Question

Why Richard Thaler used JEP'' Anormalies'' to highlight - becoming policy prescriptions - ''Nugde'' - 401k opt -in

Answer 1

Economics belief that most human behaviour can be easily explained b y relying on the assumption that our preferences are rational,well defined and stable across time. Richard Thaler challenged this view by starting writing about anomalies in people's behavior that could not be explained by standard economic theory. He started a column in the The Journal of Economic Perspectives that was all about such anomalies.

Thaler inspired the creation of behavioral science teams,often called' nudge units', in public and private organizations across the world. He wrote a book together with Cass Sunstein in 2008 called Nudge: Improving Decisions about Health,Weaith, and Happiness, which suggested that there are many opportunities to 'nudge' people's behavior by making subtle changes to the context in which they make decisions. Thaler demonstrated how nudging,a term he coined,may help people exercise better self-control.

Among his many achievements ,his biggest success was to inspire Congress to overhaul the nation's 401(k) system , a change that has helped millions of Americans prepare for their retirements. It has a key change that instead of companies asking employees to sign up for a retirement saving plan, the new law encouraged employers to enroll workers automatically, but offer the right to opt out to anyone who did not want to participate.

Thaler is famous for upending the notion that people are rational economic actors, who can always be relied upon to do what is in their best interest,Thaler saw people what they really are. Richard Thaler has won Nobel Prize for Economics in 2017.