Behavioral Nudging, Its Directions, and Its Impact on Economic Efficiency

Abstract

Objectives: This study aimed to address the topic of behavioral nudging and its impact on economic efficiency, as well as the role of Islamic financial institutions in enhancing it. Behavioral nudging has increasingly asserted itself globally today, and Islamic economics can make a genuine contribution to it due to the intersection of many of its principles with those of nudging.

Methods: To achieve the research objective, the descriptive method was used to present and ground the concepts related to the study. The deductive method was also employed to establish the specific guidelines of behavioral nudging, its impact on economic efficiencies, and its relation to Islamic finance. The study proposed the following hypothesis: that the regulations of Islamic economics have an effect on modifying economic behavior.

Results: The study found that behavioral nudging primarily concerns restoring consumers, savers, and investors to a state of economic prudence amid the expansion of marketing spaces through vast technological platforms, which overwhelm individuals and society with a large volume of goods and services without the ability to discern beneficial from harmful. Behavioral nudges serve to adjust this behavior. Additionally, the media plays a major role in shaping and reshaping mental images. On the other hand, there is a real need to spread Islamic banking and saving awareness, and the behavioral nudging unit plays a direct role in this.

Conclusion: The study concluded that it is necessary to link consumer and saving culture with religious commitment, legal compliance, people's purchasing power, and their actual needs for goods, rather than mere imitation of others, through means of advocacy, guidance, and media. It recommended adopting the behavioral nudging approach by banks and Islamic financial institutions and establishing a unit dedicated to studying customer behavior.