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3673nudges and financial incentives

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  • Simon Norton
    Jun 1, 2009
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      In the middle of Dr Avineri's article was a statement that there was a synergy
      between nudges and financial incentives. I think that this needs greater
      emphasis. Relying entirely on nudges is a strategy which I call "it pays to
      pollute", in antithesis to a policy based on financial incentives which I call
      "polluter pays".

      The "it pays to pollute" strategy is supposed to work by incentivising the
      producers of energy efficient services (such as transport) by enabling them to
      collect more from consumers. I believe that it is palpably not working.

      In newspapers we constantly see letters with themes like "we are supposed to be
      being encouraged out of our cars, but..." which show that people are often very
      good at seeing through such strategies.

      On another point, the article mentions the name of Sunstein. This is, I assume,
      the author of "Worst Case Scenarios", reviewed in the London Review of Books 10
      Apr 2008. The reviewer, Jeremy Waldron, expresses his disappointment with the
      book. His main points are that the book ignores distributional problems, even
      though the author has elsewhere shown his awareness of this issue; and in
      condemning the Precautionary Principle, by which one avoids new and uncertain
      risks until one can be sure that the relevant threats are low, it generalises
      from the Iraq war to climate change, though I'd say (and would have said some
      years ago) that both the gravity and the likelihood of the threat from the
      latter were greater by several orders of magnitude.

      Simon Norton
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