Richard Thaler Quotes

I love Richard Thaler's 'Quasi Rational Economics.' A collection of some of his most interesting and inventive essays, the real foundation of behavioral economics.

I practice what has come to be called behavioral economics.

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 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 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.

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.

If we all make systematic mistakes in our decisions, then why not develop new strategies, tools, and methods to help us make better decisions and improve our overall well-being? That's exactly the meaning of free lunches- the idea that there are tools, methods, and policies that can help all of us make better decisions and as a consequence achieve what we desire-pg. 241

One of the big lessons from behavioral economics is that we make decisions as a function of the environment that we're in.

Economists think about what people ought to do. Psychologists watch what they actually do.

I like to think that since I was about 19, I have studied human decision-making and problem-solving.

There is much evidence that people are not rational, in the economist’s sense; nor do they take into account expectation, in the precise interpretation of that word. As a result, economic theory often does not correspond with what happens in the market. Some would argue that we need descriptive economics. I would argue that all should be taught about probability, utility, and MEU (maximization of expected utility) and act accordingly.

In psychology and behavioral economics, people have shown that if you just describe options in a certain way, or make some features of a situation salient, you can get people to do and even see what you want. You don't have to be a Jedi to manipulate people's attention.

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.

Early in my doctoral training at Cornell University, I became immersed in the behavioral decision theory paradigm.

So, what's a nudge? A nudge is some small feature of the environment that attracts our attention and alters our behavior.

I started in business journalism from the outside, so when I started writing about markets and business, I was struck by the fact that markets seemed to work well even though people are often irrational, lack good information and are not perfect in the way they think about decisions.

My first undertaking in the way of scientific experiment was in the field of economics and psychology.

If you simply announce that things are irrational, then that alone doesn't get you very far. You have to replace rational agents with some concrete notion of what it means to be irrational.

Except for some effects that I attribute mostly to age, my intuitive thinking is just as prone to overconfidence, extreme predictions, and the planning fallacy as it was before I made a study of these issues.

It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches!

We historians are increasingly using experimental psychology to understand the way we act. It is becoming very clear that our ability to evaluate risk is hedged by all sorts of cognitive biases. It's a miracle that we get anything right.

Personally, I don't see old economics and behavioural economics as opposed. It is useful to assume people are rational as a good approximation to their long term behaviour, but it would be unwise not to think how in practice their behaviour may deviate from that simplifying assumption.

Interestingly, human irrationality is a hot topic in economics at the moment. Behavioural economics it's called, on the cusp of economics and psychology.

Positive defaults align our short-term decisions with our long-term interests. And we don't always do that.

Economic theory does not work with human beings. We are far too messy.