Thursday, April 11, 2013
Brian Galle (Boston College) presented Regulation from the Inside Out: Nudges and Price Instrument Theory for Internalities and Externalities at NYU on Tuesday as part of its Colloquium Series on Tax Policy and Public Finance convened by Daniel Shaviro (NYU) and William Gale (Tax Policy Center; visiting at NYU):
This Article compares for the first time the relative merits 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 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-ofinstruments literature, and contrary to this popular wisdom, I show that nudges may out-perform fines, other Pigouvian taxes, or subsidies in some contexts. I also add to the existing literature by extending choice-of-instrument theory to the regulation of internalities---instances where individuals do harm to their own future selves. I then apply these lessons to a set of contemporary policy controversies, such as New York City’s cap on beverage portion sizes, cigarette labeling, retirement savings, and charitable contributions.
Dan Shaviro blogs the workshop here.