U1 AOS3 - Strategies used by Government to Influence Consumer Behaviour Flashcards
(13 cards)
Strategies used by government to influence consumer behaviour:
- Incentives
- Disincentives
- Educational campaigns
Incentives
Reward or encourage certain decisions
Disincentives
Punish or discourage certain decisions
Educational Advertising Campaigns
Aim to make decisions better informed and able to make improved decisions
Examples of incentives from government
- Cash subsidies
- Allowing tax write-offs
Examples of disincentives from government
- Indirect taxes
- Laws
- Fines
- Government regulations
How educational campaigns work to influence consumer behaviour
Improve the knowledge of decision makers → consumers are more likely to make rational and beneficial decisions
The exise tax on alcohol and tobacco makes it more expensive to buy, hence contracting consumer demand and reducing personal and social harm.
This is an example of which type of government intervention strategy?
A. Incentives
B. Disincentives
C. Educational advertising campaigns
D. None of the above
B
Private health insurance tax rebate and free COVID-19 vaccinations and testing seek to make it cheaper and more attractive for consumers, increasing demand and easing pressures on the public health system.
This is an example of which type of government intervention strategy?
A. Incentives
B. Disincentives
C. Educational advertising campaigns
D. None of the above
A
The Victorian Government provides a 100% discount on vehicle registration fees to apprentices, if they can prove that their vehicle is essential for their work.
How does this influence consumer behaviour?
Acts as an incentive by reducing the cost of owning a vehicle (by about $865/year) → encourages existing apprentices to purchase vehicles. Government claims that it will ensure apprentices are able to work productively and develop their skills.
Alternatively, acts as an incentive for individuals to become apprentices.
The Victorian Government provides a $1,400 rebate for households that install PV solar systems.
How does this influence consumer behaviour?
Acts as an incentive by reducing the upfront cost of installing solar systems. Seeks to encourage greater small-scale renewable energy production, supporting government environmental and energy goals.
Without the rebate, the initial cost of installing solar systems is high and immediate, but the savings are long-term, so these systems would be unaffordable and unattainable for most.
In addition to the $1,400 rebate, the Victorian Government also offers zero interest loans of up to $1,400.
How does this influence consumer behaviour?
Zero interest loans mean that consumers only pay the principal on their loan, which means that the cost of their loan is less overall (and only equal to $1,400 in this case).
The loan allows the high upfront cost to be broken into smaller, more manageable payments for consumers. If the cost of servicing the loan repayments is less than the savings delivered through the solar system, consumers will be incentivised to use the loan and install the solar system.
In 2024, the Victorian Government increased the Wagering and Betting Tax from 10% to 15% of revenue earned from betting.
How does this influence consumer behaviour?
Increased tax on betting and wagering acts as an excise tax so is a disincentive.
Businesses pass on this tax to consumers by lowering returns/odds/winnings on bets → less incentive or reward for consumers who gamble → less likely to gamble
Businesses will not be able to increase prices/bets for consumers to compensate for the tax increase, given that the tax is pegged to revenue - an increase in revenue will proportionally increase the amount of tax paid.
