Using Behavioural Insights to Argue for a Stronger Social Safety Net: Beyond Libertarian Paternalism

Abstract

Insights from experimental research in the behavioural sciences offer a powerful impetus to reject the new paternalist approach to social policy. The findings from psychology, behavioural economics and behavioural finance, concerning decision-making by people experiencing poverty, point to the importance of alleviating material hardship by improving the social safety net, rather than trying to remedy the character of individuals through welfare conditionality. Thus far, the behavioural sciences’ usefulness as an intellectual weapon against punitive welfare reform has been underappreciated. This is partly due to underappreciation of the considerable contrast between the libertarian paternalism advocated by some behavioural scientists, which provides a rationale for governments to nudge citizens, and Lawrence Mead's new paternalism, which emphasises the personal responsibility of the poor for their circumstances. More importantly the disproportionate attention given to nudge has inhibited recognition that the behavioural research on poverty can be used to argue for more ambitious policy approaches which seek to transform behaviour in more ethical ways.