The sad truth is that many behavioral economists know very little about psychology.
— Richard Thaler
We humans actually need help controlling our impulses - nudges.
My thesis topic was 'The value of a human life.' I asked people a question: 'Suppose you had some risk, a one in a thousand risk of dying - how much would you pay to eliminate it?'
Anybody who's ever been in a large organization realizes that 'optimizing' is not a word that would often be used to describe any large organization. The reason is that it's full of people, who are complicated.
The tradition of Chicago price theory is a good one, and it is a low-tech methodology that tries to apply simple economic theory to the world.
Don't get trapped by looking at what the price was that you paid for some stock originally.
I think behavioral economists don't have any more of an explanation about the rise of Trump than anyone else.
'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.
Sunk costs? We pay too much attention to them.
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.
Doctors and hospitals should be paid for keeping their patients well. Paying them for doing more tests and surgeries creates bad incentives.
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.
Payroll savings plans are vital because they are essentially the only way that middle-class Americans reliably save for retirement.
Fortunately, economists open to new ways of thinking are finding novel ways to use supposedly irrelevant factors to make the world a better place.
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.
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.
I practice what has come to be called behavioral economics.
Behavioral economics offers a plausible explanation for overreactions by the market. For example, a long period of bad performance can lead to stereotyping.
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.
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.
The main thing that you learn in grad school, or should learn, is how to think like an economist. The rest is just math.
God did not say that you should be able to borrow one hundred percent of the price of a house.
If you're trading individual securities, you're almost certainly making a mistake. Because most professional managers can't outperform their benchmarks, and there's little reason to think that individuals can.
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.
The Nobel Prize is going to be 'fun money' - for an occasion, when my wife and I want a $50 bottle of wine.
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.
Tort reform is a complicated subject and not a panacea.
Signing up to be an organ donor should be at least as easy as downloading a song to your iPhone.
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.
For many people, being asked to solve their own retirement savings problems is like being asked to build their own cars.
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.
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.'
If you're not putting enough away for emergencies or retirement, making commitments in advance, such as signing up for payroll withholding, can help.
We all need a lot of humility, and especially about the economy.
It's essential that we understand things like the free-rider problem, but we also need to understand that, fortunately, humans are a little nicer than economists give them credit for. Some people actually leave money at roadside fruit stands; some people give money to NPR so we can listen to it.
The good thing I will say about the Chicago School is that it was always about the world, not about the abstract.
It's not that we can predict bubbles - if we could, we would be rich. But we can certainly have a bubble warning system.
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.
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.
The supply price and the demand price should be roughly the same. You're not supposed to have two different prices. According to economists.
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.
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.
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.
When employees are first eligible for a retirement savings plan, they should be enrolled unless they choose to opt out.
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.
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.
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.
We behavioralists differ from our more traditional brethren in the way we characterize agents in the economy.
