Tax, Command -- or Nudge?: Evaluating the New Regulation

52 Pages Posted: 29 Aug 2013 Last revised: 16 Oct 2013

See all articles by Brian D. Galle

Brian D. Galle

Georgetown University Law Center

Date Written: October 16, 2013


This Article compares for the first time the relative economic efficiency of “nudges” and other forms of behaviorally-inspired regulation against more common policy alternatives, such as taxes, subsidies, or traditional quantity regulation. Environmental economists and some legal commentators have dismissed nudge-type interventions out of hand for their failure to match the revenues and informational benefits taxes can provide. Similarly, writers in the law and economics tradition argue that fines are generally superior to non-pecuniary punishments.

Drawing on prior work in the choice-of-instruments literature, and contrary to this popular wisdom, I show that nudges may out-perform fines, other Pigouvian taxes, or subsidies in some contexts. These same arguments may also imply the superiority of some traditional “command and control” regulations over their tax or subsidy alternatives. I then apply these lessons to a set of contemporary policy controversies, such as New York City’s cap on beverage portion sizes, climate change, retirement savings, and charitable contributions.

Keywords: nudge, choice of instruments, Pigouvian tax, behavioral law & economics, choice architecture, sticky default

Suggested Citation

Galle, Brian D., Tax, Command -- or Nudge?: Evaluating the New Regulation (October 16, 2013). Texas Law Review, Forthcoming, Available at SSRN:

Brian D. Galle (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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