Quotes from Richard H. Thaler

Social practices, and the laws that reflect them, often persist not because they are wise but because Humans, often suffering from self-control problems, are simply following other Humans. Inertia, procrastination, and imitation often drive our behavior. Once

This confirmed my longheld suspicion that many people use spreadsheets as an alternative to thinking.

There's no better way to build confidence in a theory than to believe it is not testable.

In our understanding, a policy is "paternalistic" if it tries to influence choices in a way that will make choosers better off, as judged by themselves. 3

When in a cold state, we do not appreciate how much our desires and our behavior will be altered when we are "under the influence

For most of us, however, self-control issues arise because we underestimate the effect of arousal.

Sometimes dessert really is delicious, and we do best to go for it. Sometimes it is best to fall in love. But it is clear that when we are in a hot state, we can often get into a lot of trouble.

Given that people would often choose not to choose, it is hard to see why freedom lovers should compel choice even though people (freely and voluntarily) resist it. If we ask the waiter to select a good bottle of wine to go with our dinner, we will not be happy if he says that we should just choose for ourselves!

We will call something "tempting" if we consume more of it when hot than when cold. None of this means that decisions made in a cold state are always better. For example, sometimes we have to be in a hot state to overcome our fears about trying new things.

Similarly, people are far more likely to splurge impulsively on a big luxury purchase when they receive an unexpected windfall than with savings that they have accumulated over time, even if those savings are fully available to be spent.

As for information and educational campaigns, one of the main lessons from psychology is that it is impossible for such programs to be "neutral," regardless of how scrupulously designers try to achieve that goal. So to put it simply, forcing people to choose is not always wise, and remaining neutral is not always possible.

If you want to encourage people to do something, Make It Easy.

California and New York now require that any subscription that is initiated online can also be canceled online.

1. If you want to encourage someone to do something, make it easy.

people who are threatened with big losses and have a chance to break even will be unusually willing to take risks

No more than 25 percent of the guests at a university dinner party can come from the economics department without spoiling the conversation.

Once you recognize the break-even effect and the house money effect, it is easy to spot them in everyday life. It occurs whenever there are two salient reference points, for instance where you started and where you are right now. The house money effect—along with a tendency to extrapolate recent returns into the future—facilitates financial bubbles.

app we particularly like is called Tally.13 (Full disclosure: Tally was started by Jason Brown, who, when he was a student at the University of Chicago Booth School of Business, took Thaler's class. We have no financial stake in his company.)

If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic. Gains

I began to have deviant thoughts about economic theory while I was a graduate student

As I have learned over the years, and will discuss further in subsequent chapters, the reluctance to experiment, test, evaluate, and learn that I experienced at General Motors is all too common.

Compare subliminal advertising to something just as cunning. If you want people to lose weight, one effective strategy is to put mirrors in the cafeteria.

To approach these problems we once again rely on one of our guiding principles: transparency.

We can even see the legal institution of marriage as a precommitment strategy, not unlike that of Ulysses in approaching the Sirens, in which people knowingly choose a legal status that will protect them against their own errors.