Blog

Behavioural Economics in Policy Design: Nudging Toward Sustainable Consumer Choices

Book Title: Transformative Approaches in Multidisciplinary Research (TAMR)

Chief Editors: Dr. Meenakshi Kujur, and Dr. Hamidun Bunawan

Associate Editors: Mr. Gunjit Singhal, and Dr. Asma Farooque

Co-Editors: Dr. Suresh Kamarapu, and Dr. Souvik Sur

Chapter: 9

DOI: https://doi.org/10.59646/672/9

Authors: Dr. Sanjay Prasad, and Dr. Deepali amb Prasad

Abstract

The growing imperative of environmental sustainability has prompted policymakers to consider new policies that can impact consumer behaviour without limiting choice. The use of behavioural economics, especially nudging has become an effective aspect of policy making to make consumers make sustainable choices. This case study research paper explores how behavioural economics can be used to come up with policy interventions that can influence environmentally friendly consumption habits. This paper discusses the role of nudges, including default options, framing effects, social norms and choice architecture, in consumer behaviour in various industries, including energy consumption, waste management, transportation, and sustainable purchasing. The study takes a mixed methodology approach which entails quantifying behavioural data through policy implementations and qualitative information through the available literature and case studies of behavioural interventions in other countries. The results indicate that behavioural nudges can go a long way in enhancing the probability of sustainable decisions by minimizing the cognitive burden and providing subtle clues on decision-making without infringing on the freedom of choice. Nevertheless, nudges are not effective in all cultural backgrounds, based on the level of awareness, and confidence in the ruling bodies. Another point that is brought out in the study is that behavioural interventions are cost-effective, scalable, but, when used with traditional regulatory and economic policies, they do work best. Issues of transparency and manipulation are also ethical issues that are vital in acceptance of policies. Moreover, the study reveals some important policy implications, such as the incorporation of behavioural knowledge in environmental management, application of digital platforms to nudge behaviour in real-time, and ongoing assessment of behavioural interventions. Through an examination of the nexus of behavioural economics and the sustainability policy, this paper shows how nudging can help achieve long term environmental objectives by promoting responsible consumer behaviours. The results offer important information to policy makers, environmental institutions and scholars who wish to come up with effective, ethical, and scalable sustainability interventions. The research is an addition to the existing body of literature on behavioural public policy by providing evidence-based policies on how to improve sustainable consumption by designing behavioural interventions.

Keywords: Behavioural Economics, Nudging, Policy Design, Sustainable Consumption, Environmental Policy, Choice Architecture, Consumer Behaviour, Sustainability, Behavioural Policy, Green Behaviour.

References

  1. Allcott, H. (2011). Social norms and energy conservation. Journal of Public Economics, 95(9–10), 1082–1095. [https://doi.org/10.1016/j.jpubeco.2011.03.003](https://doi.org/10.1016/j.jpubeco.2011.03.003)
  2. Allcott, H., & Rogers, T. (2014). The short-run and long-run effects of behavioural interventions. American Economic Review, 104(10), 3003–3037. [https://doi.org/10.1257/aer.104.10.3003](https://doi.org/10.1257/aer.104.10.3003)
  3. Dolan, P., Hallsworth, M., Halpern, D., King, D., & Vlaev, I. (2012). Influencing behaviour: The mindspace way. Journal of Economic Psychology, 33(1), 264–277. [https://doi.org/10.1016/j.joep.2011.10.009](https://doi.org/10.1016/j.joep.2011.10.009)
  4. European Commission. (2021). Behavioural insights applied to policy. Publications Office of the European Union.
  5. Kallbekken, S., & Sælen, H. (2013). ‘Nudging’ hotel guests to reduce food waste. Tourism Management, 36, 542–550. [https://doi.org/10.1016/j.tourman.2012.09.006](https://doi.org/10.1016/j.tourman.2012.09.006)
  6. Lehner, M., Mont, O., & Heiskanen, E. (2016). Nudging – A promising tool for sustainable consumption behaviour? Journal of Cleaner Production, 134, 166–177. [https://doi.org/10.1016/j.jclepro.2015.11.086](https://doi.org/10.1016/j.jclepro.2015.11.086)
  7. OECD. (2017). Behavioural insights and public policy: Lessons from around the world. OECD Publishing. [https://doi.org/10.1787/9789264270480-en](https://doi.org/10.1787/9789264270480-en)
  8. OECD. (2019). Tools and ethics for applied behavioural insights: The BASIC toolkit. OECD Publishing. [https://doi.org/10.1787/9ea76a8f-en](https://doi.org/10.1787/9ea76a8f-en)
  9. S. Sruthi.(2025). AI-Enhanced CRM Tools in Network Marketing: Adoption and Impact. Scriptora International Journal of Research and Innovation (SIJRI),1(4). https://scriptora.org/index.php/files/article/view/37
  10. S. Sruthi., M.R. (2025). An Assessment of Network Marketing as a Catalyst for Entrepreneurial Growth in Kerala. Journal of Information Systems Engineering and Management, 10(26s). DOI: https://doi.org/10.52783/jisem.v10i26s.4311
  11. Schultz, P. W., Nolan, J. M., Cialdini, R. B., Goldstein, N. J., & Griskevicius, V. (2007). The constructive, destructive, and reconstructive power of social norms. Psychological Science, 18*(5), 429–434. [https://doi.org/10.1111/j.1467-9280.2007.01917.x](https://doi.org/10.1111/j.1467-9280.2007.01917.x)
  12. Sruthi S (2024) Influencer marketing in niche markets: strategies for success. Lib Pro 44(3):344. https://doi.org/10.48165/bapas.2024.44.2.1
  13. Sruthi S, Dr. R. Maheshwari. (2025). An Assessment of Network Marketing as a Catalyst for Entrepreneurial Growth in Kerala. Journal of Information Systems Engineering and Management. DOI: https://doi.org/10.52783/jisem.v10i26s.4311
  14. Sunstein, C. R. (2014). Why nudge? The politics of libertarian paternalism. Yale University Press.
  15. Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth, and happiness. Yale University Press.
  16. United Nations Development Programme. (2023). Behavioural science for sustainable development*. UNDP.
  17. United Nations Environment Programme. (2023). Turning off the tap: How the world can end plastic pollution and create a circular economy. UNEP.
  18. World Bank. (2022). World development report 2022: Finance for an equitable recovery. World Bank Publications. [https://doi.org/10.1596/978-1-4648-1730-4](https://doi.org/10.1596/978-1-4648-1730-4)