Behavioral Economics and Government Purchases – Some Insights into the Fiscal Psychology of Public Expenditure

Authors : Thomas DÖRİNG, Ruven Dominik OEHMKE

Pages : 56-80

Doi:10.30927/ijpf.713894

View : 16 | Download : 11

Publication Date : 2020-07-24

Article Type : Review Paper

Abstract :As a challenge to the neoclassical approach to human decision-making, behavioral economics have obtained increasing acceptance either in the field of public finance for some time. How-ever, so far the fundamental results of behavioral economics on cognitive heuristics, illusions and biases with respect to human information processes, judgements and choices were pri-marily applied to the analysis of taxation and public debt. In contrast, comparable examinations of public expenditure are not very common up to now. For this reason, the paper gives a review of the existing behavioral economic research on public spending and governmental expenditure policy.
Keywords : Behavioral Economics, Public Expenditure, Fiscal Illusion, Fiscal Psychology