Learning lessons: how to practice nudging around the world

Abstract

The aim of this article is to cover three things: (1) to introduce the context behind why a report prepared by the Organisation for Economic Co-operation and Development (OECD) in 2017 would be of such importance to researchers in various academic disciplines and public policy, (2) to present the details of a simple classification system that was applied to all 111 case studies of behavioural interventions (better known as nudges) referred to in the OECD (2017a OECD. 2017a. Behavioural Insights and Public Policy Lessons from Around the World.1-408 pp. OeCD Publishing. https://read.oecd-ilibrary.org/governance/behavioural-insights-and-public-policy_9789264270480-en. doi:10.1787/9789264270480-en.[Crossref] , [Google Scholar]) report, and (3) to discuss what needs to be done to help advance practitioners’ pursuit of effective behavioural interventions. This article aims to highlight the importance of accurately cataloguing the types of behavioural interventions that have been trialled/implemented across the world. By adopting an agreed classification system, researchers and practitioners can benefit from knowing what can work, and where it can work, as well as what does not work, in order to be better armed when considering the use of behavioural interventions to solve social policy issues.     

On the Transmission Mechanism of Policy Shocks in Developing Countries

The debate over the effectiveness of demand-side stabilizing policies has often centred over the relative effectiveness of monetary and fiscal policies. Demand- and supply-side constraints are both relevant. On the supply side, price flexibility may be the result of structural and/or institutional constraints that warrant a larger degree of price adjustment in the face of demand fluctuations. On the demand side, structural constraints may hinder the transmission mechanism of demand fluctuations, resulting in an inelastic aggregate demand in the face of policy adjustments. Using data for 50 developing countries, supply-side constraints do not differentiate the transmission mechanism of policy shocks to price inflation and output growth. In contrast, a larger demand shift in the face of monetary and government spending shocks increases the real and inflationary effects of policy shocks. The pronounced evidence of upward price flexibility points to the importance of addressing supply-side capacity constraints to counter inflationary pressures in developing countries. Equally important is to analyse determinants of private spending to identify channels for influencing aggregate spending and maximizing the effectiveness of stabilization policies.     

Wage differentials across sectors in Europe

Using a unique harmonized linked employer–employee dataset, this paper analyses the structure and determinants of inter‐industry wage differentials in Central and Eastern European countries (Czech Republic, Latvia, Lithuania and Poland) and compares them to those observed in Western European states. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries, although the former tend to have higher levels of dispersion of inter‐industry wage differentials.     

Demand Shift across US Industries and the Stabilizing Function of Nominal Wage and Price Flexibility.

Nominal wage and price adjustments in response to demand shocks are likely to determine industrial output variability. The direction of this relationship is complicated, however, by demand and supply factors. The empirical investigation across a sample of private industries in the United States produces the following evidence. Price flexibility moderates the response of the output supplied to a given shift in industrial demand. Similarly, nominal wage flexibility moderates, although insignificantly, the output response to a given shift in industrial demand. The size of industrial demand shifts dominates, however, supply-side constraints in differentiating output fluctuations across industries. While price flexibility moderates shifts in industrial demand in response to aggregate demand shocks, these shifts are larger the higher the nominal wage flexibility across industries. The combined supply and demand effects differentiate the stabilizing function of nominal wage and price flexibility. Nominal wage flexibility increases output fluctuations in response to aggregate demand shocks. In contrast, output fluctuations are smaller the larger the price adjustment to demand shocks across industries. Given the endogeneity of price flexibility, it is necessary to control for variation in demand variability in order to reveal the stabilizing effect of price flexibility on output across industries.     

On the relationship between public and private spending in developing and developed countries

Using annual data, the paper studies the time-series evidence regarding the effectiveness of government spending. The emphasis is on the relationship between public spending and private spending. The objective is to identify whether the effects of public spending on macro variables are reinforced or mitigated through the spillover effects on private spending. The evidence attests to the importance of stimulating private spending to maximize the positive effect of an increase in public spending on real growth. Concerns about the crowding out effects of higher public spending on private demand are more dominant in developing countries. Moreover, the scope for government spending to determine aggregate uncertainty is much larger in developing countries. Overall, the evidence attests to the importance of managing trends and variability of government spending towards maximizing the fiscal multiplier. The paper's evidence spells out potential to maximize the fiscal multiplier via private spending and concerns about the ineffectiveness of fiscal policy where crowding out concerns dominate.     

How common is new product failure and when does it vary?

Marketing Letters - This study aims to explore how common new product failure is in consumer packaged goods (CPG) categories and investigate the conditions in which the new product failure rate...     

Family firms’ investments, uncertainty and opacity

This paper contributes to the literature on family firms in two ways. First, it focuses on a largely neglected but important issue of family firms’ investment decisions. Second, it uses a novel and rich data set about Italian private firms; this complements the literature, which typically focuses on publicly traded companies, in an important way, given that most family firms are private and relatively little information is available on their behaviour. Our results suggest that family firms’ investments are significantly more sensitive to uncertainty than nonfamily firms. We find evidence that the greater sensitivity to uncertainty is basically due to the greater opacity of family firms and to their higher risk aversion, rather than to the degree of sunk fixed capital as is typical in the literature on investment decisions.