your academic requirements but also fuels your passion for learning.

How to Write a Behavioral Economics Research Paper

Writing a research paper in behavioral economics, like any other academic paper, requires careful planning, thorough research, and meticulous writing. Here are some expert tips to guide you through this process:

• Understanding the Structure of a Research Paper: A typical research paper includes an introduction, literature review, methodology, results, discussion, and conclusion. The introduction presents your research question and its significance. The literature review provides an overview of existing research related to your topic. The methodology explains how you conducted your research. The results section presents your findings, and the discussion interprets these findings in the context of your research question. Finally, the conclusion summarizes your research and suggests areas for future research.
• Developing a Strong Thesis Statement: Your thesis statement is the central argument of your research paper. It should be clear, concise, and debatable. A strong thesis statement guides your research and helps your readers understand the purpose of your paper.
• Conducting Thorough Research: Before you start writing, conduct a thorough review of the literature related to your topic. This will help you understand the current state of research in your area, identify gaps in the literature, and position your research within this context. Use academic databases to find relevant books, journal articles, and other resources. Remember to evaluate the credibility of your sources and take detailed notes to help you when writing.
• Writing and Revising Drafts: Start writing your research paper by creating an outline based on the structure of a research paper. This will help you organize your thoughts and ensure that you cover all necessary sections. Write a first draft without worrying too much about perfection. Focus on getting your ideas down first. Then, revise your draft to improve clarity, coherence, and argumentation. Make sure each paragraph has a clear topic sentence and supports your thesis statement.
• Proper Citation and Avoiding Plagiarism: Always cite your sources properly to give credit to the authors whose work you are building upon and to avoid plagiarism. Familiarize yourself with the citation style required by your institution or discipline, such as APA, MLA, Chicago/Turabian, or Harvard. There are many citation tools available online that can help you with this.
• Seeking Feedback: Don’t hesitate to seek feedback on your drafts from your professors, peers, or writing centers at your institution. They can provide valuable insights and help you improve your paper.
• Proofreading: Finally, proofread your paper to check for any grammatical errors, typos, or inconsistencies in formatting. A well-written, error-free paper makes a good impression on your readers and enhances the credibility of your research.

Remember, writing a research paper is a process that requires time, effort, and patience. Don’t rush through it. Take your time to understand your topic, conduct thorough research, and write carefully. With these expert tips, you can write a compelling behavioral economics research paper that contributes to your academic success and the broader field of behavioral economics.

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Articles on Behavioral economics

Displaying 1 - 20 of 52 articles.

Biases against Black-sounding first names can lead to discrimination in hiring, especially when employers make decisions in a hurry − new research

Martin Abel , Bowdoin College

Just in time for back-to -school shopping: How retailers can alter customer behavior to encourage more sustainable returns

Christopher Faires , Iowa State University and Robert Overstreet , Iowa State University

Your political rivals aren’t as bad as you think – here’s how misunderstandings amplify hostility

Daniel F. Stone , Bowdoin College

Medicaid coverage is expiring for millions of Americans – but there’s a proven way to keep many of them insured

Mark Shepard , Harvard Kennedy School

Starbucks fans are steamed: The psychology behind why changes to a rewards program are stirring up anger, even though many will get grande benefits

H. Sami Karaca , Boston University and Jay L. Zagorsky , Boston University

Fundraisers who appeal to donors’ fond memories by evoking their emotions may get larger gifts – new research

Michael Kurtz , Lycoming College

Having COVID-19 or being close to others who get it may make you more charitable

Nancy R. Buchan , University of South Carolina ; Gianluca Grimalda , Kiel Institute for the World Economy , and Orgul Demet Ozturk , University of South Carolina

Microeconomics explains why people can never have enough of what they want and how that influences policies

Amitrajeet A. Batabyal , Rochester Institute of Technology

Declined invitations go over more graciously when lack of money is cited instead of lack of time – new research

Grant Donnelly , The Ohio State University and Ashley Whillans , Harvard University

Women are as likely as men to accept a gender pay gap if they benefit from it

Marlon Williams , University of Dayton

Free beer, doughnuts and a $1 million lottery – how vaccine incentives and other behavioral tools are helping the US reach herd immunity

Isabelle Brocas , USC Dornsife College of Letters, Arts and Sciences

Selfish or selfless? Human nature means you’re both

Keith Yoder , University of Chicago and Jean Decety , University of Chicago

Kids are probably more strategic about swapping Halloween candy and other stuff than you might think

Margaret Echelbarger , University of Chicago

The urge to punish is not only about revenge – unfairness can unleash it, too

Paul Deutchman , Boston College and Katherine McAuliffe , Boston College

Mandatory face masks might lull people into taking more coronavirus risks

Alex Horenstein , University of Miami and Konrad Grabiszewski , Prince Mohammad Bin Salman College (MBSC) of Business & Entrepreneurship

Why Americans are tiring of social distancing and hand-washing – 2 behavioral scientists explain

Gretchen Chapman , Carnegie Mellon University and George Loewenstein , Carnegie Mellon University

When safety measures lead to riskier behavior by more people

A company’s good deeds can make consumers think its products are safer

Valerie Good , Michigan State University

Paying all blood donors might not be worth it

Gretchen Chapman , Carnegie Mellon University

Here’s how you can be nudged to eat healthier, recycle and make better decisions every day

José Antonio Rosa , Iowa State University

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Behavioural Economics

Behavioural economics is an approach to economic analysis that blends insights from economics and psychology to explain how people make everyday economic decisions, and how these affect economic outcomes. The collection of articles below covers a variety of research in this area such as asking why people vote, to how much monetary and non-monetary incentives motivate effort, as well as the topics of social welfare dependency, competition for consumer attention, and tax manipulation. These articles have been collated by the editors of The Review of Economic Studies and are free to read until the end of March 2019.

Endogenous Depth of Reasoning Larbi Alaoui and Antonio Penta

The Sunk-Cost Fallacy in Penny Auctions Ned Augenblick

Competition for Attention Pedro Bordalo, Nicola Gennaioli, and Andrei Shleifer

Welfare Dependence and Self-Control: An Empirical Analysis Marc K. Chan

The Demand for Bad Policy when Voters Underappreciate Equilibrium Effects Ernesto Dal Bó, Pedro Dal Bó, and Erik Eyster

Voting to Tell Others Stefano Dellavigna, John A. List, Ulrike Malmendier, and Gautam Rao

What Motivates Effort? Evidence and Expert Forecasts Stefano DellaVigna and Devin Pope

Excusing Selfishness in Charitable Giving: The Role of Risk Christine L. Exley

Inferior Products and Profitable Deception Paul Heidhues, Botond K?szegi, and Takeshi Murooka

Expectations-Based Reference-Dependent Life-Cycle Consumption Michaela Pagel

Quantifying Loss-Averse Tax Manipulation Alex Rees-Jones

“Data Monkeys”: A Procedural Model of Extrapolation from Partial Statistics Ran Spiegler

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Ethan bueno de mesquita appointed dean of the harris school of public policy, behavioral economics, explained.

Behavioral economics combines elements of economics and psychology to understand how and why people behave the way they do in the real world. It differs from neoclassical economics, which assumes that most people have well-defined preferences and make well-informed, self-interested decisions based on those preferences.

Shaped by the field-defining work of University of Chicago scholar and Nobel laureate Richard Thaler, behavioral economics examines   the differences between what people “should” do and what they actually do and the consequences of those actions.

Jump to a section:

What is behavioral economics, what are the origins of behavioral economics research, and who are tversky and kahneman.

• What role have Richard Thaler and University of Chicago economists played in the development of the field?

What is a “nudge” in behavioral economics?

Guide to behavioral economics terms.

Behavioral economics is grounded in empirical observations of human behavior, which have demonstrated that people do not always make what neoclassical economists consider the “rational” or “optimal” decision, even if they have the information and the tools available to do so.

For example, why do people often avoid or delay investing in 401ks or exercising, even if they know that doing those things would benefit them? And why do gamblers often risk more after both winning and losing, even though the odds remain the same, regardless of “streaks”?

By asking questions like these and identifying answers through experiments, the field of behavioral economics considers people as human beings who are subject to emotion and impulsivity, and who are influenced by their environments and circumstances.

This characterization draws a contrast to traditional economic models that have treated people as purely rational actors—who have perfect self-control and never lose sight of their long-term goals—or as people who occasionally make random errors that cancel out in the long run.

Several principles have emerged from behavioral economics research that have helped economists better understand human economic behavior. From these principles, governments and businesses have developed policy frameworks to encourage people to make particular choices.

Behavioral economics has expanded since the 1980s, but it has a long history: According to Thaler, some important ideas in the field can be traced back to 18th-century Scottish economist Adam Smith.

Smith is often remembered for the concept of an “invisible hand” that guides an overall economy to prosperity if each individual makes their own self-interested decisions—a key concept in classical and neoclassical economics. But he also recognized that people are often overconfident in their own abilities, more afraid of losing than they are eager to win and more likely to pursue short-term than long-term benefits. These ideas (overconfidence, loss aversion and self-control) are foundational concepts in behavioral economics today.

More recently, behavioral economics has early roots in the work of Israeli psychologists Amos Tversky and Daniel Kahneman on uncertainty and risk. In the 1970s and ’80s, Tversky and Kahneman identified several consistent biases in the way people make judgments, finding that people often rely on easily recalled information, rather than actual data, when evaluating the likelihood of a particular outcome, a concept known as the “availability heuristic.” For example, people may think shark or bear attacks are a common cause of death if they’ve read about one such attack, but the incidents are actually very rare.

With “prospect theory,” Tversky and Kahneman also demonstrated that framing and loss aversion influence the choices people make. For example, if presented with an opportunity to win $250 guaranteed or gamble on a 25% chance of winning $1,000 and a 75% chance of winning nothing, most people will choose the sure win. But if presented with the chance to lose $750 guaranteed or a 75% chance to lose $1,000 and a 25% chance to lose nothing, most people will risk losing $1,000, hoping for the slim chance that they will lose nothing at all.

This classic example demonstrates that people are more willing to take a greater statistical risk if it means avoiding a $1,000 loss versus obtaining a $1,000 win, which contradicts expected utility theory. Prospect theory and other work by Tversky and Kahneman continues to inform many areas of behavioral economics research today.

What role have Richard Thaler and behavioral economists at the University of Chicago played in the development of the field?

In the 1980s, Richard Thaler began to build on the work of Tversky and Kahneman, with whom he collaborated extensively. Now the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the Booth School of Business, he is today considered a founder of the field of behavioral economics.

Thaler’s research in identifying the factors that guide individuals’ economic decision-making earned him the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2017. His ideas stem in part from a series of observations he made in graduate school that led him to believe that people’s behavior deviated from traditional economic models in predictable ways.

For example, Thaler observed that he and a friend were willing to forgo a drive to a sporting event due to a snowstorm because they had been given free tickets. But had they purchased the tickets themselves, they would have been more inclined to go, even though the tickets would have been valued at the same price regardless, and the danger of driving in the snowstorm unchanged. This is an example of the “sunk cost fallacy”—the idea that people are less willing to give up on projects they have personally invested in, even if it means more risk.

Thaler is also known for popularizing the concept of the “nudge,” a conceptual device for leading people to make better decisions. A “nudge” takes advantage of human psychology and a number of other concepts in behavioral economics, including mental accounting—the idea that people treat money differently based on context. For example, people are more willing to drive across town to save $10 on a $20 purchase than $10 on a $1,000 purchase, even though the effort expended and the amount of money saved would be the same.

Thaler and other UChicago economists—including Leonardo Bursztyn, Josh Dean, Nicholas Epley, Austan Goolsbee, Alex Imas, John List, Susan Mayer, Sendhil Mullainathan, Devin Pope, Rebecca Dizon Ross and Heather Sarsons—continue to conduct empirical research, including field experiments, that explore behavioral economics from multiple angles.

In behavioral economics, a “nudge” is a way to manipulate people’s choices to lead them to make specific decisions: For example, putting fruit at eye level or near the cash register at a high school cafeteria is an example of a “nudge” to get students to choose healthier options. An essential aspect of nudges is that they are not coercive: Banning junk food is not a nudge, nor is punishing people for choosing unhealthy options.

Thaler’s ideas about nudges were popularized in Nudge: Improving Decisions about Health, Wealth, and Happiness , his 2008 book with former UChicago legal scholar Cass Sunstein, now of Harvard University. Businesses and governments, including the U.S. government under President Barack Obama, have adapted Thaler and Sunstein’s ideas about nudges into policy.

For example, automatically enrolling employees in 401k plans—and asking them to opt out rather than offering them the chance to opt in—is an example of a nudge to encourage better and more consistent saving for retirement. Another seeks to make organ donation standard practice, by requiring people registering for drivers’ licenses to indicate whether or not they are willing to donate.

The formal term Thaler and Sunstein use to describe a situation designed around nudges is “libertarian paternalism”—libertarian because it preserves choice, but paternalistic because it encourages certain behavior. In Thaler’s words: “If you want people to do something, make it easy.”

The availability heuristic refers to the idea that people often rely on easily recalled information, rather than actual data, when evaluating the likelihood of a particular outcome. For example, people may think shark or bear attacks are a common cause of death if they’ve read about one such attack, but the incidents are actually very rare.

Bounded rationality refers to the fact that people have limited cognitive ability, information and time, and do not always make the “correct” choice from an economist’s point of view, even if information is available that would point them toward a particular course of action.

This might be because they cannot synthesize new information quickly; because they ignore it and instead choose to “go with their gut”; or because they don’t have the time to fully research all options. The term was coined in 1955 by Nobel laureate and UChicago alum Herbert A. Simon, AB’36, PhD’43.

Bounded self-interest is the idea that people are often willing to choose a less-optimal outcome for themselves if it means they can support others. Giving to charity is an example of bounded self-interest, as is volunteering. While these are common activities, they are not captured by traditional economic models, which predict that people act mostly to further their own goals and those of their immediate family and friends, rather than strangers.

Bounded willpower captures the idea that even given an understanding of the optimal choice, people will often still preferentially choose whatever brings the most short-term benefit over incremental progress toward a long-term goal. For example, even if we know that exercising may help us obtain our fitness goals, we may put it off indefinitely, saying we will “start tomorrow.”

Loss aversion is the idea that people are more averse to losses than they are eager to make gains. For example, losing a $100 bill might be more painful than finding a $100 bill would be positive.

Prospect theory refers to a series of empirical observations made by Kahneman and Tversky (1979) in which they asked people about how they would respond to certain hypothetical situations involving wins and losses, allowing them to characterize human economic behavior. Loss aversion is key to prospect theory.

The sunk-cost fallacy is the idea that people will continue to invest in a losing project simply because they are already heavily invested, even if it means risking more losses.

Mental accounting is the idea that people think about money differently depending on the circumstances. For example, if the price of gas goes down, they may begin to buy premium gas, leading them to ultimately spend the same amount, rather than taking advantage of the savings offered by the lower price.

Related Experts

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The Two Friends Who Changed How We Think About How We Think— The New Yorker

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7 Richard Thaler Columns That Explain How Human Behavior Affects Economics— The New York Times

NBER Working Paper on Behavioral Economics

Behavioral economics from nuts to ‘nudges’— Chicago Booth Review

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Behavioral Economics

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Further Reading

Ariely, D. (2008). Predictably irrational: The hidden forces that shape our decisions . Harper Collins.

Bernheim, B. D. (2009). Behavioral welfare economics. Journal of the European Economic Association, 7 , 267–319. MIT Press

Bernheim, D., & Rangel, A. (2008): Choice-theoretic foundations for behavioral welfare economics. In A. Caplin & A. Schotter (Eds.), The foundations of positive and normative economics . Oxford University Press.

Cooper, D., & Kagel, J. (2016). Other-regarding preferences - Selective survey of experimental results. In J. Kagel & A. Roth (Eds.), The handbook of experimental economics (Vol. 2, Chap. 4).

Fehr, E., & Schmidt, K. (2006). The economics of fairness, reciprocity and altruism – Experimental evidence and new theories. In S.-C. Kolm & J. M. Ythier (Eds.), Handbook on the economics of giving, reciprocity and altruism (Chap. 8). Amsterdam: Elsevier.

Laibson, D., & List, J. A. (2015). Principles of (behavioral) economics. American Economic Review: Papers and Proceedings, 105 (5), 385–390.

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Policy Impact and Future Directions for Behavioral Economics — New Report

A new report from the National Academies of Sciences, Engineering, and Medicine calls for increased collaboration between behavioral economists and policymakers and examines the future research directions for the field of behavioral economics.  

While economists consider behavioral influences in their work, behavioral economics is a narrower field that incorporates insights from the behavioral sciences into economic models of human behavior. These insights can be applied to policies to encourage people to make choices that, for example, promote health, support financial well-being, or protect the environment. The new report highlights how behavioral economics has built invaluable evidence about why people may act in seemingly irrational ways, how they respond to interventions, and how public policy can be designed to help people make better decisions. 

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The report,  Behavioral Economics: Policy Impact and Future Directions ,  is  now available for immediate release .  Members of the committee that wrote the report will present their conclusions and recommendations during a  webinar  on Tuesday, April 25,   starting at 1 p.m. EDT. Speakers are:  

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Behavioral Economics: Policy Impact and Future Directions examines the evidence for behavioral economics and its application in six public policy domains: health, retirement benefits, climate change, social safety net benefits, climate change, education, and criminal justice. The report concludes that the principles of behavioral economics are indispensable for the design of policy and recommends integrating behavioral specialists into policy development within government units. In addition, the report calls for strengthening research methodology and identifies research priorities for building on the accomplishments of the field to date.

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National Academies of Sciences, Engineering, and Medicine; Division of Behavioral and Social Sciences and Education; Board on Behavioral, Cognitive, and Sensory Sciences; Committee on Future Directions for Applying Behavioral Economics to Policy; Beatty A, Moffitt R, Buttenheim A, editors. Behavioral Economics: Policy Impact and Future Directions. Washington (DC): National Academies Press (US); 2023 Apr 20.

Behavioral Economics: Policy Impact and Future Directions.

• Hardcopy Version at National Academies Press

14 Advancing the Field of Behavioral Economics

Behavioral economics has grown steadily as a field over the last several decades. Journals and academic departments devoted to it have established themselves, and behavioral economists have studied the application of their ideas to numerous policy challenges, as detailed throughout this report. Returning to the charge that guided this study, we close with our review of the development of the field and its theoretical foundations, as well as our findings about the primary behavioral economics strategies and how they have been applied. In this chapter we synthesize key conclusions from the research to date and offer recommendations to guide the future development of the field and capitalize fully on its potential to help meet critical societal goals, including directions for the research that is needed to support continued growth.

• CONCLUSIONS

We draw two primary conclusions from our review: that behavioral knowledge is indispensable to the development of effective policy interventions and that work is needed to support intervention design and broad-scale implementation.

Developing Effective Policy Interventions

Foundational theoretical work that has integrated understanding of cognitive and psychosocial processes with economic analysis has pointed to five core principles that help to explain human decision making: limited attention and cognition, inaccurate beliefs, present bias, reference dependence and framing, and social preferences and social norms (see Chapter 3 ). Empirical research has provided strong evidence that these behavioral factors play a major role in human decisions and are therefore key factors to consider in assessing the impact of public policy programs and in designing interventions to modify human behavior.

We acknowledge that our review of the available evidence was not comprehensive and that, for reasons discussed throughout the report, positive findings of effects may be more likely to garner attention than null or negative findings. We hope the field will continue to produce studies that can provide the most robust evidence of effectiveness—or lack of it—such as large-scale studies and meta-analyses.

Nevertheless, the accumulated evidence across the six domains is significant: it shows that decision processes are dynamic, malleable, and context dependent and that understanding these factors helps to explain how and why people behave in ways that appear to be counter to rational calculations. That evidence from research in behavioral economics demonstrates that those behavioral decision processes recur repeatedly and have significant impact on policy-relevant behavior, which in turn has strong implications for policies that differ from those that are suggested by traditional economics.

This report examines this impact in six important domains, but behavioral economics concepts are also being applied in many other contexts, including contexts not generally considered for behavioral economics input. For example, recent reports of the National Academies of Sciences, Engineering, and Medicine that addressed improving fuel economy (2021), reducing consumer food waste (2020), and reducing alcohol-impaired fatalities (2018) all discuss behavioral economics approaches among varied other interventions. Behavioral economics has also had a profound influence in commercial contexts, as we note below. In the future, understanding of behavior has the potential to play a key role in other urgent societal issues we have not addressed, such as combating misinformation; see Box 14-1 .

Using Behavioral Knowledge to Combat False and Misleading Information.

Conclusion 14-1: The very strong evidence that complex cognitive, social, behavioral, and contextual factors influence judgment and decision making means that behavioral economics concepts are indispensable for advancing scientific understanding of policy-relevant human behavior and for designing public policies. Behavioral economics has produced invaluable evidence about why people act in seemingly irrational ways, how they respond to interventions, and how public policy and practice interventions can be designed to modify the habitual and unconscious ways that people act and make decisions.

Supporting Design and Implementation

The evidence for the importance of behavioral ideas is strong, but the refinement of strategies for applying these principles in a systematic way to the design of policies and interventions remains a frontier challenge. There is clear and strong evidence that specific interventions based on these principles have been effective at changing certain targeted behaviors, and it is also clear that behavioral economics research has contributed to a large and expanding set of policy interventions that includes strategies with excellent empirical evidence of effectiveness (e.g., defaults, framing). For other intervention approaches commonly studied, such as behaviorally informed incentives and social proof interventions, the evidence is mixed, nuanced, or still emerging.

Some types of decisions appear to be more amenable to behaviorally informed interventions than others. It is comparatively easy to influence a one-time, up-or-down decision, such as whether or not to opt in to a retirement savings plan, or to make it easier and more likely for a target population to complete a specific action, such as filling out an application form. Interventions that have targeted more complex behaviors, such as programs to reward teachers for increasing their students’ test scores, or approaches to changing how clinicians approach complex diagnosis and treatment decisions, have not yielded such clear-cut or consistent results.

It is important to acknowledge that research demonstrating positive effects for behavioral economics interventions typically shows modest effect sizes. This is not necessarily a surprising finding, particularly because many of the intervention studies are comparatively low in cost and easy to administer. However, as we emphasize clearly in the work on climate change—a challenge of unmeasurable magnitude—the application of combinations of individually modest interventions can cumulatively bring important changes and benefits for relatively little cost.

Throughout the report we also identify additional persistent challenges in the application of behavioral economics for policy: it is not easy or straightforward to generalize findings from specific contexts, and implementing successful interventions at scale remains elusive. Moreover, deeper understanding of why and when observed effects occur would be valuable. Even when intervention or policy studies demonstrate a positive effect on behavior, there is insufficient knowledge about mechanisms of action and about differential responses to the intervention or policy by different groups. For example, in the context of inaccurate beliefs, understanding of the relevant mechanisms would be enhanced if data on both beliefs and behavior were collected and analyzed. For example, testing whether beliefs held by participants before the intervention were inaccurate and whether the intervention was effective in changing them would be valuable. Our review of six policy domains (in Part II ) also suggests that behavioral economists have yet to fully embrace the concept of behavioral design—the systematic process by which interventions and strategies to change human behavior are designed. That is, specific interventions are often tested without sufficient attention to behavioral design principles.

Conclusion 14-2: The field of behavioral economics has made significant advances over the past 20 years, producing evidence about both general principles and specific intervention approaches that address policy challenges in many domains. However, the field has not yet produced generalizable and implementable practice guidance and intervention design strategies for determining what works, when, and for whom. Whether the goal of providing such specific guidance can be achieved, given the importance of context and the unique characteristics of many targets of behavior change, is not clear.

• RECOMMENDATIONS

As noted above, behavioral economics research has generated a large volume of promising results. But there is also much more to learn, and there are contributions to be made in new policy domains. The committee recommends strategies for funders, research and professional organizations, and universities to support future development in the field of behavioral economics; such support would certainly be appropriate in other research fields, but our focus is on work in behavioral economics. We also recommend priorities for research.

Recommendation 14-1: Researchers and funders of research should balance attention and funding across: basic research in intervention design, interdisciplinary investigation, and development of methods; research to support applications of behavioral economics concepts in practice, including implementation and scale-up and evaluation; and research to explore and support the positive contributions of behavioral economics to society, including attention to equity of impact and attitudes about behavioral interventions. Recommendation 14-2: Funders and university leaders should prioritize investments in interdisciplinary research collaborations.

Behavioral economics is rooted in the integration of ideas from diverse academic domains, and its future progress will depend on continued interdisciplinary collaboration. Such interaction is not easy and faces well-known obstacles: differences in theoretical perspectives, terminology, research methods and tools, and standards of evidence all bring challenges. Nevertheless, interdisciplinary work, involving researchers from many domains, including cognitive and social psychology and neuroeconomics, can help to pinpoint how the human brain processes and responds to information.

Practical strategies, such as setting up (and funding) multidisciplinary labs or working groups in which teams of researchers can regularly collaborate and identifying funders for methodologies and projects that do not fit established research contexts, can help to address the challenges of implementation (see Chapter 13 ). Examples include the Behavioral Economics Design Initiative at the University of Pittsburgh, which focuses on behavioral economics and mechanism design, and the Nudge4 Lab at the University of Virginia. 1 In general, establishing stronger incentives (e.g., in the contexts of research support, journal publication, academic advancement) for interdisciplinary research and training for students and younger scholars in interdisciplinary work will yield long-term benefits for the field.

Recommendation 14-3: Researchers and funders of research should prioritize research related to methods and ways of understanding the mechanisms of behavior and behavior change. Specifically, research is needed to: advance behavioral design and intervention design methods to better link behavioral principles and insights to specific intervention and policy goals; advance methods for conducting pilot and rapid-cycle studies; accumulate more evidence on how findings from one setting can be applied to other settings or at broader scales; realize the potential for artificial intelligence and machine learning approaches to improve tailoring and targeting; bring cutting-edge adaptive trial design approaches to behavioral economics studies; and incorporate empirical methods from other disciplines and fields that can enrich behavioral economics research. Recommendation 14-4: Researchers, funders of research, and entities that support or sponsor behavioral units in organizations should prioritize research and practice initiatives that increase the impact of behavioral economics findings through implementation, scale-up, and evaluation of potentially successful interventions and policies.

As evidence that an intervention has been effective in a particular context accumulates (in any research field), it is important that larger studies, with larger samples and more variants, be conducted to replicate the findings and test how well the intervention works in practice, across contexts and populations. In some cases, the results will be confirmed; in others, they will not; and others will point to a redesign or a refinement. This phase of the research—scaling studies that involve patience and resources—is essential for behavioral tools to bring meaningful societal benefits.

Many social science disciplines and policy domains emphasize the importance of systems of ongoing evaluation, in which research, design and development, testing of ideas, and evaluation each contribute to a continuous cycle of learning and refinement and improvement of policy interventions (see, e.g., Patton, Sawicki, & Clark, 2012 ). In the context of behavioral economics interventions, ongoing data collection, pilot testing, and long-term surveillance are of particular importance because of the need to assess the durability and sustainability of effects, as well as differential response to policies by different populations. The committee examined many policy interventions that were designed with behavioral principles in mind but was not able to look systematically, from the perspective of policy makers, at how regularly behavioral factors are currently considered in the design of policy. It seems likely, however, that the majority of policy recommendations still rely primarily or exclusively on traditional economic modeling.

Recommendation 14-5: Researchers, funders of research, and entities that support or sponsor behavioral units in organizations should prioritize ongoing investigations into the role of behavioral economics in society, with specific attention to the equity implications of behavioral economics policies and interventions; the implications of public attitudes toward the ethics of behavioral economics research and practice, as well as their acceptance by the general public; and possible public policy interest in commercial applications of behavioral economics findings.

It was not part of our charge to identify priorities for the specific policy goals that should be addressed using behavioral economics approaches, but three issues in policy implementation raise broad questions: equity of impact, attitudes about interventions, and commercial application of behaviorally based findings.

Equity of Impact

It is reasonable to ask whether behavioral interventions are reaching those most in need, and whether such interventions in some cases may have the negative unintended consequence of increasing inequalities ( Blumenthal-Barby & Burrough, 2012 ; Lunze & Paasche-Orlow, 2013 ; Lin, Osman, & Ashcroft, 2017 ). These are empirical questions and, as far as the committee is aware, there is limited evidence on them.

Attitudes About Behavioral Interventions

The use of behavioral interventions, such as nudges, can be perceived as paternalistic (as can many government interventions). That is, behavioral economics reveals that people’s behaviors and actions cannot be assumed to accurately reveal their preferences or reflect their conscious thinking about a decision. Thus, policy makers using behaviorally informed interventions are making decisions for people about what would be optimal for them. Thus, it is important to give close scrutiny to how the target of change is chosen and how certain policy makers are that the change will actually benefit the people who are induced to make it.

It is also important to consider how researchers and policy makers know that a particular outcome, which may appear to be desirable from a societal perspective, can be construed as beneficial to an individual, and that, in effect, manipulating a person to change their behavior is an unmitigated good ( Liscow & Markovits, 2022 ). Another important question is whether people’s attitudes about interventions affect their responses to them—that is, whether the perception that nudges and other behaviorally based interventions may be paternalistic might influence the way people respond when they recognize that they are the target of one. These issues may arise with any sort of incentive, but the possibility that some people may respond when they recognize behaviorally based strategies—such as an energy bill that compares one’s energy use with that of one’s neighbors—by determining to resist the desired behavior merits investigation.

Commercial Application of Behavioral Economics Knowledge

Ideas grounded in behavioral research are used in commercial contexts, usually to induce people to buy things. While it is not the job of behavioral economics researchers to police the applications of their ideas, they might profitably explore such understudied questions as how behavioral ideas are being used, how consumer responses may vary across business and policy domains, and when marketing that takes advantage of knowledge of biases crosses an ethical line.

All human decision making is influenced by the context in which those decisions are made. The influence of context on decisions often occurs in ways that consumers are aware of, through design, detectable nudges, and so on. But many factors have been shown to influence people’s decisions in ways that they are often unaware of and cannot control; moreover, even hypothetical questions can influence people’s subsequent decisions ( Fitzsimons & Shiv, 2001 ).

Advertising, of course, is a hugely profitable and effective means of shaping preferences, often in ways consumers are unaware of and unable to avoid. In a study offering loans to low-income borrowers, various features of the offer letter that had no economic implications were found to have a large effect on take-up. There is compelling evidence that television advertising influences children’s food and beverage preferences, requests, and consumption habits. One study found that a majority of Australian children ages 9–10 believed that Ronald McDonald knew best what children should eat ( Olfman, 2005 ). Another study found that the number of hours of television watched by children ages 3–8 correlated with their caloric intake and their requests for—and their parents’ subsequent purchases of—foods they see on television ( Taras et al., 1989 ). These peripheral and undetected effects on people’s decision behavior have been observed among novices and experts, in situations of intentional manipulation, in cases where people are not aware of the manipulation, and sometimes when the manipulating factors are altered without any human involvement.

Although researchers in the field of behavioral industrial organization, in particular, have examined some of these questions, there are no straightforward rules or answers (for a review, see, e.g., Heidhues & Kőszegi, 2018 ). It is important that researchers and those who apply and use research keep these questions in mind when making decisions, including in the design of research studies and selection of study populations. Empirical investigation of how behavioral economics findings are used by both public and private entities to influence consumer attitudes and behaviors could contribute to public policy thinking about the possibility of using regulatory mechanisms to limit actions that cross ethical boundaries.

Recommendation 14-6: Funders and university leaders should foster the development and application of behavioral economics by supporting training opportunities for public policy professionals. They should also support learning about practices for research transparency.

The successful development and implementation of policies that incorporate knowledge from behavioral economics depend in part on people who have been trained in behavioral principles and understand their application in policy making. Many policy schools are now including coursework on behavioral public policy; further progress in this area will be valuable for the field and for policy makers.

• CONCLUDING OBSERVATION

We close with a few reflections on the future of behavioral economics. As ongoing questions about whether research discussed in this report is more properly regarded as a domain of economics or a domain of behavioral science suggest, the field’s boundaries are not precise. From the committee’s perspective, this was less important than the benefits behaviorally based approaches can bring in the development of policy. It is also perhaps a reason to think about future aspirations for application of these ideas, however they are categorized.

Most of the research we identified investigated ways in which behavioral biases interfere with a desired policy outcome and how behaviorally based interventions counteract those biases. This analysis can be applied beyond the context of the individual behaviors that are the focus of most behavioral economics research to help explain nonrational responses to complex regulatory structures, for example. That is, there may be behavioral solutions to problems that are not primarily the result of individual behavioral biases, such as the externalities that are such important considerations in combating climate change.

Thus, it is important not only to consider a broader range of solutions to behavioral biases but also to consider applying behavioral solutions even when there is no clear problem of cognitive bias. It is likely that ideas not explicitly identified as coming from behavioral economics research, but that nevertheless take advantage of behavioral insights, have already influenced the development of policy. All of these are reasons to be optimistic about the future contributions of the field.

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See https://sites ​.google ​.com/view/bedi-university-of-pittsburgh ​/home and https://nudge4 ​.org

• Cite this Page National Academies of Sciences, Engineering, and Medicine; Division of Behavioral and Social Sciences and Education; Board on Behavioral, Cognitive, and Sensory Sciences; Committee on Future Directions for Applying Behavioral Economics to Policy; Beatty A, Moffitt R, Buttenheim A, editors. Behavioral Economics: Policy Impact and Future Directions. Washington (DC): National Academies Press (US); 2023 Apr 20. 14, Advancing the Field of Behavioral Economics.
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MIT economics to launch new predoctoral fellowship program

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The MIT Department of Economics is launching a new program this year that will pair faculty with predoctoral fellows.

“MIT economics right now is historically strong,” says Jon Gruber, the Ford Professor of Economics and department head of MIT economics. “To remain in that position involves having the resources to stay on the cutting edge of the research frontier, and that requires the use of predocs.”

The nature of economic research has changed enormously, adds Gruber, due to factors like the use of large datasets, innovations in experiment design, and comprehensive data analysis, all of which require the support of predocs. This new research model empowers economists to address national and global challenges in profound and much more effective ways.

The new predoc program is made possible by an ongoing major fundraising initiative in the department. 

Gruber gave credit to Glenn Ellison, the Gregory K. Palm (1970) Professor of Economics and former department chair, for working closely with Roger Altman, MIT Corporation member and the former head and current member of the visiting committee, to craft a vision for the future of the department that will ultimately include up to 24 predocs that would work for economics faculty at MIT. 

“It’s a great vision. They put a lot of work into it,” Gruber says.

With significant support from the Altman Family Fund, Gruber explains, the predoc program will be able to ramp up, providing predocs to the department’s junior faculty. He expects six predocs to start in the department this fall.

“We’ll have a wide range of junior faculty who will be using these predocs for a bunch of really interesting and important questions that are very data- and research-intensive,” Gruber says.

Tobias Salz, the Castle Krob Career Development Associate Professor of Economics, is one of the faculty members already benefiting from a pilot of the new program. He’s working on a large project on the search engine market.

“I am working with a predoctoral research fellow who has been instrumental in many parts of the project, including the design of an experiment and data analysis,” says Salz. “Initially, I was only able to hire him for one year, but with the new funding I am able to extend his contract. The predoctoral program has therefore helped ensure continuity on this project, which has made a big difference.”

Nina Roussille, assistant professor of economics, says her work will greatly benefit from collaborating with a predoc. Several of her projects either require the analysis of large, administrative datasets or the implementation of large-scale experiments.

“This kind of work will be greatly enhanced and streamlined with the help of a predoc to construct, clean, and analyze the data, as well as to set up the experiments and study their effects. This will free up some of my time to participate in more projects and allow me to focus my efforts on high-yield tasks, such as data analysis and paper writing,” says Roussille.

Roussille adds that she’s excited about the opportunity to mentor a young economist on the path to a PhD.

“They’ll greatly benefit from the vibrant research environment of the MIT economics department,” she said.

Gruber sees the program as mutually beneficial for both the predocs and the faculty.

“The advantage for the predoc is they get research experience and they get to know a faculty member,” adds Gruber. “The advantage for the faculty is they get to work with someone who wants to excel and make an impression with the person they research for.”

Beyond establishing the predoc program, this current fundraising initiative prioritizes building resources for faculty research in the Department of Economics. In addition to the gift from the Altman Family Fund to establish the predoctoral fellowship program, this fundraising initiative has secured several other significant contributions, including:  

• the creation of the Daniel (1972) and Gail Rubinfeld Professorship Fund, through the support of Dan Rubinfeld, PhD ’72;
• the Thapanee Sirivadhanabhakdi Techajareonvikul (1999) Professorship Fund, established by economics undergraduate alumna and her husband, Aswin Techajareonvkul MBA ’02;
• another endowed professorship in the department, through the support of an anonymous donor;
• the creation of the Locher Economics Fund, which will provide discretionary resources to support faculty research for the department, through the support of Kurt ’88, SM ’89, and Anne Stark Locher; and
• a gift to create the Dr. James A. Berkovec (1977) Memorial Faculty Research Fund in Economics, established by Ben Golub, ’78, SM ’82, PhD ’84.

To date, almost $30 million has been secured for these purposes, and efforts are ongoing.

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Study finds medical debt relief doesn’t always work

When it comes to helping Americans manage rising health care costs, one increasingly popular policy stands out for both its simplicity and potential payoff: Buy up vast amounts of medical debt for pennies on the dollar and cancel it, thereby giving struggling families a break from one major stressor.

Over the last two years, 15 state or local governments passed programs to acquire about $8 billion worth of medical fees that have either been — or are about to be — sent to bill collectors. Five others are considering programs that would raise that total to nearly $13 billion.

It’s not just governments that think medical debt relief holds promise: Private donors are financing the purchase of outstanding medical debts worth billions of dollars at steep discounts.

But are these efforts delivering on their promise?

Not according to the largest study to date of medical debt relief programs released April 8 as a National Bureau of Economic Research working paper and co-authored by Neale Mahoney , a professor of economics in the Stanford School of Humanities and Sciences.

Mahoney and his collaborators find no evidence that buying and then forgiving medical debts that are in collections improved on average beneficiaries’ finances, access to credit, or their physical or mental health. People were even less likely to pay existing medical bills after their debt was eliminated.

Calling the results “largely disappointing,” Mahoney says that policymakers, philanthropists and even the experts in health care costs that the study authors surveyed as part of their experiment had every reason to think that buying medical debts in collections would be a relatively low cost, scalable tool for helping people in need.

“We are not saying with this study that medical debt relief doesn’t help people,” says Mahoney, who is the George P. Shultz Fellow at the Stanford Institute for Economic Policy Research ( SIEPR ) and will become director of the institute in January 2025.

“What we are saying” he says, “is that trying to help them by reducing their medical debt when it’s either in collections or headed there may be happening too late to make a difference or else there are problems with how it is currently done that need to be addressed.”

In response to the study’s results, Mahoney says that RIP Medical Debt, the nonprofit organization that partnered with Mahoney and his collaborators on the research and is working with state and local governments on their debt relief plans, is changing its approach — including buying up debts before they reach collections, when the hoped-for benefits are more likely to be felt by patients.

“This is what we, as scientists, set out to do, which is to help people in the business of reducing medical debts figure out how to actually have the impact that they want to have,” he says.

“The overriding question now is, how do we find the sweet spot between low cost and high impact?,” says Mahoney, whose ongoing research into health care costs includes a study that found significant benefits for patients who participated in a hospital debt-forgiveness program.

Beyond correlations

Medical debt is a real problem in the U.S.: Two in five Americans have outstanding health care bills, according to the Kaiser Foundation. Those with payments overdue are more likely to be uninsured, low-income, and either Black or Hispanic. What’s more, the total amount of outstanding medical debt in the United States is, as Mahoney has shown, much bigger than people think.

Eight years ago, comedian John Oliver turned RIP Medical into a household name with a segment on his HBO show in which he announced he had financed RIP’s purchase of $15 million worth of medical debt held by some 9,000 Americans. An outpouring of donations to RIP followed, including a $30 million grant in 2022 from Mackenzie Scott, ex-wife of Amazon founder Jeff Bezos.

With RIP gaining traction, Mahoney teamed with the company and with Raymond Kluender, an assistant professor at Harvard Business School; Francis Wong, an assistant professor at Ludwig Maximilian University of Munich; and Wesley Yin, an economics professor at UCLA, to study its effects on people whose debts are forgiven.

To do that, the researchers conducted two experiments, both of which allowed them to compare one group selected at random to have their medical debts paid for against another group, also selected at random, whose outstanding bills remained in collections.

In doing so, Mahoney and collaborators were able to get to the root of a vexing question in health care economics: “We know that people with medical debt are struggling with their health and with other aspects of their life,” Mahoney says. “But is medical debt a cause or a symptom of these issues? Our study shows that medical debt is a symptom, and not an underlying cause.”

Possible explanations

The researchers’ first experiment looked at what happened when RIP Medical relieved nearly 14,400 patients of $19 million in hospital debt that was unlikely to be paid but had not yet been sent to third-party collection. The second involved a similar analysis of $150 million worth of medical debt incurred by 69,000 individuals and that had languished with debt collectors for several years.

The first test mattered because the hospital debt was “younger” — meaning patients were more likely to experience benefits once it was written off than they would with “older” debt that they may have already put behind them.

To Mahoney and his co-authors’ surprise, in both instances they didn’t see in their data any payoff on average in their measures of financial well-being, physical health, or mental state. Beneficiaries of debt relief were also less likely to pay their existing medical bills. And those with the most medical debt were more likely to feel depressed upon learning that their debt had gone away.

Mahoney says it’s difficult to know for sure why removing debts in collection or near-collection didn’t help patients — but the evidence suggests that the help came too late.

“These findings reject the idea that people who had some debt relieved would have more resources to pay other bills,” Mahoney says.

One explanation for why people on average weren’t paying their current medical bills, he says, could be that they now figured those would be forgiven, too. As for the rise in feelings of sadness, he says people may have taken the debt forgiveness as a reminder of their overall financial distress and of their need for charity to help address it.

A silver lining

Mahoney cautions that the study doesn’t analyze every potential outcome of having medical debt relieved, so could be that there are benefits that his study does not account for.

But it does offer one piece of good news for proponents of medical debt relief efforts, he says. In recent years, the Consumer Financial Protection Bureau has been cracking down on the practice of listing medical debts on credit reports, which it says is a poor predictor of whether people are likely to pay their bills. Even so, Mahoney and his coauthors were able to study nearly 2,800 individuals that had their outstanding bills listed on their credit reports when RIP Medical bought their debt.

The researchers find that debt relief immediately raised their credit scores as well as credit limits.

To Mahoney, the finding is significant for what it says about the power of policymaking to reduce the fallout of health care costs — and for evidence-based research to help identify what’s working and what isn’t.

“My hope is that the next study on medical debt relief shows positive impacts, not because our study is wrong but because the world will have responded to our research,” he says.

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Why Do We Dislike Inflation?

This paper provides new evidence on a long-standing question asked by Shiller (1997): Why do we dislike inflation? I conducted two surveys on representative samples of the US population to elicit people’s perceptions about the impacts of inflation and their reactions to it. The predominant reason for people’s aversion to inflation is the widespread belief that it diminishes their buying power, as neither personal nor general wage increases seem to match the pace of rising prices. As a result, respondents report having to make costly adjustments in their budgets and behaviors, especially among lower-income groups. Inflation also provokes stress, emotional responses, and a sense of inequity, as the wages of high-income individuals are perceived to grow more rapidly amidst inflation. Many respondents believe that firms have considerable discretion in setting wages, opting not to raise them in order to boost profits, rather than being compelled by market dynamics. The potential positive associations of inflation, such as with reduced unemployment or enhanced economic activity, are typically not recognized by respondents. Inflation ranks high in priority among various economic and social issues, with respondents blaming the government and businesses for it. I also highlight a substantial polarization in attitudes towards inflation along partisan lines, as well as across income groups.

This is an earlier version of the paper prepared for the Spring 2024 Brookings Papers on Economic Activity (BPEA) conference and the final version of this paper will be published in the Spring 2024 BPEA issue. I thank Carola Binder, Janice Eberly, Yuriy Gorodnichenko, Francesco Nuzzi, and Jon Steinsson for helpful comments and feedback. I am deeply grateful to Alberto Binetti, Filippo Giorgis, and Alfonso Merendino for excellent research assistance. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.

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