Our regular Q&A columnist, Greg McKenna, the Markets & Economics Correspondent for Business Insider Australia gives us his insights into this week’s budget.
Treasurer Scott Morrison may have just delivered a perfectly pitched budget from a behavioural economics point of view with a set of measures which neatly “nudge” Australians across the broad spectrum of the economy toward the government’s twin goals of jobs and growth.
The government – and specifically this budget – sets up what behavioural economists would call the “choice architecture” within which Australian business and consumers will make decisions.
US academics Richard Thaler and Cass Sunstein explain choice architecture in their 2008 book “Nudge: Improving Decisions About Health, Wealth, and Happiness” as follows:
Decision makers do not make choices in a vacuum. They make them in an environment where many features, noticed and unnoticed, can influence their decisions. The person who creates that environment is, in our terminology, a choice architect.
In an Australian context, the government and this budget are the choice architects.
Where the 2014 budget appeared to shock and disappoint the community with broken promises and tough measures, the 2016 budget unveiled by Morrison seems to be the very antithesis of its 2014 predecessor.
The 2014 budget saw consumer confidence collapse as a result of these tough measures, this 2016 document looks to deliver stimulus, and confidence in all the right places.
With the exception of negative gearing, the budget seeks, and appears to hit, all the hot buttons currently top of mind for Australian consumers and business.
Greg McKenna is an economist, trader and adviser. He runs his own consultancy and writes for Business Insider Australia. You can find him on Twitter @gregorymckenna or at www.gregmckenna.com.au