“Behavioural economists look for ‘quirky’ behavioural patterns – it is only in the eyes of economists that these are misbehaviours.” Richard Thaler began with a number of anecdotes from his time as a graduate economics student. He and others began to observe several quirky behaviours exhibited by those around him, including the economics professor who collected and drank fine wines without having any intention of buying or selling those vintages. It was these ‘misbehaviours’, as an economist might view them, which gave Thaler his inspiration and encouraged him to begin testing his ideas. “A famous US senator once said ‘a billion here, a billion there, it soon adds up to real money’.” Have these quirks contributed much to policy formulation? Evan Davis pointed out that so far the most celebrated successes of behavioural economics in the UK—automatic enrolment for pensions and tax letters—had not made a significant dent on public spending. But Thaler defended the potential of focusing on what look like marginal gains. He argued that while a 2- 3% increase in revenue might not sound like much, “if we can speed up getting unemployment levels from 8% to 6% to 5%, or increase the rate of retirement saving […]

Original source – Blog

Comments closed