Le Grand Syllabus 2017/2018
enced by our environment and feelings much more than individuals and policy makers would like to think. As a result individuals make decisions that are not always in their best interest, and that systematically depart form the predictions of standard rational actor economic models. For example, people take out loans that they cannot afford, smoke though they know it is harmful, buy things they hardly need, and save too little. Behavioural economics breaks down the human decision-making process, helping us understand what factors people consider when making decisions and how they arrive at the choices they make. Behavioural economics considers emotions, world views, and habits – among other factors – to understand what impacts individuals and how that affects their decisions. This course will explore the relationship between behavioural economics and public policy. It will review the major themes of behavioural economics, drawing upon recent developments from experimental economics, motivational and behavioural studies in psychology, and the “nudge” agenda. These insights will then be applied to a range of policy-relevant sectors, including health care, revenue collection, energy use, social welfare programs, the political process, education, and international development. Required reading : R. Thaler and C. Sunstein (2008) Nudge : Improving Decision about Health, Wealth and Happiness New ; Ariely, D. (2008). Predictably irrational : the hidden forces that shape our decisions. London, HarperCollins ; Kahneman, D. (2011) Thinking, Fast and Slow London, Allen Lane ; P. Dolan et al (2010) Mindspace : Inﬂuencing Behaviour through Public Policy. London : Cabinet Ofﬁce and the Institute for Government ; William J. Congdon, Jeffrey R. Kling and Sendhil Mullainathan. 2011. Policy and Choice : Public Finance through the Lens of Behavioral Economics, Brookings Institution Press.
Teachers : Marco MIRA D'ERCOLE (Head of the Division for Household Statistics and Progress), Fabrice MURTIN (Economiste). Pedagogical Format : Elective Course validation : Policy brief on a subject related to well-being. Workload : Reading as indicated in the plan of the course. Course Description : Following the Stiglitz-SenFitoussi Commission (Stiglitz et al., 2009), the quest for measures of well-being alternative to GDP has become topical in many countries and in many circles. Considerable progress has been made in assessing the pros and cons of the various approaches and in understanding what next steps are needed to overcome some of the limitations. As a starting point, the course describes how the System of National Accounts evolved and the 'tension' between a production and a welfare perspective on the accounts. It then describes different perspectives to individual well-being, from those limited to ‘opulence' to those focus on people's 'capabilities' ; how inequalities enter the construction of community-level social welfare functions ; and how considerations on different capital stocks and risks affect any assessment of the sustainability of social welfare over time. On a second step, the course looks at subjective well-being (SWB) as a key dimension of individual welfare. The course takes stock of concepts, measurement practices and empirical evidence, drawing on evidence from the Gallup World Poll and other sources. It describes differences between life evaluations, experienced well-being and eudemonia, their drivers and impacts. One step further, the course will show how a composite measure of social welfare based on the 'equivalent income' approach (the Multidimensional Living Standards measure) can be developed based on 'shadow prices' of some non-material dimensions (e.g. longevity and employment) and on a choice of parameter to express the degree of inequality aversion. This measure is used as a framework for assessing the beneﬁts of economic growth, how they are distributed among social groups, and how policies and institutions affect them ; and to compare
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