Thaler Quotes & Sayings

Unrealistic optimism is a pervasive feature of human life; it characterizes most people in most social categories. When they overestimate their personal immunity from harm, people may fail to take sensible preventive steps. 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. — Richard H. Thaler

When an economist says the evidence is "mixed," he or she means that theory says one thing and data says the opposite. — Richard Thaler

If rather than setting the minimum balance as the lowest possible amount, so we keep people in debt for as long as possible, we raise the minimum payment and encourage people to pay off their credit cards, we're going to make less money, but we're going to have costumers that are more solvent. — Richard Thaler

There's no reason to think that
markets always drive people to
what's good for them. — Richard Thaler

When you accept that you may fail, you can accomplish anything. Fear can be so debilitating. Every day I'm faced with difficult decisions, but losing the fear helps me make the right choices. — Linda Kaplan Thaler

Everyone's lost a lot of money on their 401k plans. I've heard some people calling them 201k plans. So it's even more important to get people to be saving more for retirement. Behavioral economics has helped us learn a lot about how to do that. — Richard Thaler

I've never written a song that's hopeless. I'm not a hopeless person. I'm crazily optimistic. I crazily see the good in people. - singer Michael Stipe of R.E.M. Focusing on the tiniest details, finding magic in even the smallest inspirations, embracing the briefest moments-that's where passion is. — Linda Kaplan Thaler

People think about life in terms of changes, not levels. They can be changes from the status quo or changes from what was expected, but whatever form they take, it is changes that make us happy or miserable. — Richard H. Thaler

A bat and ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? _ cents If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? _ minutes In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? _ days — Richard H. Thaler

Most economists, including me, agree that longevity insurance would make sense for a lot of people. — Richard Thaler

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. — Michael Lewis

The money has to be deferred with what they call "clawback," which means they can get it back if I lose it all. So that guy making ten million a year selling credit default swaps, if we're going to keep five million of it in escrow for ten years, and with the right to go back and get it, if he starts losing money, then we're going to give people the right incentives not too take so much risk. — Richard Thaler

A good rule of thumb is to assume that everything matters. — Richard Thaler

Every book is a time machine, a flying carpet, a passport to the most powerful nation in the world....... your imagi-nation! — Mike Thaler

You are so beautiful, Jenna. Any man in this world would give up
his life to touch you once, just like this. -Lucas Thaler, Demon King — J.L. Sheppard

Or consider this one: people's judgments about strangers are affected by whether they are drinking iced coffee or hot coffee! Those given iced coffee are more likely to see other people as more selfish, less sociable, and, well, colder than those who are given hot coffee.27 This, too, happens quite unconsciously. — Richard H. Thaler

In a typical 401k plan, when you first become eligible you get a big pile of forms and you're told, fill out these forms if you want to join. Tell us how much amount you've saved and how you want to invest the money. In, under automatic enrollment you get that same pile of forms but the top page says, if you don't fill out these forms, we're going to enroll you anyway and we're going to enroll you at this saving rate and in these investments. — Richard Thaler

track, each one mile long, laid end to end (see figure 1). The tracks are nailed down at their end points but simply meet in the middle. Now, suppose it gets hot and the railroad tracks expand, each by one inch. Since they are attached to the ground at the end points, the tracks can only expand by rising like a drawbridge. Furthermore, these pieces of track are so sturdy that they retain their straight, linear shape as they go up. (This is to make the problem easier, so stop complaining about unrealistic assumptions.) Here is your problem: Consider just one side of the track. We have a right triangle with a base of one mile, a hypotenuse of one mile plus one inch. What is the altitude? In other words, by how much does the track rise above the ground? — Richard H. Thaler

Every American worker should be able to save for retirement via payroll deductions. — Richard Thaler

It turns out, that men, when they're taking care of their business, they're not fully attending to the task at hand, but, I'm sure there's an evolutionary explanation for this, if you give them a target, they will aim. — Richard Thaler

As someone who grew up in the Bronx, I certainly learned my share of four-letter words, but none are more powerful than nice. — Linda Kaplan Thaler

I think we also have learned the lesson that we have to have better incentive structures. — Richard Thaler

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. — Richard H. Thaler

I think the people who've been the most overconfident in our business in the last decade have been the people that called themselves risk managers. — Richard Thaler

My hunch is that as the importance of a decision grows, the tendency to rely on quantitative analyses done by others tends to shrink. When the championship or the future of the company is on the line, managers tend to rely on their gut instincts. — Richard H. Thaler

PROBLEM 1. Assume yourself richer by $300 than you are today. You are offered a choice between A. A sure gain of $100, or [72%] B. A 50% chance to gain $200 and a 50% chance to lose $0. [28%] PROBLEM 2. Assume yourself richer by $500 than you are today. You are offered a choice between A. A sure loss of $100, or [36%] B. A 50% chance to lose $200 and a 50% chance to lose $0. — Richard H. Thaler

So, we experience life in terms of changes, we feel diminishing sensitivity to both gains and losses, and losses sting more than equivalently-sized gains feel good. — Richard H. Thaler

suppose there was some medical procedure that will provide some modest health benefit but is extremely painful. However, the procedure is administered with a drug that does not prevent the pain but instead erases all memory of the event. Would you be willing to undertake this procedure? — Richard H. Thaler

10. Calories count in New York City. The Big Apple recently adopted a law that requires fast-food restaurants with at least fifteen outlets in the city to post, in prominent places, the calories of each of their food items so that customers can make informed choices. — Richard H. Thaler

Ignorance is a renewable resource — David Thaler

We don't have to stop inventing abstract models that describe the behavior of imaginary Econs. We do, however, have to stop assuming that those models are accurate descriptions of behavior, and stop basing policy decisions on such flawed analyses. — Richard H. Thaler

Toward 1175 rich veins of copper, silver, and gold were found in the Erz Gebirge (i.e., ore mountains); Freiberg, Goslar, and Annaberg became the centers of a medieval "gold rush"; and from the little town of Joachimsthal came the word joachimsthaler - meaning coins mined there - and, by inevitable shortening, the German and English words thaler and dollar. — Will Durant

The assumption that everybody will figure out how much they have to save and then will just implement that plan is obviously preposterous. — Richard Thaler

"Save more tomorrow" is a nudge to help people do what they know they want to do, which is save more, but they can't bring themselves to save more now. Just like many of us are planning to go on diets next month, or maybe in two months, certainly not tonight. — Richard Thaler

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. — Richard H. Thaler

It would be much more consumer friendly for them to beep you when you swipe your card that says, uh-oh you're over your limit, are you sure you want to use that? — Richard Thaler

It is time to stop making excuses. We need an enriched approach to doing economic research, one that acknowledges the existence and relevance of Humans. — Richard H. Thaler

The first is that seemingly small features of social situations can have massive effects on people's behavior; nudges are everywhere, even if we do not see them. Choice architecture, both good and bad, is pervasive and unavoidable, and it greatly affects our decisions. The second claim is that libertarian paternalism is not an oxymoron. Choice architects can preserve freedom of choice while also nudging people in directions that will improve their lives. — Richard H. Thaler

There is a new wave of interest in exploring how to frame choices so that people make better decisions. Richard Thaler and Cass Sunstein, professors of economics and law, respectively, teamed up to write Nudge: Improving Decisions About Health, Wealth, and Happiness, which advocates using defaults to nudge us to make better choices.9 Even when we are choosing in our own interests, we often choose unwisely. When employees have the option of participating in a retirement-savings scheme, many do not, despite the financial advantages of doing so. If their employer instead automatically enrolls them, giving them the choice of opting out, participation jumps dramatically — Peter Singer

One overly simplistic idea is that we can improve student performance by just by giving financial incentives to parents, teachers, or kids. Unfortunately, there is little evidence that such incentives are effective, but nuances matter. — Richard H. Thaler

Most people start claiming benefits within a year of when they become eligible, although benefits increase substantially if they wait. — Richard Thaler

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. — Richard H. Thaler

Is there a market for somebody selling a credit card that helps people pay down their balances? I think the question is yes. But it would have to be sold by a bank that's really willing to invest in being a trusted partner with its consumers, because they will make less money on each consumer. — Richard Thaler

GRIT is Guts, Resilience, Industriousness and Tenacity. GRIT is the ability to focus, stay determined, stay optimistic in the face of a challenge, and simply work harder than the next guy or gal. — Linda Kaplan Thaler

Recall that people like to do what most people think it is right to do; recall too that people like to do what most people actually do. — Richard Thaler

there is no question that social pressures nudge people to accept some pretty odd conclusions - and those conclusions might well affect their behavior. — Richard H. Thaler

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. — Richard H. Thaler

specific values to objects. When they have to give something up, they are hurt more than they are pleased if they acquire the very same thing. — Richard H. Thaler

So the world is much more correlated than we give credit to. And so we see more of what Nassim Taleb calls "black swan events" - rare events happen more often than they should because the world is more correlated. — Richard Thaler

One simple step firms can take is make sure that people that are getting paid a lot of money, say more than a million or two, that a big chunk of that money is deferred. That's going to change the whole ballgame. — Richard Thaler

There's a second component of a good savings plan, which is something that a colleague of mine called Schlomo Benartzi and I developed many years ago, that we call "save more tomorrow." — Richard Thaler

You buy a pair of shoes that turn out to be uncomfortable. Thaler suggests the expensive they were, the more often you'll try to wear them. Eventually you'll stop wearing them, but you won't get rid of them. And the more you paid for them the longer they will sit in your closet. At some point, after the shoes have been fully depreciated psychologically, you will throw them away. — Barry Schwartz

You have to treat everyone you meet as if they are the most important person in the world - because they are. If not to you, then to someone; and if not today, then perhaps tomorrow. — Linda Kaplan Thaler

Investors must keep in mind that there's a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it. — Richard Thaler

People exaggerate their own skills. they are optimistic about their prospects and overconfident about their guesses, including which managers to pick. — Richard Thaler

The reason is they failed to learned the primary lesson we should have learned from when Long Term Capital Management went belly up ten years ago. That is, investments that seem uncorrelated can be correlated simply because we're interested in it. — Richard Thaler

I found the concept of hindsight bias fascinating, and incredibly important to management. One of the toughest problems a CEO faces is convincing managers that they should take on risky projects if the expected gains are high enough. Their managers worry, for good reason, that if the project works out badly, the manager who championed the project will be blamed whether or not the decision was a good one at the time. Hindsight bias greatly exacerbates this problem, because the CEO will wrongly think that whatever was the cause of the failure, it should have been anticipated in advance. And, with the benefit of hindsight, he always knew this project was a poor risk. What makes the bias particularly pernicious is that we all recognize this bias in others but not in ourselves. — Richard H. Thaler

If you want to encourage someone to do something, make it easy. — Richard Thaler

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. — Richard H. Thaler

On traditional economic theory:
We do not play chess as if we were a grandmaster, invest as if we were Warren Buffett, or cook like an Iron Chef. It is more likely we cook like Warren Buffett, who loves to eat at Dairy Queen. — Richard H. Thaler

average article written in a specialized academic journal is probably lucky to find 100 readers. — Richard H. Thaler

Why tie to gold? Why not 1982 Bordeaux? — Richard Thaler

The same with the mortgage brokers that were selling people mortgages they couldn't afford. We shouldn't pay them on each mortgage they write. They should have what they call "skin in the game," where they've got to reimburse us if the guy who sold the mortgage defaults. — Richard Thaler

individual risk taking, especially in the domain of risks to life and health. — Richard H. Thaler

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. — Richard H. Thaler

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! — Richard H. Thaler

My mantra is if you want to help people accomplish some goal, make it easy. — Richard Thaler

John Rawls (1971) called the publicity principle. In its simplest form, the publicity principle bans government from selecting a policy that it would not be able or willing to defend publicly to its own citizens. — Richard H. Thaler

There are cases when I can make myself better off by restricting my future choices and commit myself to a specific course of action. — Richard Thaler

Credit cards have been extremely profitable to banks. They're profitable not from the fees they collect from the retailers that use the credit cards, that pays the bills, but the real profits come from the interest payments and the charges to users that are unexpected. — Richard Thaler

I have been searching for you
for centuries, Jenna. I never knew your name or if you were even alive yet,
but I had already memorized every part of your gorgeous face, your scent,
the glimmer in your eyes. I had dreamed it all many times over the course
of my long existence. I searched for you because I knew you were my
mate. - Lucas Thaler, Demon King — J.L. Sheppard

An especially good way to gain weight is to have dinner with other people.11 On average, those who eat with one other person eat about 35 percent more than they do when they are alone; members of a group of four eat about 75 percent more; those in groups of seven or more eat 96 percent more.* — Richard H. Thaler

I'm all for empowerment and education, but the empirical evidence is that it doesn't work. That's why I say make it easy. — Richard Thaler

People worry that if they buy an annuity and then die before the policy starts to pay off, their heirs will lose out. I tell them, "What you should be more worried about is if you outlive your money, you will have to move in with your kids. Ask your kids which of these outcomes they are more worried about." — Richard Thaler

Retirement savings is probably behavioral economists' greatest success story. It is a prototypical behavioral-economics problem because saving for retirement is cognitively hard - figuring out how much to save - and requires self-control. — Richard Thaler

My present post amounts to about 700 thaler, and when there are rather more funerals than usual, the fees rise in proportion; but when a healthy wind blows, they fall accordingly ... — Johann Sebastian Bach

Psychologists tell us that in order to learn from experience, two ingredients are necessary: frequent practice and immediate feedback. — Richard H. Thaler

If people just put away what's left at the end of the month, that's a recipe for failure. — Richard Thaler

Maybe you'll take the cash out. So a credit card company or a bank that goes into the business of saying we're going to be the broker, we're going to sell you a mortgage that you're going to be able to pay off, we're going to help you reduce your credit card debt, we're going to help you save for retirement, we're going to put you into mutual funds that have low fees rather than high fees. — Richard Thaler

Thinking, Fast and Slow, mentioned above, and Dan Ariely's Predictably Irrational. One of the handful of books that provides advice on making decisions better is Nudge by Richard Thaler and Cass Sunstein, which was written for "choice architects" in business and government who construct decision systems such as retirement plans or organ-donation policies. It has been used to improve government policies in the United States, Great Britain, and other countries. — Chip Heath

14. Procrastinator's Clock. For those who are chronically late to meetings, there's the Procrastinator's Clock, a downloadable program for your computer, that displays a digital clock that is guaranteed to be up to fifteen minutes fast. How fast? Well, that's the nudge. You are never exactly sure because the clock unpredictably speeds up and slows down. That assures that users can't game the system. We think that this device might help the lawyer of this team (who shall remain nameless) get to Noodles on time for lunch. A physical version of this clock has already been patented by a company called Emergent Technologies. — Richard H. Thaler

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

Ubiquity is the new exclusivity. — Linda Kaplan Thaler

The lesson from behavioral economics is that people only save if it's automatic. — Richard Thaler

MBA students are not the only ones overconfident about their abilities. The "above average" effect is pervasive. Ninety percent of all drivers think they are above average behind the wheel, — Richard H. Thaler

LTCM lost money when Russia defaulted on a certain class of bonds, and then they had other investments like on the spread between two different kinds of shares of Royal Dutch Shell Oil Company. Now that seems completely unrelated to Russian bonds. But they were related because other hedge funds saw similar discrepancies and they were all making similar bets. — Richard Thaler

Self-control problems can be illuminated by thinking about an individual as containing two semiautonomous selves, a far-sighted "Planner" and a myopic "Doer." You can think of the Planner as speaking for your Reflective System, or the Mr. Spock lurking within you, and the Doer as heavily influenced by the Automatic System, or everyone's Homer Simpson. The Planner is trying to promote your long-term welfare but must cope with the feelings, mischief, and strong will of the Doer, who is exposed to the temptations that come with arousal. Recent research in neuroeconomics (yes, there really is such a field) has found evidence consistent with this two-system conception of self-control. Some parts of the brain get tempted, and other parts are prepared to enable us to resist temptation by assessing how we should react to the temptation.1 Sometimes the two parts of the brain can be in severe conflict - a kind of battle that one or the other is bound to lose. — Richard H. Thaler

Our principal claim here is that patients and doctors should be free to make their own agreements about that right. If patients want to waive the right to sue, they should be allowed to do exactly that. This increase in freedom is likely to help doctors and patients alike, and to make a valuable, even if modest, contribution to the health care problem. — Richard H. Thaler

So, what's a nudge? A nudge is some small feature of the environment that attracts our attention and alters our behavior. — Richard Thaler

I don't go by the ratings. I buy wine that tastes good. Statistically, anybody's ability to predict what will be a good wine a decade from now is limited. — Richard Thaler

When should we nudge and when should we shove, I think, it's a political judgment. Obviously in some situations we need shoves, we need laws. Fraud is against the law, murder is against the law, drunk-driving is against the law. We don't need just nudges. — Richard Thaler

Doctors are crucial choice architects, and with an understanding of how Humans think, they could do far more to improve people's health and thus to lengthen their lives. — Richard H. Thaler

I think one lesson we have to learn is that there's a lot more risk than we're giving credit to, a lot more what economist calls systematic risk. — Richard Thaler

Hundreds of studies confirm that human forecasts are flawed and biased. Human decision making is not so great either. Again to take just one example, consider what is called the "status quo bias," a fancy name for inertia. For a host of reasons, which we shall explore, people have a strong tendency to go along with the status quo or default option. — Richard H. Thaler

Rip Van Winkle would be the ideal stock market investor: Rip could invest in the market before his nap and when he woke up 20 years later, he'd be happy. He would have been asleep through all the ups and downs in between. But few investors resemble Mr. Van Winkle. The more often an investor counts his money - or looks at the value of his mutual funds in the newspaper - the lower his risk tolerance. — Richard Thaler

A company invites their employees to sign up for a plan where every time they get a raise, some part of that raise goes to increasing their contribution rate to the 401k plan. In the first company we convinced to adopt this plan, saving rates tripled. — Richard Thaler

Wealth, too, is often separated into various mental accounts. At the bottom of this hierarchy sits the money that is easiest to spend: cash. — Richard H. Thaler