We?ve discussed in this forum the impact of behavioral economics and libertarian paternalism on the new administration?s plans.
The latest Newsweek features an article from a leader within this school of thought, Richard Thaler at the University of Chicago. Among its highlights:
Traditional economists bestow upon humans the mind of a computer and the willpower of a saint; I like to call these imaginary creatures Econs. These Econs have no difficulty saving because they rationally calculate how much wealth they need for retirement, reduce their consumption accordingly and then invest optimally. Econs never splurge or speculate. But the world is not populated by Econs?and if we understand how humans really behave, we can come up with ways to get them saving again.
Notice that Thaler?s approach seems to imply that humans would be better off if enlightened experts pointed the way for them to behave more like Econs. Those enlightened experts doubtless know the best course for everyone to follow.
