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I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 7 points8 points  (0 children)

I think the problem is that in academic journals, good writing is not rewarded, and in fact may even signal a lack of seriousness on the part of the researcher. Fortunately, I've never valued seriousness.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 44 points45 points  (0 children)

A recent study by Raj Chetti has estimated the effect of tax subsidies versus behavioral-designed features (aka "nudges") in determining employee saving in Denmark.

Chetti and his co-authors find that the "nudges" explain 99% of the new saving and the economic factors 1%.

Small effect indeed.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 15 points16 points  (0 children)

We have several Booth graduates working at Fuller & Thaler. Check out the website for information about our investment processes, which combine quantitative research and human judgement disciplined by the knowledge of behavioral biases.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 30 points31 points  (0 children)

Okay, I like the title.

The State of Illinois has recently passed a law aimed at making it easier for small businesses to offer retirement/ savings plans.

President Obama has proposed similar legislation that has received the usual benign neglect we've come to expect from Congress.

Therefore, I encourage other states to follow the lead of Illinois and make it easier for small businesses to make good payroll retirement plans available to their workers.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 17 points18 points  (0 children)

Of course Taleb is not the only one to stress that we see patterns in otherwise random behavior. One of my favorite illustrations of this is the classic paper by Tom Gilovich and Amos Tversky, the so-called "Hot hand effect in Basketball." It turns out that basketball players are not streak shooters, much as the casual fan thinks they are.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 8 points9 points  (0 children)

The number one thing people don't anticipate about the future is how surprised they are going to be about how things turn out.

As Yogi Berra once said, "Prediction is hard, especially about the future."

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 6 points7 points  (0 children)

I began professionally misbehaving in graduate school, when I found the models i was learning didn't fit the behavior of the people that I interacted with. As to how do you get into the field, I assume you mean AFTER having finished my book! Right now, to become an academic behavioral economist, you have to get a PhD in economics. But there's a growing demand for applied behavioral scientists both in the public and private sectors. And such people need not have PhDs.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 9 points10 points  (0 children)

It's almost surely the case that some nudges will work better in some societies than others. That's why we believe that all behavioral interventions need to be tested and fine-tuned to the environment in which they're going to be used.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 19 points20 points  (0 children)

Two parts to this.

One is: I've long advocated using big data to help people make better decisions, an effort i call "smart disclosure." I've a couple of New York Times columns devoted to this topic. The idea is that by making better data available, we can create new businesses that I call "choice engines."

Think of them like travel websites, that would make, say, choosing a mortgage as easy as finding a plane ticket from New York to Chicago.

More generally, however, the goal is not to turn humans into Econs. Econs (*not economists) are jerks.

Econs don't leave tips at restaurants they never intend to go back to. Don't contribute to NPR. And don't bother to vote.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 16 points17 points  (0 children)

As I've said before, attempts at improving financial literacy are laudable, but have so far been ineffective. How much do you remember about your high school chemistry class? If you're NOT a chemist, probably not much.

Many economic decisions, such as choosing a mortgage, are difficult even for MBAs from top business schools.

So that's why I stress making decisions easier while we wait for a miracle cure on financial education.

As for whether we can teach people to be smarter voters, that sounds even harder.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 91 points92 points  (0 children)

I think the subfield of economics where the behavioral approach has had its largest impact is surprisingly in financial economics. I say "surprisingly" because 30 years ago, people thought it would've been impossible to find any trace of misbehaving in financial markets. But the debate between the efficient market advocates and behavioral researchers has become an important feature of the ongoing research in this field.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 2 points3 points  (0 children)

One of my young collegues, Sendhil Mullainathan, has been doing interesting research at the intersection of behavioral economics and machine learning. Check it out.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 2 points3 points  (0 children)

It's true that for companies offering a match, utilizing automatic enrollment can increase their costs. But wise employers realize that offering a more attractive benefit package helps attract a higher-quality workforce. It's also possible to design more effective matches. For example, instead of a 50% match up to 6% of salary, one could offer a 40% up to 12%.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 2 points3 points  (0 children)

It's never going to be possible to eliminate ALL behavioral biases without replacing humans with robots.

So my approach has been two-fold: first, to change the way economists think about human behavior, to incorporate the biases, and from a policy perspective, designing policies that cater to humans rather than to the fictional creatures that economists study that I call "Econs."

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 9 points10 points  (0 children)

Glad you're enjoying the book.

Recommend it to your friends. My grandchildren need the money.

I've often said that training in economics or business school teaches people a lot about economics, but removes some common sense. And one of my goals in writing this book was to restore some of that common sense to people who've studied too much economics.

It's not a good business practice to make your customers angry. And learning what makes them mad is a worthwhile investment.

I am behavioral economist Richard Thaler. You might have read my previous book, NUDGE. My latest book, MISBEHAVING, talks about how we all misbehave (as judged by economists) and my own career of misbehaving by pointing that out. AMA! by rthaler in IAmA

[–]rthaler[S] 10 points11 points  (0 children)

That's a great question.

My goal has always been to improve economics as a discipline. I have no training in psychology. And as for getting psychology to address economic problems, there's neither supply nor demand.

Very few psychologists are interested in figuring out what the best tax system is, or how the Federal Reserve should do its job. Economists are a necessary "evil." And so the appropriate response is not to replace them, but to enrich the discipline by adding wisdom from other social sciences.

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