| FUTURE CONSUMER POLICY SHIFT IN THE EU? – A potentially groundbreaking conference is being organised by DG SANCO this week, as it will helpfully bring the European Commission’s current policies in the area of financial services more in line with scientific evidence and away from simplistic ideology. |
The conference planned this Friday 28th November 2008 entitled “How Can Behavioural Economics Improve Policies Affecting Consumers?” is now fully booked, but will be available for those who still want to follow the Conference via the live webstreaming link below.
Simply focussing on financial literacy and information provision may not be the most effective policy for our EU policy maker to follow. Regulation of a different sort may be preferable for European consumers based on the implications of behavioural economics and the nuances of consumer behaviour. The subprime crisis has shown that suppliers of financial services (i.e. US mortgage brokers) are able to manipulate consumers so as to benefit from their behavioural biases. We encourage ECRC members to listen in on the webstream at 3.40pm on Friday when financial services will be specifically discussed.
The lessons from the field of behavioural economics have already been a part of ECRC stakeholder conferences at the national level as it was in 2007 in Italy (see the link below).
HOW CAN BEHAVIOURAL ECONOMICS IMPROVE POLICIES AFFECTING CONSUMERS?
CONFERENCE DESCRIPTION
Many areas of public policy increasingly seek to shape and influence the behaviour of consumers or to empower them to make better choices. For example, at European level, consumer behaviour is central to the debate over nutritional and environmental labelling, sustainable consumption, bank account switching, consumer contract law, alcohol and tobacco policy, energy and mobile telephone regulation. However, much of this policy is implicitly based upon the assumption that individuals are rational, selfish and consistent. Recent insights from behavioural economics question the standard assumptions of neoclassical economics and identify new challenges and opportunities for policy practitioners: if individuals are not perfectly rational and time-consistent, what are the implications for consumer-related policies?
The conference is designed to bring together researchers, policy-makers and stakeholders to explore these new challenges and identify the next steps. In particular, the aim of the conference is to bring the research and policymaking communities together, in order to make research more relevant to current policy problems. The conference should help researchers understand the kind of evidence policy-makers need and should make policy-makers aware of the advances of behavioural economics and of the nuances of consumer behaviour. It should also generate ideas for new research that could be carried out under the 7th Framework Programme.
The recent literature has identified a number of behavioural anomalies confirming people's limited rationality: default bias (i.e., the ordering of options influences the choice); framing (the way information if framed matters; in particular, people weigh losses more heavily than gains); endowment effect (people's value of a good increases once they own it); present bias (people don't like to defer gratification) and choice overload (more choice can be demotivating and reduce satisfaction), to mention but a few. For more background information, you may want to read "The Marketplace of Perceptions" (Harvard Magazine, March-April 2006) , or the report of the conference on behavioural economics organised by Federal Trade Commission, or the proceedings of the Roundtable on behavioural economics and public policy , organised bby the Australian Government Productivity Commission.
The conference will attract a large audience from different areas of work and backgrounds. The conference presentations and discussions will be adapted accordingly and no previous knowledge of behavioural economics and European consumer-related policy is strictly required. The conference presentations and discussions will tackle several key questions, among which:
1. Do the insights from behavioural economics call for a more or less interventionist policy to influence consumer behaviour?
2. Are modern, ever more complex markets generating more choice that consumers can cope with?
3. Should policy aim to protect consumers against their own behavioural biases?
4. Are behavioural biases more significant in service markets, especially financial services?
AGENDA:
Date: Friday 28th November 2008
Venue: Room 0A, Albert Borschette Centre, 36, Rue Froissart, 1040 Brussels
Friday 28th November 2008
8.00am – 9.00am Registration
INTRODUCTION
9.00am – 9.20am Official Welcome – Ms. Jacqueline Minor
Director of Consumer Affairs, DG SANCO (Health and Consumers)
9.20am – 9.40am Opening Address – Ms. Meglena Kuneva
EU Commissioner, Consumer Protection
Content: Bridging the gap between science and policy-making
SESSION 1 Behavioural economics and consumer-related policies: tools and objectives
9.40am – 10.00am
Prof. Matthew Rabin
University of California, Berkeley
Title: How can behavioural economics improve consumer-related policies?
10.00am – 10.20am
Dr. Amelia Fletcher
Chief Economist, Office of Fair Trading, UK
Title: What do policy-makers need from behavioural economists?
The speakers will address the following questions:
1. What are the main insights from behavioural economics?
2. Does behavioural economics tell us more about consumer behaviour than consumers tell
us themselves in surveys?
3. How can policy-makers begin to integrate the insights of behavioural economics into
their work?
10.20am – 11.00am Discussion, Session 1
Questions for the discussion:
1. Are the results of behavioural economics robust enough to be incorporated into
consumer-related policy?
2. Are the insights from behavioural economics more applicable to some markets or
policies than others?
11.00am – 11.30am Morning Tea or Coffee
SESSION 2 Framing and choice
11.30am – 11.50pm
Prof. Dan Goldstein
London Business School
Title: Defaults, choice architecture and choice overload
11.50am – 12.10am
Prof. Botond Koszegi
University of California, Berkeley
Title: Time and decision: the taste for instant gratification
The speakers will address the following questions:
1. Are modern, ever more complex markets generating more choice that consumers can
cope with?
2. Are consumers who prefer short-term over long-term benefits still able to maximise their
welfare?
3. How can policy reconcile the impatient self and the forward-looking one?
12.10am – 12.40am Discussion, Session 2
Questions for the discussion:
1. Should consumer choice be limited or "edited"?
2. How can we identify commercial practices that undermine rational choice rather than
facilitate it?
12.40am – 1.00pm
Prof. Mark Armstrong
University College of London
Title: Some drawbacks of interventionist consumer policy
The speaker will address the following question:
Should policy aim to protect consumers against their own behavioural biases?
1.00pm – 1.10pm Discussion
Questions for the discussion:
1. What are the dangers of an interventionist policy?
2. Should policy-makers try and reconcile the impatient self and the forward-looking one?
1.10pm – 2.40pm Buffet Lunch
SESSION 3 Switching and consumer behaviour in the service sectors
2.40pm – 3.00pm
Prof. Sumit Agarwal
Indian School of Business, Federal Reserve Bank of Chicago
Title: Consumer behaviour in financial markets: the role of policy
3.00pm – 3.20pm
Prof. Catherine Waddams
Director of the ESRC Centre for Competition Policy
Title: Consumers' ability to choose in newly-liberalised markets
3.20pm – 3.40pm
Ms. Mary O'Dea
Consumer Director, Financial Regulator (Ireland)
Title: How to overcome the endowment effect and encourage consumers to
switch: a case study from the Irish Switching Code
The speakers will address the following questions:
1. Does the status-quo bias affect consumers' decision-making?
2. How can policy interventions overcome behavioural biases discouraging switching?
3. Are consumers able to make optimal choices in complex competitive markets and are
they able to learn from past mistakes?
3.40pm – 4.20pm Discussion, Session 3
Questions for the discussion:
1. Are behavioural biases more significant in service markets, especially financial services?
2. Has market liberalisation generated choice overload for consumers and has choice
overload amplified the endowment effect?
4.20pm – 4.50pm Afternoon Tea or Coffee
ROUNDTABLE DISCUSSION How can we best apply behavioural economics to consumer-related policies?
4.50pm – 5.50pm
Chair: Ms. Jacqueline Minor
Director of Consumer Affairs, DG SANCO (Health and Consumers)
Panellists:
Dr. Pierre Valette, Research in economics, social sciences and humanities, DG RTD
Ms. Monique Goyens, General Director, The European Consumers' Organisation
Dr. Rossella Incardona, Lawyer, Expert in EU Consumer Law
Prof. Lucia A. Reisch, Copenhagen Business School
Dr. Veronique Scailteur, Director Government Relations Europe, Procter &Gamble
The panellists will address the following questions:
1. Are consumers rational?
2. Do the insights from behavioural economics call for a more or less interventionist
policy to influence consumer behaviour?
3. How do we design research that is more timely and relevant to current policy problems
(e.g., for inclusion in Impact Assessments)?
4. What are the tools that policy-makers would like behavioural economists to develop?
5.50pm – 6.00pm Closing remarks – Mr. Robert Madelin
Director General, DG SANCO (Health and Consumers) |
| ID: |
42111 |
| Author(s): |
ECRC |
| Publication date: |
25/11/08 |
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Created: 25/11/08. Last changed: 09/02/09.
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