Richard Thaler
For many people, being asked to solve their own retirement savings problems is like being asked to build their own cars.Collection: Car
One reason for high health care costs is that patients fail to follow their treatment regimen.Collection: Health
As a general rule, the United States government is run by lawyers who occasionally take advice from economists. Others interested in helping the lawyers out need not apply.Collection: Government
It is true that I am one of the co-authors of 'Nudge,' and I am a behavioral economist, but it does not mean that everything we write about in that book is behavioral economics, nor does it mean that my co-author, the distinguished legal scholar Cass Sunstein, is a behavioral economist.Collection: Legal
There can be legal conflicts over whether registering intent is enough to qualify you as an organ donor or whether a doctor must still ask your family's permission.Collection: Legal
The government employs scientists of many varieties in technical capacities, from estimating the environmental toxicity of a chemical to the structural soundness of a bridge. But when it comes to forming policies, these scientists and, especially, behavioral scientists are rarely at the table with the lawyers and the economists.Collection: Environmental
I am all for trying to teach household finance in schools, starting as early as possible. And when it comes to high school, I think learning about compound interest is at least as important as trigonometry or memorizing the names of all 50 state capitals.Collection: Finance
It's hard to have any idea of how much money is enough to finance an appropriate lifestyle in retirement. But if a lump sum is translated into a monthly income, it's much easier to determine whether you have enough put away to afford to stop working.Collection: Finance
In the 1940s, economics started getting highly mathematical. It was basically because economists weren't smart enough to write down models of real behavior that they started writing down models of highly rational behavior - and they kind of forgot about humans.
If you want to encourage some activity, make it easy.
Economists discount any factors that would not influence the thinking of a rational person.
As both a consumer and producer of newspaper articles, I have no beef with pay walls. But before signing up, I read the fine print.
You can't make evidence-based policy decisions without evidence.
The lesson of my field, behavioral economics, is that we need to understand the ways in which we differ from the rational human assumed in standard economic theory.
Don't get trapped by looking at what the price was that you paid for some stock originally.
The main thing that you learn in grad school, or should learn, is how to think like an economist. The rest is just math.
Lotteries are just one way to provide positive reinforcement. Their power comes from the fact that the chance of winning the prize is overvalued.
Payroll savings plans are vital because they are essentially the only way that middle-class Americans reliably save for retirement.
Real people have trouble balancing their checkbooks, much less calculating how much they need to save for retirement; they sometimes binge on food, drink, or high-definition televisions. They are more like Homer Simpson than Mr. Spock.
When it comes to assessing the chances of some complicated combination of events, gut feelings are pretty much useless.
As every successful parent learns, one way to encourage good behavior, from room-cleaning to tooth-brushing, is to make it fun. Not surprisingly, the same principle applies to adults. Adults like to have fun, too.
Academia does not provide many opportunities for immediate gratification. You work for two years on a project, it takes two more years to get it published, and then you start hoping someone might read it.
A nudge is some feature of the environment that changes the behaviour of humans but would not change the behaviour of rational economic agents, what we call Econs.
I try to teach people to make fewer mistakes. But in designing economic policies, we need to take full account of the fact that people are busy, they're absent minded, they're lazy, and that we should try to make things as easy for them as possible.
The lesson for businesses is you are dealing with real people. Those are your customers, those are your employees, those are your bosses, and the better you understand how real people tick, the more successfully you will be able to accomplish your goals.
Social Security may be the most beloved of all the government's programs, partly because it requires so little thinking. You pay taxes while you work, then you and your spouse collect until you die.
People make just as many mistakes when the stakes go up, maybe more.
We could all use more coaching.
I practice what has come to be called behavioral economics.
We behavioralists differ from our more traditional brethren in the way we characterize agents in the economy.
Traditional economics is based on imaginary creatures sometimes referred to as 'Homo economicus.' I call them Econs for short. Econs are amazingly smart and are free of emotion, distraction or self-control problems. Think Mr. Spock from 'Star Trek.'
Whenever I'm asked to autograph a copy of 'Nudge,' the book I wrote with Cass Sunstein, the Harvard law professor, I sign it, 'Nudge for good.' Unfortunately, that is meant as a plea, not an expectation.
In a democracy, if a government creates bad policies, it can be voted out of office. Competition in the private sector, however, can easily work to encourage phishing rather than stifle it.
The more we turn down questionable offers like trip insurance and scrutinize 'one month' trials, the less incentive companies will have to use such schemes.
Fortunately, economists open to new ways of thinking are finding novel ways to use supposedly irrelevant factors to make the world a better place.
Many problems are so complex that even if we had the money to fix them, we wouldn't know how to do it. Fixing inner-city schools, reducing obesity, creating peace in the Middle East are just a few examples.
When employees are first eligible for a retirement savings plan, they should be enrolled unless they choose to opt out.
In the world of traditional economics, it shouldn't matter whether you use an opt-in or opt-out system. So long as the costs of registering as a donor or a nondonor are low, the results should be similar. But many findings of behavioral economics show that tiny disparities in such rules can make a big difference.
Many Americans say they want to be organ donors, but they just don't get around to acting on their intentions. Helping these potential good Samaritans overcome their inertia could prolong thousands of lives a year.
Signing up to be an organ donor should be at least as easy as downloading a song to your iPhone.
Doctors and hospitals should be paid for keeping their patients well. Paying them for doing more tests and surgeries creates bad incentives.
We should at least make sure that patients are given the opportunity to opt out of spending their final days in a hospital, hooked up to tubes and running up enormous bills.
Tort reform is a complicated subject and not a panacea.
When it comes to my health, I would rather my doctor base her decisions on science rather than what she, or some lawyer, thinks will stand up in court.
Claiming that Social Security benefits are safe may sound naive, but my view is actually quite cynical. I believe that as long as the elderly continue to vote in large numbers, no Congress will renege on promised payouts for those already eligible to receive benefits.
Sunk costs? We pay too much attention to them.
The supply price and the demand price should be roughly the same. You're not supposed to have two different prices. According to economists.
The Nobel Prize is going to be 'fun money' - for an occasion, when my wife and I want a $50 bottle of wine.
'Fun money' is another thing that makes no sense to traditional economists. Because there's just money; there's no 'fun money.' It's all supposed to be the same.
Countries all around the world, starting with the U.K., have started behavioural insight teams, often referred to as nudge units. And they seem to be doing lots of good.