“The goal is not to change people, it’s to make things easy.”
This week Professor Richard Thaler has been awarded the Nobel Memorial Prize in Economic Sciences. He is best known as the architect of the “Nudge Theory” which means “encouraging people to do the right thing, and discouraging people to do the wrong thing.”
Professor Thaler stresses the importance of using psychological triggers to encourage desirable actions. His theories also recognise the need to incorporate limited rationality, social biases and lack of self-control in individual decisions and market outcomes.
The Nudge Theory has widely been applied in government economics. Rather than opt-out mechanisms or dictation, Thaler recommends “benign paternalistic guidance” to yield great results.
“A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives,” Professor Thaler writes in the best-selling book Nudge (2009), co-written with legal professor Cass R Sunstein.
“It’s important to stress that much of what nudging people is about is simply moving barriers,” Professor Thaler explained in a recent interview with the British publication The Economist.
Richard Thaler is a Professor of Behavioural Science and Economics at the University of Chicago Booth School of Business. For more information on his work, click here.
Photo Credits © 2013 Richard Thaler. All rights reserved.