5 Things We Learned about Behavioral Economics from Richard Thaler’s Reddit AMA
Richard Thaler is a celebrated economist and co-author of the bestselling book Nudge. He is a professor of behavioral science and economics at the University of Chicago Graduate School of Business, and the New York Times called his new book, Misbehaving, “a sly and somewhat subversive history of his profession.”
Thaler recently took to Reddit to answer your questions on behavioral economics, nudges, and misbehaving. Below are some of the highlights.
1. How did you get into behavioral economics? What do you recommend for a recent college grad who would like to learn more about the field?
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. (permalink)
2. Why do we misbehave?
So by “misbehaving,” I mean any behavior that is inconsistent with the model of choice favored by economists, in which people are lightning-fast calculators with no emotions, self-control problems, or care for other people.
So the term is not meant to be pejorative.
Mine is a critique of the economic model, not of human behavior. (permalink)
3. Is there any evidence to show that being aware that a person is being “nudged” lessens or strengthens the effect?
Lots of people have the misconception that nudges have to be secret to work. This is preposterous. My favorite nudge, one that has saved my life on numerous occasions, are the signs in London that remind you which direction to look for oncoming double decker busses. Obviously, they wouldn’t work if they weren’t visible. (permalink)
4. Is there anything to suggest nudges being more powerful behavioral influences on people with certain (mental, emotional, social, economic, etc.) characteristics as opposed to others?
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. (permalink)
5. What would you say is the #1 thing that people get wrong about the future?
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.” (permalink)