Do people’s preferences depend on policies?

Behavioral economics and public policy

David Just and Andrew Hanks have a new paper forthcoming in the American Journal of Agricultural Economics entitled: The Hidden Cost of Regulation. This is an important paper in many respects. As I see it, one of the general problems with the behavioral economics literature is that the findings of behavioral biases (e.g., status quo bias, overweighting low probability risks, loss aversion, present, etc.) are almost always put forth as motivation for more government regulation. Yet, it is easy to imagine many behavioral economic findings suggesting just the opposite – though that is rarely the conclusion drawn by the authors. ….[READ]

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