POSSIBILITIES OF INFLUENCING ECONOMIC BEHAVIOR OF THE POPULATION: ECONOMIC INCENTIVES VS. NUDGING

Abstract

The article reveals the specifics of how the population makes economic decisions, with an emphasis on limited attention and the resulting irrational actions of economic agents. It presents arguments regarding the importance of considering behavioral factors in managerial decision-making within the economic sphere. Based on an analysis of successful cases of influencing changes in the population’s economic behavior, examples from decision-making practices in Ukraine are reviewed. The purpose of the article is to substantiate the necessity of incorporating the idea of nudging and interventions into policy design alongside traditional economic incentives, with particular attention to the problem of limited attention among socially vulnerable groups. The novelty of the study lies in adapting globally established approaches to influencing economic behavior to the Ukrainian context and confirming the hypothesis of the feasibility of such influence through the practical experience of Ukrainian policy-making. The research relies on classical statistical methods to build an evidence base for the importance of accounting for behavioral components in policy development. To justify the relevance of behavioral factors, the method of retrospective assessments of population responses to various government programs was chosen. On this basis, hypotheses about possible explanations of economic agents’ actions, especially among socially vulnerable groups, were formulated. For the assessment of the impact of specific programs, microdata from surveys were used: Household Budget Survey (HBS) and Household Socio-Economic Status Survey. (HSESS), conducted in 2023 at the initiative of the Ministry of Social Policy of Ukraine with technical support from UNICEF, due to the suspension of the state household living conditions survey during martial law.

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