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April 15, 2014

A Conversation with Richard Thaler

By Anne Panek '14  |  november, 2012, Issue 2

Somehow, "libertarian paternalism" just doesn't have the same charm as "nudge" for a book title. This is a point that Richard Thaler, Professor of Behavioral Science and Economics, readily acknowledged during a discussion with Steven Levitt, Professor of Economics, at the Becker Brown Bag Speaker Series on November 13. The book (Nudge, also written by Cass Sunstein) focuses on how policies or circumstances can be adjusted according to principles of human behavior in order to bring about better decisions. Written with humans rather than "econs" in mind, Thaler described how behavioral economics could be a source of positive change in everything from bathroom habits to savings programs.

ChicagoBusiness had a chance to catch up with Thaler to discuss some of his other projects and where he sees his field of research heading. Here are some of his thoughts from the Harper cafeteria to the presidential election:

ChiBus (CB): Are there any ideas for "nudges" within Booth itself that you have identified (either for students, faculty, or other entities)?

Richard Thaler (RT): I think the cafeteria is very well designed from a nudge perspective. The salad bar is right in the middle, and has lots of healthy "goodies" that make it a tasty lunch. To get to the burgers and fries you have to go all the way to the back. I doubt if this was the intent, but regardless, it is well done.

CB: What do you see as the future of behavioral economics?

RT: I am on record (see my paper "The End of Behavioral Finance") as predicting that behavioral economics will eventually disappear as a separate field because economics will become as "behavioral" as it needs to be, to be a satisfactory model of human behavior. Young economists, including many at Booth, no longer consider behavioral economics to be a renegade branch of economics.

CB: Nudge is an incredibly popular book; why do you believe it has such mass appeal? And, are you ever concerned that behavioral books in your discipline (such as Nudge) could be considered "too mainstream"?

RT: Of course I am happy about the success of Nudge but it was never written to appeal to a mass audience. We wrote the book because we had what we thought was a novel way of thinking about public policy problems, and we hoped the book might be read by influential policy makers and journalists. We achieved that goal. That just regular folks find something in the book for them is a great bonus.

CB: Can you provide any general thoughts about your unofficial role as an adviser for Obama's re-election campaign?

RT: There is nothing very unusual or special about what this group did aside from the fact that they were (except from me) psychologists rather than economists. Many economists advise governments and Presidential campaigns including several members of our faculty such as Austan Goolsbee, Dennis Carlton and Randy Kroszner. I have done some of that as well, both with the Obama administration and more extensively with the conservative Cameron government in the UK, which has established a Behavioral Insight Team.

Last Updated 11/27/12
Last Updated 11/27/12