Quotes About Behavioral economics

Steven D. Levitt

Steven D. Levitt

Steven D. Levitt

Steven D. Levitt

If morality represents the way we would like the world to work and economics represents how it actually does work

Las conductas social y económica, añade, «son complejas, y comprender su carácter resulta mentalmente agotador.

Steven D. Levitt

is a systematic means of describing how people make decisions and how they change their minds;

If there is one mantra a Freak lives by, it is this: people respond to incentives.

declared preferences and revealed preferences.)

Most of economics can be summarized in four words: "People respond to incentives." The rest is commentary.

The governing principle is precisely the same one that predicts behavior at the gas pump. When the price of gasoline is low, people choose to buy more gasoline. When the price of accidents (e.g., the probability of being killed or the expected medical bill) is low, people choose to have more accidents. You

The asymmetry has been confirmed in the lab by showing that people will take a bigger gamble to avoid a sure loss than to improve on a sure gain

loss aversion, the sunk-cost fallacy, and throwing good money after bad, is patently irrational, but it is surprisingly pervasive in human decision-making.

One of the most commonly cited human irrationalities is the sunk-cost fallacy, in which people continue to invest in a losing venture because of what they have invested so far rather than in anticipation of what they will gain going forward.

As Hobbes saw clearly, people don't have to be evil to get into collective action problems. They just have to be human.

We humans actually need help controlling our impulses - nudges.

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.

We aren't, as human beings, very good at acting in our best interest.

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.

And [Thaler] noticed that when he had his fellow economists to dinner, they filled up on cashews, which meant they had less appetite for the meal. More to the point, he noticed that they tended to be relieved when he removed the cashew nuts, so they didn't ruin their dinners. The idea that it could make you better off to reduce your choices—that idea was alien to economics.

They were "risk averse." But what was this thing that everyone had been calling "risk aversion?" It amounted to a fee that people paid, willingly, to avoid regret: a regret premium.

For some reason human beings did not see it that way. "People's intuitions about random sampling appear to satisfy the law of small numbers, which asserts that the law of large numbers applies to small numbers as well," Danny and Amos wrote.

Actually, they soon discovered, you had to reduce the amount of the certain loss even further if you wanted to get people to accept it. When choosing between sure things and gambles, people's desire to avoid loss exceeded their desire to secure gain.