Economic Reforms in Ukraine From the Standpoint of Behavioral Economy

Abstract

The article shows that when developing and implementing economic reforms, irrational behavior of economic entities is not sufficiently taken into account. For its more complete consideration, it is proposed to make wider use of the theory and principles of behavioral economics – a special direction of institutional economics, within which the influence of psychological factors on the behavior of the economic subjects is investigated. It is noted that behavioral economics originated against the background of criticism of the theory of rational choice, which in its constructions traditionally relied on the concept of «economic man». It is noted that the «sprouts» of the theory of behavioral economics appeared in the works of the representatives of classical political economy, Keynesianism and neo-institutionalism, its beginnings – in the works of M. Alle, D. Ellsberg, L. Savage, G. Simon and J. Katons, and the basics – in the works of D. Kahneman, A. Tversky and their followers. It is shown that the work of D. Kahneman and A. Tversky stimulated the process of differentiation of behavioral economics and contributed to the emergence within its framework of several theories, namely: the choice of decisions in conditions of uncertainty and risk (prospects and cognitive heuristics), intertemporal choice (anomalies and behavioral finances), behavioral games (social preferences and equitable distribution, as well as the theory of nudging. For the practical use of theories of behavioral economics on their basis the basic principles of behavior of economic subjects are allocated: painful attitude to risks and losses; permanent improvement; compliance with a certain style of the behavior; problems of self-control; imitating crowd behavior; incorporating equity into the utility function; paternalism; nudging (najing). It is emphasized that the theories and principles of behavioral economics should be used when carrying out economic reforms. The experience of their use in foreign countries is summarized. The possibilities of their use in Ukraine during the implementation of the following reforms are revealed: institutional (state administration, national security and defense system, deoligarization, decentralization and regional policy) – to improve public management of the socio-economic development of the country, regions and territorial communities, to protect the country from russian military aggression; financial sector of the economy (monetary policy, tax and budget policy) – to encourage business and citizens to save, lend to the economy and pay taxes, improve control over budget expenditures; real sector of the economy (land, agriculture, industry and infrastructure) – to eliminate the monopoly on state property, in particular land, restoration of the effective owner, innovative development of the economy; social sphere (education, labor market, medical, pension and social protection system of the population) – to improve the quality of education and the level of employment, improve the system of providing social services, etc.; spheres of nature use (subsoil use and systems of state supervision in the field of environmental protection) – to ensure sustainable development of the country.