Thaler also drew attention to the potential impact of automatic enrollment: Because inertia is an important force, employees will stay in a retirement plan if they are automatically enrolled, even if they would not sign up in the first place. All over the world, employers are now using Save More Tomorrow and automatic enrollment. As a result, workers will have more comfortable retirements.
These ideas can be seen as forms of libertarian paternalism, interventions that insist on preserving freedom of choice but that steer people in directions that make their lives go better. I have been privileged to collaborate with Thaler on the exploration of how those interventions -- more simply, nudges -- can help address some of the world’s large challenges, including poverty, unemployment, consumer protection, addiction, education, corruption, national security, and environmental degradation.
In these and other areas, Thaler’s research is now being used by governments all over the world. Some of this work is being done by “nudge units,” but many of the largest and most promising initiatives come from the very highest levels, where some of Thaler’s findings have become common knowledge, even to people who have never heard his name.
In the U.S., for example, over 11 million poor children are obtaining access to the free school meals to which they are legally entitled, largely because of a program directly inspired by Thaler’s work. In terms of the use of behavioral economics in public policy, we have just gotten started; the next decades will see incalculably more.
More than anyone I know, Thaler’s academic interests are a direct outgrowth of his personality. He’s full of mischief and a ton of fun. He’s an intensely close observer of human behavior, and nothing delights him more than people’s foibles. He’s the Charles Dickens of the economics profession.
Who else would develop a theory of human behavior by observing how at a dinner party, supposedly rational economists gobble up cashews before dinner -- and are immensely grateful when the host takes the half-eaten bowl away?
Asked what advice he would provide to graduate students in economics, Thaler said, “Make your research about the world, not the literature.” That’s precisely what he’s done -- and he’s made the world a lot better in the process.
Cass R. Sunstein is a Bloomberg View columnist. He is the author of Republic: Divided Democracy in the Age of Social Media and a co-author of Nudge: Improving Decisions About Health, Wealth and Happiness. He is the Robert Walmsley University Professor at Harvard Law School. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.