The principles underpinning behavioural economics have been attracting legislators seeking to rein in the excesses of the financial sector. Are they motivated by saving face, political gain or doing right by the public? Roger Miles conducts some research.
As the current crisis of trust in public housing safety shows, it can take a catastrophe to force us all to overhaul the ways that we perceive and govern risk. After the financial market crash of 2007-8, many market watchers – including me – saw just such an opportunity: we could at last bring in better, people-centric ways to regulate financial risk-taking. Before the crash, years of patient work by “alternative” economists had made steady but mostly unspectacular progress in getting the attention of legislators. Now, ten years on, has the crash made government agencies take on board the new economics? Are new laws reflecting a fresh understanding, among legislators, of how people really behave?