Shareplus 503 error1/18/2023 ![]() ![]() ![]() This contributes to improving traditional instruments, developing new ones related to choice architecture (nudges), and combining them within behavioral decarbonization intervention strategies. One of the most important climate change mitigation strategies is to exploit the potential of individual behavioral changes in order to reduce greenhouse gas (GHG) emissions, and the insights of behavioral economics are proving helpful in this regard. Moreover, the same is likely to be true of “nudges” more generally, when motivated firms oppose them. Therefore, policy defaults intended to protect individuals when firms have the motivation and means to move consumers out of the default are unlikely to be effective unless accompanied by substantive regulation. Due to Constitutional and institutional constraints, government regulation of the libertarian paternalism variety is unlikely to be capable of overcoming these bounds. Comparing the retirement savings default to the overdraft default, four boundary conditions on the use of defaults as a policy tool are apparent: policy defaults will not be sticky when (1) motivated firms oppose them, (2) these firms have access to the consumer, (3) consumers find the decision environment confusing, and (4) consumer preferences are uncertain. Examining the new default for consumer checking account overdraft coverage reveals that firms can systematically undermine each of the mechanisms that might otherwise operate to make defaults sticky. ![]() But how broadly applicable are the results obtained in the retirement savings context? Evidence from other contexts indicates two problems with this approach: the defaults put in place by the law are not particularly sticky, and the people who opt out can be those who would benefit the most from the default. Internet privacy appears poised to be the next arena. Inspired by the success of “automatic enrollment” in increasing participation in defined contribution retirement savings plans, policymakers have put similar policy defaults in place in a variety of other contexts, from checking account overdraft coverage to home mortgage escrows. ![]()
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