Behavioral Economics Quotes

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

Human Nature is not a problem that can be fixed by rules and regulations. All solutions to the existing problems must be based on how people behave, not on how we think they should behave. ~ Kirk Chisholm

Consumption is a universal phenomenon. All humans consume varieties of products, many of which beyond actual necessity, because it activates the brain's reward center. And the more a certain product activates the reward center with its unique characteristics or its predominant social stature, the more that product gets chiseled into the long-term memory of the consumer, making it a fundamental part of the individual's psychological well being. Thus the human mind grows a deep psychological bond with a product. And this bond can grow so strong in time that it would defend itself from all sorts of criticisms. It is the brain's way to maintain its internal purely individualistic well being. Hence, a strong psychological bond between the mind and a product slowly not only becomes invincible to criticisms, but also, develops its own cognitive immune system against such criticisms. ~ Abhijit Naskar

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

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

Behavioral economics is about working constructively with the standard economic model to get a better understanding of economic behavior. The objective is definitely not to criticize the standard economic model, or accentuate the negatives. Testing the standard model is a means to an end, and that end is to understand economic behavior as best we can. ~ Edward Cartwright

I started to read as obsessively about Star Wars as I once did about Kant - and still do about behavioral economics and behavioral psychology. ~ Cass Sunstein

If we all make systematic mistakes in our decisions, then why not develop new strategies, tools, and methods to help us make better decisions and improve our overall well-being? That's exactly the meaning of free lunches- the idea that there are tools, methods, and policies that can help all of us make better decisions and as a consequence achieve what we desire-pg. 241 ~ Dan Ariely

January is always a good month for behavioral economics: Few things illustrate self-control as vividly as New Year's resolutions. February is even better, though, because it lets us study why so many of those resolutions are broken. ~ Sendhil Mullainathan

From this failure to expunge the microeconomic foundations of neoclassical economics from post-Great Depression theory arose the "microfoundations of macroeconomics" debate, which ultimately led to a model in which the economy is viewed as a single utility-maximizing individual blessed with perfect knowledge of the future.
Fortunately, behavioral economics provides the beginnings of an alternative vision of how individuals operate in a market environment, while multi-agent modelling and network theory give us foundations for understanding group dynamics in a complex society. These approaches explicitly emphasize what neoclassical economics has evaded: that aggregation of heterogeneous individuals results in emergent properties of the group, which cannot be reduced to the behavior of any "representative individual." These approaches should replace neoclassical microeconomics completely. ~ Steve Keen

Two Awesome Hours in the Morning After identifying your MIT, you need to turn it into a calendar item and book it as early in your day as possible. Dan Ariely, a Duke University professor of psychology and behavioral economics, suggests that most people are most productive and have the highest cognitive functioning in the first two hours after they're fully awake. In a Reditt Ask Me Anything, Ariely wrote: One of the saddest mistakes in time management is the propensity of people to spend the two most productive hours of their day on things that don't require high cognitive capacity (like social media). If we could salvage those precious hours, most of us would be much more successful in accomplishing what we truly want. ~ Kevin Kruse

The psychology of individuals – warts and all – must be a central consideration in the formulation of any practical investing approach. The good news here is that others' misbehavior will consistently and systematically create opportunities for you. The bad news is that you are prone to all of the same quirks and are just as likely, in the absence of strict adherence to the rules, to create the same opportunities for others. ~ Daniel Crosby

In fact quite generally, commercial advertising is fundamentally an effort to undermine markets. We should recognize that. If you've taken an economics course, you know that markets are supposed to be based on informed consumers making rational choices. You take a look at the first ad you see on television and ask yourself … is that it's purpose? No it's not. It's to create uninformed consumers making irrational choices. And these same institutions run political campaigns. It's pretty much the same: you have to undermine democracy by trying to get uninformed people to make irrational choices. ~ Noam Chomsky

How should the best parts of psychology and economics interrelate in an enlightened economist's mind? ... I think that these behavioral economics ... or economists are probably the ones that are bending them in the correct direction. I don't think it's going to be that hard to bend economics a little to accommodate what's right in psychology. ~ Charlie Munger

It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches! ~ Dan Ariely

Behavioral economics tells us that people often focus too much on the wrong things, and tend to focus on aspects of the job that are salient. So, for example, the pay is salient, especially the starting pay. ~ Alan Krueger

[There will be movement toward] behavioral economics ... [which] involves study of those aspects of men's images, or cognitive and affective structures that are more relevant to economic decisions. ~ Kenneth E. Boulding

Dan Ariely, author of Predictably Irrational, a book that offers an entertaining and engaging overview of behavioral economics. ~ Daniel H. Pink

There is ample evidence that confirmation bias permeates throughout investors' decisions. For example, once an investor likes a stock, he is likely to seek out information that validates that stock. In a 2010 study, researchers showed that investors used message boards to seek out information that validated rather than challenged, stocks they owned (Park et al. 2010). If we own a stock, we tend to look for anything that validates our decision to buy it, and to reinforce why we should keep holding it. ~ Peter Mallouk

If we can learn to embrace the Homer Simpson within us, with all our flaws and inabilities, and take these into account when we design our schools, health plans, stock markets, and everything else in our environment, I am certain that we can create a much better world. This is the real promise of behavioral economics. ~ Dan Ariely

But, as the results presented in this book (and others) show, we are all far less rational in our decision making than standard economic theory assumes. Our irrational behaviors are neither random nor senseless-they are systematic and predictable. We all make the same types of mistakes over and over, because of the basic wiring of our brains. So wouldn't it make sense to modify standard economics and move away from naive psychology, which often fails the tests of reason, introspection, and-most important-empirical scrutiny?

Wouldn't economics make a lot more sense if it were based on how people actually behave, instead of how they should behave? As I said in the Introduction, that simple idea is the basis of behavioral economics, an emerging field focused on the (quite intrusive) idea that people do not always behave rationally and that they often make mistakes in their decisions. ~ Dan Ariely

But even when Facebook isn't deliberately exploiting its users, it is exploiting its users - its business model requires it. Even if you distance yourself from Facebook, you still live in the world that Facebook is shaping. Facebook, using our native narcissism and our desire to connect with other people, captured our attention and our behavioral data; it used this attention and data to manipulate our behavior, to the point that nearly half of America began relying on Facebook for news. Then, with the media both reliant on Facebook as a way of reaching readers and powerless against the platform's ability to suck up digital advertising revenue - it was like a paperboy who pocketed all the subscription money - Facebook bent the media's economic model to match its own practices: publications needed to capture attention quickly and consistently trigger high emotional responses to be seen at all. The result, in 2016, was an unending stream of Trump stories, both from the mainstream news and from the fringe outlets that were buoyed by Facebook's algorithm. What began as a way for Zuckerberg to harness collegiate misogyny and self-interest has become the fuel for our whole contemporary nightmare, for a world that fundamentally and systematically misrepresents human needs. ~ Jia Tolentino

But a progressive policy needs more than just a bigger break with the economic and moral assumptions of the past 30 years. It needs a return to the conviction that economic growth and the affluence it brings is a means and not an end. The end is what it does to the lives, life-chances and hopes of people. Look at London. Of course it matters to all of us that London's economy flourishes. But the test of the enormous wealth generated in patches of the capital is not that it contributed 20%-30% to Britain's GDP but how it affects the lives of the millions who live and work there. What kind of lives are available to them? Can they afford to live there? If they can't, it is not compensation that London is also a paradise for the ultra-rich. Can they get decently paid jobs or jobs at all? If they can't, don't brag about all those Michelin-starred restaurants and their self-dramatising chefs. Or schooling for children? Inadequate schools are not offset by the fact that London universities could field a football team of Nobel prize winners. ~ Eric J. Hobsbawm

If morality represents how people would like the world to work, then economics shows how it actually does work. ~ Steven D. Levitt

No one thought the poor more undeserving than the poor themselves. ~ Matthew Desmond

Conflicts are never caused in any simple way by identity, culture or economics. Where resources are scarce, or there are strong historical memories of conflict, small events are more likely to inflame passions. ~ Geoff Mulgan

Once it has been perceived that the division of labour is the essence of society, nothing remains of the antithesis between individual and society. The contradiction between individual principle and social principle disappears. ~ Ludwig Von Mises

Faith in the gospel restructures our motivations, our self-understanding, our identity, and our view of the world. Behavioral compliance to rules without heart-change will be superficial and fleeting ... We can only change permanently as we take the gospel more deeply into our understanding and into our hearts. We must feed on the gospel, as it were, digesting it and making it part of ourselves. That is how we grow. ~ Timothy Keller

It's not only possible, but likely that the Nobel Prize in economics will go in alternate years to people who disagree on nearly everything fundamental. ~ Jerry Pournelle

The older theories, which started from an erroneous conception of the social demand for money, could never arrive at a solution of this problem. Their sole contribution is limited to paraphrases of the proposition that an increase in the stock of money at the disposal of the community while the demand for it rClnains the same decreases the objective exchange-value of money, and that an increase of the demand with a constant available stock has the contrary effect, and so on. By a flash of genius, the formulators of the Quantity Theory had already recognized this. We cannot by any means call it an advance when the formula giving the amount of the demand for money (Volume of Transactions + Velocity of Circulation) was reduced to its elements. ~ Ludwig Von Mises

It has been discovered that with a dull urban population, all formed under a mechanical system of State education, a suggestion or command, however senseless and unreasoned, will be obeyed if it be sufficiently repeated. ~ Hilaire Belloc

The blunt truth about the politics of climate change is that no country will want to sacrifice its economy in order to meet this challenge, but all economies know that the only sensible long term way of developing is to do it on a sustainable basis. ~ Tony Blair

We need to move beyond the demonisation of overpaid traders ... In finance and economics, ill-designed policy is a more powerful force for harm than individual greed or error. ~ Adair Turner, Baron Turner Of Ecchinswell

It would take little more than $50 billion to raise every poor person above the official poverty line, yet the percentage of the population classified as poor hardly budges, while annual welfare spending amounts to four times that much. Where's the money going? ~ Robert Higgs

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

In an advanced industrial society it becomes almost impossible to seek, even to imagine, unemployment as a condition for autonomous, useful work. The infrastructure of society is arranged so that only the job gives access to the tools of production...Housework, handicrafts, subsistence agriculture, radical technology, learning exchanges, and the like are degraded into activities for the idle, the unproductive, the very poor, or the very rich. A society that fosters intense dependence on commodities thus turns its unemployed into either its poor or its dependents. ~ Ivan Illich

So long as I confine my activities to social service and the blind, they compliment me extravagantly, calling me 'arch priestess of the sightless,' 'wonder woman,' and a 'modern miracle.' But when it comes to a discussion of poverty, and I maintain that it is the result of wrong economics - that the industrial system under which we live is at the root of much of the physical deafness and blindness in the world - that is a different matter! It is laudable to give aid to the handicapped. Superficial charities make smooth the way of the prosperous; but to advocate that all human beings should have leisure and comfort, the decencies and refinements of life, is a Utopian dream, and one who seriously contemplates its realization indeed must be deaf, dumb, and blind. ~ Helen Keller

CEOs should be measured by the value they create into the community, the shareholders and the members of the company. ~ Miguel Reynolds Brandao

Where combination is possible, competition is impossible. ~ George Stephenson

Discovering various economists, economic works, reading financial periodicals and keeping up on current events in geopolitics and economics around the world opened my eyes to many facets of how the extended order works. ~ Kurt Bills

...poor countries are poor because those who have power make choices that create poverty. They get it wrong not by mistake or ignorance but on purpose. To understand this, you have to go beyond economics and expert advice on the best thing to do and, instead, study how decisions actually get made, who gets to make them, and why those people decide to do what they do. ~ Daron Acemoglu

We must have an economy that does not force the migrant worker's child to miss school in order to earn ... just so the family can eat. That is the moral bankruptcy that trickle-down economics is all about. ~ Barbara Jordan

In a basic agricultural society, it's easy enough to swap five chickens for a new dress or to pay a schoolteacher with a goat and three sacks of rice. Barter works less well in a more advanced economy. The logistical challenges of using chickens to buy books on Amazon.com would be formidable. ~ Charles Wheelan

Suppose someone were to describe a small country that provided free education through university for all of its citizens, transportation for schoolchildren, and free health care - including heart surgery - for all. You might suspect that a country is either phenomenally rich or on the fast track to fiscal crisis. ~ Joseph E. Stiglitz

How does a poor country defeat rich ones?" "Indeed, the answer is not by acquiring wealth in the sense that France has it." "Meaning vineyards, farms, peasants, cows?" "But rather to play a sort of trick and redefine wealth to mean something novel." "Currency!" "Indeed. ~ Neal Stephenson

It is worth pointing out that feeling things (which usually means feeling them painfully) is at some level linked to the acquisition of knowledge. ~ Alain De Botton

While I am interested both in economics and in philosophy, the union of my interests in the two fields far exceeds their intersection ~ Amartya Sen

As Charles Darwin said,'The economy shown by Nature in her resources is striking,' says the Spirit. 'All wealth comes from Nature. Without it, there wouldn't be any economics. The primary wealth is food, not money. Therefore anything that concerns the handling of the land also concerns me. ~ Margaret Atwood

The real improvements then must come, to a considerable extent, from the local communities themselves. We need local revision of our methods of land use and production. We need to study and work together to reduce scale, reduce overhead, reduce industrial dependencies; we need to market and process local products locally; we need to bring local economies into harmony with local ecosystems so that we can live and work with pleasure in the same places indefinitely; we need to substitute ourselves, our neighborhoods, our local resources, for expensive imported goods and services; we need to increase cooperation among all local economic entities: households, farms, factories, banks, consumers, and suppliers. If. we are serious about reducing government and the burdens of government, then we need to do so by returning economic self-determination to the people. And we must not do this by inviting destructive industries to provide "jobs" to the community; we must do it by fostering economic democracy. For example, as much as possible the food that is consumed locally ought to be locally produced on small farms, and then processed in small, non- polluting plants that are locally owned. We must do everything possible to provide to ordinary citizens the opportunity to own a small, usable share of the country. In that way, we will put local capital to work locally, not to exploit and destroy the land but to use it well. This is not work just for the privileged, the well-positioned, the ~ Wendell Berry

Some years ago John Kenneth Galbraith wrote in an essay on his efforts at writing a history of economics: 'As one approaches the present, one is filled with a sense of hopelessness; in a year and possibly even a month, there is now more economic comment in the supposedly serious literature than survives from the whole of the thousand years commonly denominated as the Middle Ages ... anyone who claims to be familiar with it all is a confessing liar.' I believe that all physicists would subscribe to the same sentiments regarding their own professional literature. I do at any rate. ~ Abraham Pais

Alan Scheflin reports on some of the children who received stereotaxic surgery in the sixties and seventies. He lists several doctors who performed such surgery on children because they suffered from behavioral problems such as "wandering." One young boy would sneak away from his home and crawl underneath an automobile in order to smell the oil. Two groups were as young as two and four years old when surgery took place for "violent behavior. ~ Carol Rutz

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. ~ Henry Hazlitt

No other system of economic organizing rewards merit, hard work and creativity the way Capitalism does. ~ Hendrith Smith