Using Choice Framing to Improve the Design of Agricultural Subsidy Schemes

Abstract

Existing agri-environment schemes have suffered from poor uptake and high burden. This article leverages behavioural economics to test choice framing in three hypothetical policy scenarios. Using a randomised survey experiment on UK farmers, we find that frames based on mental accounting and loss aversion can be used to influence agricultural policyrelated decision making. Our findings highlight the following considerations for the design of future policy: (i) whether application costs are integrated within or segregated from a subsidy matters; (ii) the labelling of agricultural schemes may affect expenditure allocation; and (iii) reference points can affect the evaluation of new scheme alternatives.

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