Behavioral Public Economics shows how standard public economics can be improved using insights from behavioral economics. Public economics typically lists four market failures that may justify government intervention in markets—imperfect competition (or natural monopoly), externalities, public goods, and asymmetric information. Under the rational choice paradigm (‘agents choose what is best for them’), public economics has examined the welfare effects of policy. Recent research in behavioral economics highlights a fifth market failure—individuals may make mistakes in pursuing their own well-being. This book calls for a rethinking of assumptions of individual behavior and provides a good foundation for public economic theory.
- Introduces behavioral perspectives into public economics.
- Explains why economic incentives often undermine social preferences.
- Reveals that social incentives matter for public policy.
This book will be an invaluable resource for researchers and postgraduate students in public economics, behavioral economics, and public policy.
Table of Contents
1. Introduction: Why ‘Behavioral’ Public Economics 2. Preferences, Utility, and Welfare 3. Economic Incentives in Public Economics 4. Behavioral Economics and Public Policy 5. Social Preferences and Moral Economy 6. Social Incentives and Interaction 7. Governing the Commons with Social Incentives. Bibliography
Shinji Teraji is Professor of Economics at Yamaguchi University, Japan. His research is mainly concerned with behavioral economics, institutional economics, and economic methodology.
"Public economics has enriched economics by showing how economic outcomes can be improved by addressing market failures. In his Behavioral Public Economics, Shinji Teraji provides significant insight into how behavioral economics is enriching public economics, in particular by recognizing the impacts of social incentives and social preferences in efforts to address market failures."
Professor Mark A. Pingle, University of Nevada, Reno, USA
"This book provides a thorough investigation of behavioral public economics, a relatively new approach to public economics. Professor Shinji Teraji's book is a timely contribution at a time when insights from behavioral economics can help with global challenges we are facing including the COVID-19 pandemic. I can't wait to use it in my classes."
Distinguished Professor Mehmet S. Tosun, University of Nevada, Reno, USA
"In his important new book, Shinji Teraji, very explicitly and uniquely extends traditional public economics with the important contributions made over the decades by behavioural economics, which broadens economic modelling to incorporate critical non-economic variables. He also introduces and delves into the implications of asymmetric and costly information, processing capabilities, moral considerations, and preference formation and their realization to provide importance insights into public policy and how to better model real world individuals."
Morris Altman , Chair Professor of Behavioural and Institutional Economics & Co-Operatives , School of Business, University of Dundee