When behavioural economics meets randomised control trials: Examples from Canadian public policy

Over the past decade there has been a tremendous rise in the application of behavioural economics to public policy the world over. Combatting known cognitive and perceptual biases in our decision-making processes, the application of behavioural economics to public policy is occurring in diverse settings, from encouraging the timely and honest payment of taxes, to promoting energy conservation at home (BEworks 2014).1 Such public policy has typically emanated from centralised labs or innovation hubs specifically set up within government departments to rigorously trial and disseminate findings from the literature.

The most well-known example of these centralised hubs is the UK’s Behavioural Insights Team (BIT). Established in 2010 after Richard Thaler and Cass Sunstein’s book, Nudge, made it onto the UK Conservative Party’s summer reading list, the BIT has been advising the UK government on incorporating findings from behavioural economics (and the behavioural sciences more generally) into its policies (Thaler 2015). The BIT has been remarkably successful in enhancing the effectiveness of public policy in the UK, perhaps best evinced by the demand for its consulting services from governments internationally.2 Many other countries have also followed similar paths to the UK; in 2014, the Economic and Social Research Council estimated that at least 51 countries are home to some type of government-led initiative directly influenced by the behavioural sciences (Whitehead et al. 2014).

Although initially slow to warm to the trend, Canada is witnessing behavioural economics play an increasingly important role in its policy formulation (French and Oreopoulos, forthcoming). Agencies promoting the application of behavioural economics to public policy have now been established at both the federal and provincial level, covering a broad array of policy issues. A particularly notable feature of these agencies is the emphasis they place on rigorously testing their prospective behavioural interventions through randomised control trials. While not unique to the Canadian agencies, we believe this feature is worth highlighting. Many of the country’s behavioural interventions have occurred within an existing policy framework in which small tweaks to the status quo – influenced by behavioural economics – have had a marked impact on policy outcomes. Using randomised control trials to determine how best to tweak existing policy has been critical to the success of these interventions to date.

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