Policymaking Insights from Behavioral Economics

Behavioral economics is motivated by a range of empirical facts that are at apparent odds with assumptions of standard economic theory. But while behavioral approaches are becoming common in academia, it is unclear how behavioral models should inform economic policymaking in general, and central banking in particular.  This conference, entitled “Implications of Behavioral Economics for Economic Policy,” discussed the implications of behavioral economics for macroeconomic policy, with special attention to the regulatory and monetary policy responsibilities of central banks.

1. Introduction

Behavioral Economics: Its Prospects and Promises for Policymakers
Christopher L. Foote, Lorenz Goette, and Stephan Meier

2. Behavioral Aspects of Price Setting

Behavioral Aspects of Price Setting and Their Policy Implications
Julio J. Rotemberg, with comments by Jonas D. M. Fisher and John Leahy

3. Household Savings Behavior

Household Savings Behavior in the United States: The Role of Literacy, Information, and Financial Education Programs
Annamaria Lusardi, with comments by Alan S. Blinder and David I. Laibson

4. Fairness and the Labor Market

The Behavioral Economics of the Labor Market: Central Findings and Their Policy Implications
Ernst Fehr, Lorenz Goette, and Christian Zehnder, with comments by George P. Baker and John A. List

5. Behavioral Economics and the Housing Market

U.S. House Price Dynamics and Behavioral Economics
Christopher J. Mayer and Todd Sinai, with comments by Andrew Caplin and Robert J. Shiller

6. Should Central Banks Maximize Happiness?

Happiness, Contentment, and Other Emotions for Central Banks
Rafael Di Tella and Robert MacCulloch, with comments by Alan B. Krueger and N. Gregory Mankiw

7. Behavioral Economics and Economic Policy in the Past and in the Future

Behavioral Economics and Public Policy: Reflections on the Past and Lessons for the Future
James M. Poterba
Implications of Behavioral Economics for Monetary Policy
Janet L. Yellen
Behavioral Economics as “Psychologically Informed” Economic Inquiry
Lawrence H. Summers