3673nudges and financial incentives
- Jun 1, 2009In 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
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.
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