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Monday, June 01, 2015

'Q&A: Richard Thaler'

Some snippets from a Justin Fox interview of Richard Thaler:

Question: What are the most valuable things that you got out of studying economics in graduate school?
Answer: The main thing that you learn in grad school, or should learn, is how to think like an economist. The rest is just math. You learn a bunch of models and you learn econometrics -- it’s tools. Some people who are so inclined concentrate on having sharper tools than anybody else, but my tools were kind of dull. So the main thing was just, “How does an economist think about a problem?” And then in my case it was, “That’s really how they think about a problem?” ...
Q: One thing that’s striking -- Kahneman calls it “theory-induced blindness” -- is this sense that if you have a really nice theory, even when someone throws up evidence that the theory doesn’t hold there’s this strong disposition to laugh at the evidence and not even present counterevidence.
A: Because they know you’re wrong. This has happened to me. It still happens. Not as often, but people have what economists would call strong priors. Even our football paper, which may be my favorite of all my papers, we had a hell of a time getting that published,... people saying, “That can’t be right, firms wouldn’t leave that much money on the table.” Economists can think that because none of them have ever worked in firms. Anybody who’s ever been in a large organization realizes that optimizing is not a word that would often be used to describe any large organization. The reason is that it’s full of people, who are complicated. ...
Q: The whole idea of nudging, generally it’s been very popular, but there’s a subgroup of people who react so allergically to it.
A:  I think most of the criticism at least here comes from the right. These are choice-preserving policies. Now you’d think they would like those. I have yet to read a criticism that really gets the point that we probably make on the fourth page of the book, which is that there’s no avoiding nudging. Like in a cafeteria: You have to arrange the food somehow. You can’t arrange it at random. That would be a chaotic cafeteria. ...

    Posted by on Monday, June 1, 2015 at 12:07 PM in Economics, Methodology | Permalink  Comments (2)


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