Behavioral Economic Conundrum

Behavioral Economics Foils an Obama Tax Cut? - BusinessWeek: "It didn’t work. That, at least, is the finding of the first study to look specifically at the behavioral economics element of the stimulus. In a forthcoming paper, three economists—Claudia Sahm of the Federal Reserve, and Joel Slemrod and Matthew Shapiro of the University of Michigan—found that Making Work Pay didn’t get people to spend more money. In fact, it got them to spend less. The study is a prism through which to view both the efficacy of Obama’s stimulus and whether a set of discoveries about the foibles of human decision-making can be translated into effective government policies."

IMHO the entire project of getting us to spend more should be shelved. Our economy should be based on providing products and services we will gladly pay for. Most of what we can now buy - the big ticket items - are inherently undesirable. This includes cars and houses. We would live better and have more healthy and vibrant economies in a world beyond sprawl made up of car free communities and modular housing affized to skeletons of sufficient size to enable actual green technology rather than today's feeble retro-fitting enterprise.



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