Quotes About Behavioral economics

dumb principal" problems.

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

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.

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

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.)

The three social influences that we have emphasized—information, peer pressure, and priming—can easily be enlisted by private and public nudgers. As we will see, both business and governments can use the power of social influence to promote many good (and bad) causes.

losses hurt about twice as much as gains make you feel good.

When all economists are equally open-minded and are willing to incorporate important variables in their work, even if the rational model says those variables are supposedly irrelevant, the field of behavioral economics will disappear. All economics will be as behavioral as it needs to be. And those who have been stubbornly clinging to an imaginary world that consists only of Econs will be waving a white flag, rather than an invisible hand.

By properly deploying both incentives and nudges, we can improve our ability to improve people's lives, and help solve many of society's major problems. And we can do so while still insisting on everyone's freedom to choose.

Loss aversion produces inertia, meaning a strong desire to stick with your current holdings. Loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when changes are very much in our interests.

Trayless cafeterias. Cafeteria managers have been taking a keen interest in reducing food waste. Seeing how easy it is to load up a tray with extra food that often goes uneaten and extra napkins that go unused, curious managers and students at Alfred University in New York tested a trayless policy over two days. When trays weren't offered, food and beverage waste dropped between 30 and 50 percent!

One way to start to think about incentives is to ask four questions about a particular choice architecture: Who uses? Who chooses? Who pays? Who profits?

A nudge, as we will use the term, is any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates.

Drawing on some well-established findings in social science, we show that in many cases, individuals make pretty bad decisions—decisions they would not have made if they had paid full attention and possessed complete information, unlimited cognitive abilities, and complete self-control.

When people are given three prices (think of those for small, medium, and large coffee), and they have no strong preference, they tend to pick the "middle" price. Morgan

El enfoque económico es el del «individualismo metodológico», según el cual los fenómenos colectivos son resultado de comportamientos individuales y, a su vez, afectan a estos últimos.

If you think in terms of major losses, because losses loom much larger than gains - that's a very well-established finding - you tend to be very risk-averse. When you think in terms of wealth, you tend to be much less risk-averse.

I try to teach people to make fewer mistakes. But in designing economic policies, we need to take full account of the fact that people are busy, they're absent minded, they're lazy, and that we should try to make things as easy for them as possible.

In the parlance of economics, Julien has said to Pari that if she cut off the supply of attention, perhaps the demands for it would cease as well.

If you send out one coupon with a deadline of a week and another that must be used within the next month, you end up having more redemptions with the one week deadline. It's really amazing. With the month deadline you have four times as much time, but people tend to say they'll use it in a few weeks' time and then they don't do it.

Whatever you tax, you get less of.

If we think that high marginal tax rates are bad because they distort incentives, the same is then true for tax subsidies.

People making $1 million a year are not going to do anything different if they pay more taxes.