Behavioural Economics:

Improving Consumer Policy?

Rossella IncardonaBruxelles, 28 November 2008

Via Durini n. 2720122 MilanoTel. +39 02

778031Fax +39 02 77803233

http: www.jenny.it

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PROS

A backdrop for judges, authorities, traders and lawyers

Behavioural bias: a tool box for policymakers (e.g. framing effect,

information overload, loss aversion, imperfect self-control, importance of

other people’s behaviour, motivation to do the right thing)

An invitation for consumer organizations to motivate consumers

and raise their awareness

A challenge and a stimulus for economists (of whatever creed)

CONS

Impairment of the principle of certainty of law

Diminished confidence for traders

Diminished consumer self-awareness and freedom of choice

Behavioural Economics: Improving Consumer Policy?

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1. BE and Consumer Policy: Pros and Cons

1. BE and Consumer Policy: Pros and Cons

2. The Proposal EC Consumer Rights Directive

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The Proposal EC Consumer Rights Directive: some examples of existing policy interventions (which seem) already based on BE insights, e.g. cooling-off periods, disclosure obligations

Proposals for the Proposal: symbols for withdrawal periods and EC consumer sale guarantee

Article 31.3. of the Proposal (additional charges actively accepted and not subject to default options): some remarks

The Proposal EC Consumer Rights Directive: why not a Regulation?

2. The Proposal EC Consumer Rights Directive

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3. The Average Consumer and the UCPD

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The “average consumer” (i.e. …“reasonably well-informed and

reasonably observant and circumspect , taking into account

social, cultural and linguistic factors…”): too high a standard

for the real consumer?

The “vulnerable consumer” (i.e. “the average member of a clearly identifiable group of consumers who are particularly vulnerable … because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee”): some

criticisms

UCPD: overall benefits, i.e. broad scope, proper balance of

general clauses and fixed rules

UCPD: the Italian experience (Service providers cases)

3. The Average Consumer and the UCPD

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4. Conclusions

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BE insights may help to shape a more effective consumer

policy BUT they cannot offer turnkey solutions

YES to non intrusive BE tools in EC consumer policy, e.g.

assessing and proposing consumer policy against a backdrop of

BE insights

NO to the impairment of legal certainty, e.g. the notion of

the vulnerable consumer, grey lists

NO to limitations of consumers’ and traders’ freedom of

choice, e.g. use of excessive default options, imposition of

mandatory contractual forms

The way forward: more time and resources needed to increase

consumer awareness, make information more effective, detect

“bad” traders, keep on studying BE!

4. Conclusions

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4Behavioural Economics: Improving Consumer Policy?