Democratizing Behavioral Economics

Yale Journal on Regulation, Forthcoming

Yale Law & Economics Research Paper Forthcoming

60 Pages Posted: 26 Jan 2022 Last revised: 26 Apr 2022

Date Written: January 19, 2022

Abstract

Behavioral economics—arising from the insight that people make recognizable, systematic mistakes—has revolutionized policymaking. For example, in governments around the world, including the US, teams of experts have recently arisen to harness these insights, promising to do things like increase retirement savings. But there is a problem: Economic experts do not look or think like the rest of the population. They are deeply unrepresentative demographically and have quite different policy views.

This would be less problematic if the experts were merely helping people pursue the behavior that the people themselves would undertake, as was the case in traditional law and economics. However, the whole point of behavioral economics is that such behavior is often not in people’s interest. Rather, in making judgments about the right policy, behavioral law and economics has erected a new, shaky structure, based on ad hoc and often unstated normative assumptions. The result risks merely enacting the policy preferences (or biases) of unrepresentative experts and thereby distorting policymaking.

We propose a new approach—democratic law and economics—in which, rather than dictating what the right policy or action is, behavioral economists instead inform representative samples of ordinary people about the evidence, including specifically about their own behavioral biases, and let them decide for themselves. Those decisions, rather than experts’ opinions alone, then inform policymakers. Our approach harnesses the insights of behavioral economics, but in a way that lets the people themselves, rather than the behavioral expert, be the arbiter of the good life.

Keywords: behavioral economics, cost-benefit analysis, law and economics, expertise, legal theory

JEL Classification: D90, B40, I31, K20, K10, D61, D63, H11, G40

Suggested Citation

Liscow, Zachary D. and Markovits, Daniel, Democratizing Behavioral Economics (January 19, 2022). Yale Journal on Regulation, Forthcoming, Yale Law & Economics Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=4012996 or http://dx.doi.org/10.2139/ssrn.4012996

Zachary D. Liscow (Contact Author)

Yale University - Law School ( email )

127 Wall St.
New Haven, CT 06511
United States

Daniel Markovits

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States

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