Niall Ferguson Quotes

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

The systematic experimental study of reproducible errors of human reasoning, and what these errors reveal about underlying mental processes, is known as the heuristics and biases program in cognitive psychology. This program has made discoveries highly relevant to assessors of global catastrophic risks.

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.

The sad truth is that many behavioral economists know very little about psychology.

Humans are hard-wired to be irrational when it comes to financial decisions. We must understand that so we don't become the sucker at the poker table.

Most of our decisions are driven by either love or fear. Figure out who's doing the talking, then decide what you'll do.

How should the best parts of psychology and economics interrelate in an enlightened economist's mind?... I think that these behavioral economics...or economists are probably the ones that are bending them in the correct direction. I don't think it's going to be that hard to bend economics a little to accommodate what's right in psychology.

The great thing about behavioural psychology and economics is that they help us to see that there are actually pretty good reasons why human beings swing from greed to fear, and why we're not really calculating machines or utility-maximisers.

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.

You have a natural tendency to want an emotionally satisfying tale - and to make investments based on that - despite times when the actual data may be telling you something different.

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

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.

Policy makers, like most people, normally feel that they already know all the psychology and all the sociology they are likely to need for their decisions. I don't think they are right, but that's the way it is.

My research career has been devoted to understanding human decision-making and problem-solving processes. The pursuit of this goal has led me into the fields of political science, economics, cognitive psychology, computer science and philosophy of science, among others.

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

Fear and greed are potent motivators. When both of these forces push in the same direction, virtually no human being can resist.

We tend to ignore the high probability of small gains or losses and focus on big payoffs or disaster despite remote odds.

That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.

I think that we have to be constantly asking ourselves, 'How do we calculate the risk?' And sometimes we don't calculate it correctly; we either overstate it or understate 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.

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.

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

The ability to calibrate risk doesn't happen rationally.

And your brain doesn't naturally know how to think the way Zeckhauser knows how to play bridge. "for example," people do not react symmetrically to loss and gain. Well maybe a great bridge player like Zeckhauser does, but that's a trained response. Ordinary people, subconsciously affected by their inborn tendencies.