Behavioral Economics in Public Policy: Quiz Questions and Answers

Question 1

Which of the following is NOT a core principle of behavioral economics?

Accepted Answer

Expected utility maximization

Answer

Loss aversion

Answer

Limited rationality

Answer

Present bias

Question 2

Which of the following is NOT a key concept of behavioral economics?

Accepted Answer

Rational choice theory

Answer

Bounded rationality

Answer

Nudging

Answer

Cognitive biases

Question 3

How has behavioral economics been used to inform public policy in consumer protection?

Accepted Answer

Designing policies that make it easier for consumers to make well-informed choices.

Answer

Increasing the number of regulations on businesses.

Answer

Imposing strict penalties on businesses that engage in deceptive practices.

Question 4

Which of the following is an example of a nudge?

Accepted Answer

Providing consumers with clear and simplified information about their financial options.

Answer

Banning the advertising of cigarettes.

Answer

Imposing a tax on unhealthy foods.

Question 5

How has behavioral economics helped to improve the effectiveness of health care policies?

Accepted Answer

By developing interventions that encourage people to make healthier choices.

Answer

By expanding access to health insurance.

Answer

By increasing funding for health care research.

Question 6

How can behavioral economics principles be applied to design more sustainable environmental policies?

Accepted Answer

By encouraging people to reduce their energy consumption and adopt more environmentally friendly practices.

Answer

By imposing strict regulations on businesses that pollute the environment.

Question 7

How can behavioral economics insights be used to improve financial regulation?

Accepted Answer

By informing regulations that take into account the cognitive biases and heuristics that can lead to financial mistakes.

Answer

By increasing the number of financial regulators.

Question 8

Which of the following is an example of a heuristic?

Accepted Answer

Using a rule of thumb to estimate the value of a used car.

Answer

Seeking advice from an expert before investing in a stock.

Answer

Considering all of the relevant information before making a decision.

Question 9

How can behavioral economics help to address social inequality?

Accepted Answer

By designing policies that promote economic mobility and reduce barriers to opportunity.

Answer

By providing free education and healthcare to all citizens.

Answer

By increasing taxes on the wealthy.

Question 10

Which of the following is **NOT** a key concept in behavioral economics?

Accepted Answer

Rationality

Answer

Cognitive biases

Answer

Nudging

Question 11

Which of the following is an example of a **nudge** in public policy?

Accepted Answer

Defaulting to organ donation

Answer

Banning the sale of cigarettes

Answer

Increasing taxes on sugary drinks

Answer

Providing financial incentives for healthy behavior

Question 12

How has behavioral economics been used to inform financial regulation?

Accepted Answer

By designing regulations that take into account cognitive biases.

Answer

By reducing the number of regulations.

Answer

By increasing the penalties for financial misconduct.

Question 13

Which of the following is a **benefit** of using behavioral economics in public policy?

Accepted Answer

More effective policies that are tailored to human behavior.

Answer

Increased public trust in government.

Answer

Reduced costs of implementing policies.

Question 14

How does behavioral economics differ from **traditional economics**?

Accepted Answer

It incorporates psychological insights into economic models.

Answer

It only focuses on microeconomic behavior.

Answer

It assumes that people are always rational.

Question 15

Which of the following is **not** a limitation of using behavioral economics in public policy?

Accepted Answer

It can always guarantee successful policy outcomes.

Answer

It can be difficult to design nudges that are effective.

Answer

Behavioral insights can be complex and context-specific.

Question 16

How has behavioral economics been used to improve **health care policy**?

Accepted Answer

By designing interventions that encourage healthy behaviors.

Answer

By increasing the number of doctors.

Answer

By reducing the cost of health care.

Question 17

Which of the following is a **criticism** of using behavioral economics in public policy?

Accepted Answer

It could potentially be used to manipulate people's behavior.

Answer

It is not based on sound scientific evidence.

Answer

It is too expensive to implement.

Question 18

How does behavioral economics challenge **traditional economic models**?

Accepted Answer

By showing that people do not always behave rationally.

Answer

By disproving the concept of utility maximization.

Answer

By proving that the economy is more complex than we thought.

Question 19

What is the role of **cognitive biases** in behavioral economics?

Accepted Answer

They can lead to predictable and irrational behavior.

Answer

They are always harmful to economic decision-making.

Answer

They are only found in people with mental illness.

Question 20

Which of the following is NOT a key concept in behavioral economics?

Accepted Answer

Rationality

Answer

Loss aversion

Answer

Bounded rationality

Answer

Nudging

Question 21

What is the primary goal of using behavioral economics in public policy?

Accepted Answer

To design policies that are more effective in encouraging desired behaviors by considering cognitive biases and other aspects of human decision-making.

Answer

To reduce the cost of implementing public policies.

Answer

To make public policies more politically popular.

Question 22

Which of the following is an example of a nudge?

Accepted Answer

A default option that encourages saving for retirement.

Answer

A law that requires people to wear seat belts.

Answer

A tax on sugary drinks.

Question 23

How has behavioral economics influenced financial regulation?

Accepted Answer

It has led to a greater focus on protecting consumers from making poor financial decisions.

Answer

It has reduced the number of regulations on financial institutions.

Answer

It has increased the penalties for financial fraud.

Question 24

Which of the following is a key finding of behavioral economics?

Accepted Answer

People often make irrational decisions due to cognitive biases and other limitations.

Answer

People are always selfish in their decision-making.

Answer

People are always altruistic in their decision-making.

Question 25

What is the difference between paternalistic and libertarian approaches to public policy?

Accepted Answer

Paternalistic policies restrict people's freedom of choice, while libertarian policies maximize it.

Answer

Paternalistic policies promote equality, while libertarian policies promote freedom.

Question 26

What does 'choice architecture' refer to in behavioral economics?

Accepted Answer

Designing environments that influence choices without restricting them.

Answer

Creating a framework for decision-making with a limited set of options.

Answer

Using financial incentives to encourage desired behaviors.

Answer

Providing consumers with information to make rational choices.

Question 27

A government wants to increase retirement savings. Which policy, informed by behavioral economics, is most likely to be effective?

Accepted Answer

Automatically enrolling employees in retirement savings plans with an opt-out option.

Answer

Launching an advertising campaign highlighting the importance of retirement planning.

Answer

Offering tax breaks for those who save above a certain threshold.

Answer

Providing financial education workshops on retirement planning.

Question 28

Loss aversion, a key concept in behavioral economics, is best reflected in which policy intervention?

Accepted Answer

Framing health campaigns to emphasize potential losses from unhealthy habits.

Answer

Offering rewards for individuals who engage in healthy behaviors.

Answer

Providing clear and concise information about the risks of unhealthy choices.

Answer

Making healthy food options more accessible and affordable.

Question 29

The UK government's 'sugar tax' on soft drinks is based on which behavioral economics concept?

Accepted Answer

Price elasticity of demand, recognizing that people are more sensitive to price changes for unhealthy products.

Answer

Anchoring bias, where consumers rely heavily on the initial price as a reference point.

Answer

Availability bias, where people overestimate the likelihood of events based on easily recalled information.

Question 30

What is the main purpose of using 'default options' in policy design?

Accepted Answer

To leverage inertia and encourage individuals to make beneficial choices.

Answer

To restrict individual freedom and enforce specific behaviors.

Answer

To promote fairness and equity in policy outcomes.

Answer

To simplify decision-making by eliminating unnecessary choices.

Question 31

Which behavioral bias explains why people often underestimate the long-term benefits of saving for retirement?

Accepted Answer

Present bias, where individuals prioritize immediate gratification over future rewards.

Answer

Confirmation bias, as individuals seek information that supports their existing spending habits.

Answer

Loss aversion, as people are more afraid of losing money than gaining it.

Answer

Overconfidence bias, leading people to overestimate their ability to save enough for retirement.

Question 32

The 'sunk cost fallacy' can influence decision-making. How might this bias impact public policy?

Accepted Answer

Governments may continue ineffective policies due to past investments, even when change is beneficial.

Answer

Policymakers may prioritize short-term gains over long-term sustainability.

Answer

Policymakers might be reluctant to implement new policies due to fear of public disapproval.

Question 33

Which policy intervention uses 'social norms' to promote desired behaviors?

Accepted Answer

Public awareness campaigns highlighting the high percentage of people who already engage in the desired behavior.

Answer

Making it easier and more convenient to engage in the desired behavior.

Answer

Providing financial incentives for individuals who adopt the desired behavior.

Question 34

In healthcare, how can 'framing effects' be used to encourage preventative screenings?

Accepted Answer

Emphasizing the peace of mind gained from early detection rather than the potential negative outcomes of late diagnosis.

Answer

Offering financial rewards for individuals who participate in preventative screenings.

Answer

Providing detailed information about the benefits and risks of preventative screenings.

Question 35

Which of the following is NOT a key concept in behavioral economics that has been used to inform public policy?

Accepted Answer

Rational Choice Theory

Answer

Framing Effects

Answer

Loss Aversion

Answer

Cognitive Biases

Question 36

The 'Nudge' theory in behavioral economics suggests that:

Accepted Answer

Individuals' choices can be subtly influenced by how options are presented.

Answer

People are inherently rational and always make optimal decisions.

Answer

Government intervention should be minimized to allow for free market choices.

Question 37

Automatically enrolling individuals into pension schemes, unless they choose to opt out, is an example of:

Accepted Answer

Choice Architecture

Answer

Loss Aversion Reduction

Answer

Framing Effect Manipulation

Answer

Cognitive Bias Mitigation

Question 38

A policy aiming to reduce sugary drink consumption by increasing their price is primarily based on:

Accepted Answer

Traditional economic principles, specifically the idea that higher prices lead to lower demand.

Answer

Framing Effects

Answer

Cognitive Biases

Answer

Loss Aversion

Question 39

A policy promoting organ donation by making it the default option, where individuals need to opt out rather than opt in, is based on the concept of:

Accepted Answer

Default Bias

Answer

Availability Heuristic

Answer

Anchoring Bias

Answer

Confirmation Bias

Question 40

Which of the following is NOT a potential limitation of using behavioral economics in public policy?

Accepted Answer

Behavioral interventions are always easy to predict in their effectiveness.

Answer

Ethical concerns about manipulating people's choices.

Answer

The potential for unintended consequences.

Question 41

A policy aimed at encouraging people to save for retirement by automatically enrolling them in a pension scheme is an example of:

Accepted Answer

Behavioral Economics

Answer

Keynesian Economics

Answer

Marxist Economics

Answer

Classical Economics

Question 42

Using simplified language and clear visual aids in government communications about public health issues is an example of:

Accepted Answer

Framing Effects

Answer

Cognitive Biases

Answer

Anchoring Bias

Answer

Loss Aversion

Question 43

Which of the following is NOT a key concept in behavioral economics that has been used to inform public policy?

Accepted Answer

Rationality

Answer

Cognitive biases

Answer

Loss aversion

Question 44

The use of 'opt-out' organ donation systems, where individuals must actively choose to not donate, is an example of which behavioral economics principle?

Accepted Answer

Default bias

Answer

Anchoring bias

Answer

Social norms

Answer

Framing effects

Question 45

Which of the following is an example of how behavioral economics has been used to improve financial regulation?

Accepted Answer

Simplifying financial product disclosures to make them easier to understand.

Answer

Reducing the availability of credit.

Answer

Increasing interest rates on high-risk loans.

Question 46

The 'nudge' approach to public policy aims to:

Accepted Answer

Influence people's choices in a predictable way without restricting their options.

Answer

Force people to make specific choices through legislation.

Answer

Eliminate all cognitive biases through education.

Question 47

The 'availability heuristic' is a cognitive bias that:

Accepted Answer

Makes people overestimate the likelihood of events that are easily recalled.

Answer

Leads to people making choices based on their current mood.

Answer

Causes people to be overly optimistic about future outcomes.

Question 48

How can the concept of 'framing effects' be used to encourage healthy eating?

Accepted Answer

Presenting healthy food options as the 'default' choice.

Answer

Providing more information about the nutritional content of food.

Answer

Increasing the price of unhealthy food.

Question 49

Which of the following is NOT an example of a behavioral economics intervention aimed at improving consumer protection?

Accepted Answer

Deregulating the financial services industry.

Answer

Simplifying product labeling and packaging.

Answer

Providing clear and concise information about product risks and benefits.

Answer

Introducing cooling-off periods for certain purchases.

Question 50

The use of 'commitment devices' in public policy is based on the principle that:

Accepted Answer

People are more likely to stick to their goals if they make a public commitment.

Answer

People are easily influenced by peer pressure.

Answer

Individuals are always rational and make optimal choices.

Question 51

A 'choice architecture' approach to public policy seeks to:

Accepted Answer

Design environments that make it easier for people to make desired choices.

Answer

Restrict individual choice in order to achieve social goals.

Answer

Encourage people to rely on their own intuition when making decisions.