Behavioral-Experimental Public Budgeting and Financial Management: A Review of Experimental Studies in the Field

Abstract

Behavioral research in public budgeting and financial management (PBFM) has a venerable lineage that extends all the way back to Herbert Simon's early analysis of budgetary processes. in spite of this early connection to public budgeting, behavioral research is now more commonly associated with behavioral economics, psychology and other disciplines. Importantly, the term behavioral is now most often associated with the use of experimental research designs. We argue that the common perception in PBFM is that there is not a significant amount of behavioral-experimental (B-E) research currently being conducted in PBFM. We find that contrary to this expectation that there are some important areas where PBFM researchers have used experiments extensively including evaluating budgetary tradeoffs, the impact of performance information on budgeting outcomes, contracting and purchasing, and accountability. We then review related literatures for studies in other fields that are related to areas of PBFM research. From this review of the literature on experiments in PBFM and related fields, we see significant differences in both theoretical development and experimental designs. in conclusion, we suggest that for Behavioral-Experimental PBFM (B-E PBFM) to flourish that the field should be open to new theories and experimental methods.