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Essay Unit 1 ECON1 - Economics: Markets and Market Failure (AQA A-Level Economics Year 2 Unit 1: Markets and Market Failure): Behavioural Economics £5.99
This essay is about assessing theoretical economic policies and behavioral policies in order to fix the market failure.
This essay obtained 100% marks (25) and this essay has the "perfect" structure acording to my teacher for an A* answer. This essay is extremely ideal for any student looking to ...
The Government would like to improve the well-being of the population by
encouraging people to adopt a healthy diet. Assess alternative policies that the
Government might adopt to try to achieve its objective.
The well-being of the population can be improved via the means of behavioural and
traditional economics. However, it is behavioural economic policies that are
theoretically more efficient and effective. Examples of such policies are framing and
choice architecture which collectively influence people in making the rightful
decision. Some may argue that traditional methods such as taxation is more effective
it is more direct in the market. However Traditional policies cost more compared with
nudges such framing. Overall, behavioural economics is more practical in the
pragmatic world.
Framing is a complement of behavioural economics. Framing is an example of
cognitive bias, in which people react to a choice depending on how people were
presented with it e.g. as a loss or as a gain. This argument is clearly supported by the
fact that people tend to avoid risk when a positive frame is presented but seek risks
when a negative frame is shown. For example: when people are asked to pick between
an ice cream tub which contains 10% fat or a tub with a label stating that it is 90% fat
free people will generally pick the second one, this is because people view it as a gain
to consume something 90% fat free. Therefore, framing is a method the government
should implement more furthermore, it is also cheaper. As well as this, choice
architecture can improve the well-being of the population. Effective decision making
requires an understanding of the decision which needs to be made. This is where
choice architecture comes in. By providing solid reliable information, sequencing,
consumers could be led to making ‘good’ decisions. Restricted choice is a policy the
government could potentially apply. There are 43 different toothpaste brands in the
UK however the market is dominated by a few this is because in supermarkets they
are in the eyeline shelves. Correspondingly, the government can apply the same
method for healthier food in order to achieve a better diet for the population. In
addition, recently cigarette packaging contains graphic images with negative
information, and they are typically hidden as well as this people must go to different
counters to ask for them. The numbers of people eating healthier foods should
increase (CP) if the government use the strategy of restrictive choice and choice
architecture.
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