Richard Thaler Quotes

Powerful Richard Thaler for Daily Growth

About Richard Thaler

Richard H. Thaler is an eminent behavioral economist who has significantly influenced the field by bridging it with psychology, thus coining the term "nudge theory." Born on December 12, 1945, in Queens, New York, Thaler's early life was marked by a fascination for economics, sparked by his grandfather, an immigrant who worked as a taxi driver and saved enough money to invest in real estate. Thaler pursued his undergraduate degree at Case Western Reserve University before moving on to the University of Rochester for his Ph.D. in Economics. His work during this period focused on labor economics and was heavily influenced by the works of Nobel laureates George Akerlof and Thomas Schelling. In 1980, Thaler joined the University of Chicago's Graduate School of Business as a professor. Here, he became part of the Booth School's Behavioral Finance Group, where he developed his seminal work on behavioral economics. In 2003, Thaler published "Nudge: Improving Decisions About Health, Wealth, and Happiness," co-authored with Cass Sunstein. The book popularized the concept of 'nudging' people towards making better decisions without restricting their freedom of choice. In 2017, Thaler was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to behavioral economics. He is currently the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business, where he continues to influence the next generation of economists. Richard Thaler's work has had a profound impact on various fields, from personal finance to public policy, by highlighting the role of human behavior in economic decision-making. His quotes often reflect his pragmatic approach to solving real-world problems and his belief that understanding people's psychological biases can lead to more effective policies and interventions.

Interpretations of Popular Quotes

"Behavioral economics is the study of economic decisions making in situations where a systematic deviation from rational choice behavior is expected."

Richard Thaler's quote highlights that traditional economic theories often assume individuals make completely rational decisions based on self-interest and perfect information. However, real-world economic decision-making frequently exhibits consistent patterns of irrationality or biases. This field, known as behavioral economics, aims to understand and model these deviations from rational choice behavior in various contexts. It helps us gain insights into the complexities of human decision-making and offers practical solutions for policy design and business strategy.

"If you're going to have a moral compass in your field, it should point towards helping people make better decisions."

This quote by Richard Thaler emphasizes the importance of using one's expertise and influence in a particular field for the benefit of society. By encouraging individuals to make better decisions, he suggests that professionals should aim to foster informed choices rather than lead people astray or exploit their lack of understanding. This perspective encourages ethical decision-making and fosters trust between experts and the public. In essence, Thaler advocates for using one's skills and knowledge to help others navigate complex issues more effectively and make wiser choices in life.

"Nobel prizes seem to have a life of their own. They're not given for things that happened in the last two years; they're given for ideas that have been maturing for 20 or 30 years."

Richard Thaler, a behavioral economist who won the Nobel Prize in Economic Sciences in 2017, suggests that Nobel Prizes are awarded for ideas that have evolved over an extended period (20 to 30 years). He implies that new ideas require time to mature and gain traction within the academic or professional community before they can be recognized with prestigious awards like the Nobel Prize. This quote underscores the importance of patience, perseverance, and the long-term impact of innovative thinking in various fields.

"The mere fact that you give people information does not mean that they will use it."

This quote emphasizes that merely providing people with information is not sufficient for them to utilize it effectively. It suggests that human behavior is complex, often influenced by factors beyond just knowledge, such as biases, emotions, and contextual factors. Thus, when designing systems or policies based on data, we must also consider these nuances to encourage informed decision-making and ensure the information provided can be understood and acted upon appropriately.

"We are all walking around with a little behavioral economist on our shoulders, and he's whispering in our ear: 'Take a small piece of chocolate cake; it won't matter.'"

This quote by Richard Thaler suggests that people often make decisions based on psychological biases rather than rational analysis. He uses the example of taking a small piece of chocolate cake as an everyday action influenced by impulsive desire (the "little behavioral economist" on our shoulder) rather than considering potential long-term consequences, like weight gain or dietary restrictions. This quote underscores the idea that understanding and managing these behavioral biases can help individuals make better choices in their lives.

For amateur golfers, I think one of the biggest mistakes is to model their play on professionals.

- Richard Thaler

Play, Think, I Think, Amateur

In the 1940s, economics started getting highly mathematical. It was basically because economists weren't smart enough to write down models of real behavior that they started writing down models of highly rational behavior - and they kind of forgot about humans.

- Richard Thaler

Kind, 1940s, Models, Forgot

For many people, being asked to solve their own retirement savings problems is like being asked to build their own cars.

- Richard Thaler

Own, Like, Being, Asked

The main thing that you learn in grad school, or should learn, is how to think like an economist. The rest is just math.

- Richard Thaler

Rest, Think, Main Thing, Economist

It is true that I am one of the co-authors of 'Nudge,' and I am a behavioral economist, but it does not mean that everything we write about in that book is behavioral economics, nor does it mean that my co-author, the distinguished legal scholar Cass Sunstein, is a behavioral economist.

- Richard Thaler

Book, About, Am, Economist

Shopping for an annuity with hundreds of thousands of dollars at stake can be daunting, even for an economist.

- Richard Thaler

Stake, Even, Economist

Tort reform is a complicated subject and not a panacea.

- Richard Thaler

Complicated, Reform, Subject, Panacea

Tax cuts are one of many ways to stimulate the economy. Building infrastructure, for example, is another.

- Richard Thaler

Tax, Economy, Another, Cuts

Arthur Laffer's idea, that lowering taxes could increase revenues, was logically correct. If tax rates are high enough, then people will go to such lengths to avoid them that cutting taxes can increase revenues. What he was wrong about was in thinking that income tax rates were already so high in the 1970s that cutting them would raise revenues.

- Richard Thaler

Income, Arthur, Correct, Logically

Demanding that the rich get a tax cut as a condition for tax relief for others is simply elitist.

- Richard Thaler

Condition, Get, Cut, Elitist

In a democracy, if a government creates bad policies, it can be voted out of office. Competition in the private sector, however, can easily work to encourage phishing rather than stifle it.

- Richard Thaler

Bad, Private, However, Stifle

One reason for high health care costs is that patients fail to follow their treatment regimen.

- Richard Thaler

Reason, Costs, Treatment, Health Care Costs

Claiming that Social Security benefits are safe may sound naive, but my view is actually quite cynical. I believe that as long as the elderly continue to vote in large numbers, no Congress will renege on promised payouts for those already eligible to receive benefits.

- Richard Thaler

Elderly, Benefits, Congress, Claiming

It's essential that we understand things like the free-rider problem, but we also need to understand that, fortunately, humans are a little nicer than economists give them credit for. Some people actually leave money at roadside fruit stands; some people give money to NPR so we can listen to it.

- Richard Thaler

Fruit, Some, Nicer, Fortunately

Parents want their children to excel, callers to a victims' hot line want help, and sick people want to get well. Offering aids is like providing an alarm clock: it may help people get to an appointment on time, but no one is forcing them to use it.

- Richard Thaler

Line, Get Well, Providing, Appointment

My thesis topic was 'The value of a human life.' I asked people a question: 'Suppose you had some risk, a one in a thousand risk of dying - how much would you pay to eliminate it?'

- Richard Thaler

Some, Eliminate, Had, Thesis

There's a reason why start-ups, especially disruptive start-ups - like Google or Amazon or Uber - are full of young people. That's because young people are not as wedded to the old fashioned ways of doing things.

- Richard Thaler

Doing, Reason, Like, Disruptive

When it comes to assessing the chances of some complicated combination of events, gut feelings are pretty much useless.

- Richard Thaler

Some, Pretty, Gut, Chances

If the government can manage to collect and release personal information in a secure and useful way, so can private companies, which will empower consumers to become better shoppers.

- Richard Thaler

Will, Private, Which, Personal Information

Whenever I'm asked to autograph a copy of 'Nudge,' the book I wrote with Cass Sunstein, the Harvard law professor, I sign it, 'Nudge for good.' Unfortunately, that is meant as a plea, not an expectation.

- Richard Thaler

Book, Law, Meant, Autograph

The government employs scientists of many varieties in technical capacities, from estimating the environmental toxicity of a chemical to the structural soundness of a bridge. But when it comes to forming policies, these scientists and, especially, behavioral scientists are rarely at the table with the lawyers and the economists.

- Richard Thaler

Lawyers, Technical, Forming, Capacities

Real people have trouble balancing their checkbooks, much less calculating how much they need to save for retirement; they sometimes binge on food, drink, or high-definition televisions. They are more like Homer Simpson than Mr. Spock.

- Richard Thaler

Sometimes, Real People, Save, Calculating

Behavioral economics offers a plausible explanation for overreactions by the market. For example, a long period of bad performance can lead to stereotyping.

- Richard Thaler

Offers, Period, Long Period, Plausible

It's not that we can predict bubbles - if we could, we would be rich. But we can certainly have a bubble warning system.

- Richard Thaler

System, Certainly, Would, Warning

Economists discount any factors that would not influence the thinking of a rational person.

- Richard Thaler

Person, Would, Any, Discount

Leaders are important but not omnipotent.

- Richard Thaler

Important, Leaders, Omnipotent

As a general rule, the United States government is run by lawyers who occasionally take advice from economists. Others interested in helping the lawyers out need not apply.

- Richard Thaler

Lawyers, Need, United States, General Rule

Sunk costs? We pay too much attention to them.

- Richard Thaler

Costs, Too, Much Attention, Sunk

As every successful parent learns, one way to encourage good behavior, from room-cleaning to tooth-brushing, is to make it fun. Not surprisingly, the same principle applies to adults. Adults like to have fun, too.

- Richard Thaler

Parent, Like, Principle, Surprisingly

The lesson of my field, behavioral economics, is that we need to understand the ways in which we differ from the rational human assumed in standard economic theory.

- Richard Thaler

Need, Standard, Which, Differ

Here is a guiding principle: If a business collects data on consumers electronically, it should provide them with a version of that data that is easy to download and export to another Web site.

- Richard Thaler

Business, Here, Principle, Download

The Nobel Prize is going to be 'fun money' - for an occasion, when my wife and I want a $50 bottle of wine.

- Richard Thaler

Wife, Occasion, Going, Nobel Prize

Morality aside, there are other factors deterring 'strategic defaults,' whether in recourse or nonrecourse states. These include the economic and emotional costs of giving up one's home and moving, the perceived social stigma of defaulting, and a serious hit to a borrower's credit rating.

- Richard Thaler

Giving Up, Other, Stigma, Borrower

In some ways, the finding that financial education doesn't provide long-term payoffs is hardly surprising. After all, how much do you remember from your high school chemistry class? Unless you use chemistry at work, you probably don't recall much about ionic bonding.

- Richard Thaler

Education, Financial, Some, Bonding

When employees are first eligible for a retirement savings plan, they should be enrolled unless they choose to opt out.

- Richard Thaler

Retirement, Choose, Out, Eligible

The lesson for businesses is you are dealing with real people. Those are your customers, those are your employees, those are your bosses, and the better you understand how real people tick, the more successfully you will be able to accomplish your goals.

- Richard Thaler

Real People, Successfully, Goals

Pundits are no better at forecasting election outcomes than they would be at predicting the final path of a hurricane. Smart pundits should consider either abandoning this activity or consulting with the geeks before rendering their guesses.

- Richard Thaler

Activity, Before, Guesses, Rendering

The supply price and the demand price should be roughly the same. You're not supposed to have two different prices. According to economists.

- Richard Thaler

Demand, According, Supply, Roughly

You go out on the practice range, and something kind of clicks, and you start hitting the ball very crisply. And you're sure that you've found it, the holy grail - that all you have to do is hold your hand in a certain way. Then you go out on the golf course, and it's completely disappeared.

- Richard Thaler

Practice, Certain Way, Very, Grail

If no estate tax is imposed, capital gains taxes can be avoided indefinitely.

- Richard Thaler

Capital, Avoided, Imposed, Estate Tax

If there is one thing that most economists agree about in the realm of tax policy, it is that it's best to broaden the base of any tax, all else being equal. That means minimizing the number of deductions and exclusions from taxable income in order to lower marginal rates and reduce distortions.

- Richard Thaler

Best, Income, About, Taxable

As both a consumer and producer of newspaper articles, I have no beef with pay walls. But before signing up, I read the fine print.

- Richard Thaler

Newspaper, Before, Read, Consumer

Many Americans say they want to be organ donors, but they just don't get around to acting on their intentions. Helping these potential good Samaritans overcome their inertia could prolong thousands of lives a year.

- Richard Thaler

Year, Helping, Organ, Inertia

Academia does not provide many opportunities for immediate gratification. You work for two years on a project, it takes two more years to get it published, and then you start hoping someone might read it.

- Richard Thaler

Work, More, Read, Academia

The ability of businesses to monitor our behavior is already a fact of life, and it isn't going away. Of course we must protect our privacy rights. But if we're smart, we'll also use the data that is being collected to improve our own lives.

- Richard Thaler

Data, Fact, Away, Businesses

Most of us think that we are 'better than average' in most things. We are also 'miscalibrated,' meaning that our sense of the probability of events doesn't line up with reality. When we say we are sure about a certain fact, for example, we may well be right only half the time.

- Richard Thaler

Fact, Average, Half, Half The Time

If we think that high marginal tax rates are bad because they distort incentives, the same is then true for tax subsidies.

- Richard Thaler

Think, Bad, Rates, Marginal

Signing up to be an organ donor should be at least as easy as downloading a song to your iPhone.

- Richard Thaler

Song, Downloading, Organ, Donor

In the world of traditional economics, it shouldn't matter whether you use an opt-in or opt-out system. So long as the costs of registering as a donor or a nondonor are low, the results should be similar. But many findings of behavioral economics show that tiny disparities in such rules can make a big difference.

- Richard Thaler

Big, Use, Registering, Donor

There can be legal conflicts over whether registering intent is enough to qualify you as an organ donor or whether a doctor must still ask your family's permission.

- Richard Thaler

Over, Still, Organ, Donor

A nudge is some feature of the environment that changes the behaviour of humans but would not change the behaviour of rational economic agents, what we call Econs.

- Richard Thaler

Change, Changes, Some, Agents

We behavioralists differ from our more traditional brethren in the way we characterize agents in the economy.

- Richard Thaler

Characterize, Traditional, Agents

I try to teach people to make fewer mistakes. But in designing economic policies, we need to take full account of the fact that people are busy, they're absent minded, they're lazy, and that we should try to make things as easy for them as possible.

- Richard Thaler

Lazy, Fact, Fewer, Economic

When it comes to my health, I would rather my doctor base her decisions on science rather than what she, or some lawyer, thinks will stand up in court.

- Richard Thaler

Will, Some, Rather, Base

Social Security may be the most beloved of all the government's programs, partly because it requires so little thinking. You pay taxes while you work, then you and your spouse collect until you die.

- Richard Thaler

Die, Taxes, Your, Beloved

If you're trading individual securities, you're almost certainly making a mistake. Because most professional managers can't outperform their benchmarks, and there's little reason to think that individuals can.

- Richard Thaler

Mistake, Trading, Certainly, Managers

If you're not putting enough away for emergencies or retirement, making commitments in advance, such as signing up for payroll withholding, can help.

- Richard Thaler

Making, Away, Withholding, Payroll

Payroll savings plans are vital because they are essentially the only way that middle-class Americans reliably save for retirement.

- Richard Thaler

Middle-Class, Save, Reliably, Payroll

I have an agent, John Brockman, who is an agent to many academic authors like Dan Gilbert and Steven Pinker, and he's very good at conning academics into writing books. He pulled this trick on me.

- Richard Thaler

Very, Trick, Agent, Authors

'Fun money' is another thing that makes no sense to traditional economists. Because there's just money; there's no 'fun money.' It's all supposed to be the same.

- Richard Thaler

No Sense, Another, Makes, No Fun

We humans actually need help controlling our impulses - nudges.

- Richard Thaler

Help, Need, Actually, Controlling

People are less likely to think it's immoral to walk away from their home if they know others who have done so. And if enough people do it, the stigma begins to erode.

- Richard Thaler

Think, Likely, Stigma, Enough People

Traditional economics is based on imaginary creatures sometimes referred to as 'Homo economicus.' I call them Econs for short. Econs are amazingly smart and are free of emotion, distraction or self-control problems. Think Mr. Spock from 'Star Trek.'

- Richard Thaler

Sometimes, Self-Control, Homo

Fortunately, economists open to new ways of thinking are finding novel ways to use supposedly irrelevant factors to make the world a better place.

- Richard Thaler

New, Irrelevant, Supposedly, Open

I am all for trying to teach household finance in schools, starting as early as possible. And when it comes to high school, I think learning about compound interest is at least as important as trigonometry or memorizing the names of all 50 state capitals.

- Richard Thaler

I Think, About, Least, Compound

Many problems are so complex that even if we had the money to fix them, we wouldn't know how to do it. Fixing inner-city schools, reducing obesity, creating peace in the Middle East are just a few examples.

- Richard Thaler

How, Had, Inner-City, Obesity

Don't get trapped by looking at what the price was that you paid for some stock originally.

- Richard Thaler

Price, Trapped, Some, Stock

The more we turn down questionable offers like trip insurance and scrutinize 'one month' trials, the less incentive companies will have to use such schemes.

- Richard Thaler

Insurance, Like, Offers, Scrutinize

Everyone knows it's dangerous to ingest gasoline or to inhale its fumes. But I am starting to believe that merely thinking about the price of gasoline can damage cognitive processing.

- Richard Thaler

Dangerous, Everyone, Damage, Starting

Countries all around the world, starting with the U.K., have started behavioural insight teams, often referred to as nudge units. And they seem to be doing lots of good.

- Richard Thaler

Doing, Started, Teams, Starting

We could all use more coaching.

- Richard Thaler

More, Could, Use, Coaching

People make just as many mistakes when the stakes go up, maybe more.

- Richard Thaler

Go, More, Maybe, Stakes

God did not say that you should be able to borrow one hundred percent of the price of a house.

- Richard Thaler

Price, Able, Hundred, Borrow

You can't make evidence-based policy decisions without evidence.

- Richard Thaler

Evidence, Policy Decisions, Decisions

One of society's thorniest problems is that children from poor families start school lagging badly behind their more affluent classmates in readiness.

- Richard Thaler

Behind, Affluent, Badly, Classmates

I think behavioral economists don't have any more of an explanation about the rise of Trump than anyone else.

- Richard Thaler

Think, I Think, Trump, Rise

It's hard to have any idea of how much money is enough to finance an appropriate lifestyle in retirement. But if a lump sum is translated into a monthly income, it's much easier to determine whether you have enough put away to afford to stop working.

- Richard Thaler

Income, Away, Appropriate, Translated

Although the United States cannot unilaterally lower the price of oil, it can reduce its consumption by using oil more efficiently and by developing alternative sources of fuel.

- Richard Thaler

United States, Reduce, Using, Consumption

The voting public is not very good at attributing credit and blame to presidents. They get too much credit when things go well and too much blame when things go badly. The same applies to coaches, C.E.O.'s, parents, and anyone else in charge.

- Richard Thaler

Very, Badly, Presidents, Coaches

The tradition of Chicago price theory is a good one, and it is a low-tech methodology that tries to apply simple economic theory to the world.

- Richard Thaler

Simple, Apply, Tries, Chicago

The good thing I will say about the Chicago School is that it was always about the world, not about the abstract.

- Richard Thaler

World, Will, Always, Chicago

We should at least make sure that patients are given the opportunity to opt out of spending their final days in a hospital, hooked up to tubes and running up enormous bills.

- Richard Thaler

Sure, Given, Patients, Bills

I practice what has come to be called behavioral economics.

- Richard Thaler

Practice, Economics, Come, Behavioral

The sad truth is that many behavioral economists know very little about psychology.

- Richard Thaler

Truth, Sad Truth, Very, Behavioral

It makes sense for social scientists to become more involved in policy because many of society's most challenging problems are, in essence, behavioral.

- Richard Thaler

More, Social, Essence, Behavioral

How can government reduce the frequency and the severity of future catastrophes? Companies that have the potential to create significant harm must be required to pay for the costs they inflict, either before or after the fact. Economists agree on this general approach. The problem is in putting such a policy into effect.

- Richard Thaler

Fact, Harm, Putting, Potential

Companies are accumulating vast amounts of information about your likes and dislikes. But they are doing this not only because you're interesting. The more they know, the more money they can make.

- Richard Thaler

Interesting, Doing, More, Vast

If governments want to encourage good citizenship, they should try making the desired behavior more fun.

- Richard Thaler

Want, More, Making, Citizenship

Even if we grade on a very generous curve, many Americans flunk when it comes to financial literacy.

- Richard Thaler

Financial, Very, Curve, Literacy

Even a mother - Jewish or not - can't worry about everything. So it is important that we limit our worries to real as opposed to imaginary risks.

- Richard Thaler

Worry, About, Opposed, Imaginary

Doctors and hospitals should be paid for keeping their patients well. Paying them for doing more tests and surgeries creates bad incentives.

- Richard Thaler

Doing, Bad, Hospitals, Doctors

The wealth in many large estates has never been taxed because it is largely in the form of unrealized - therefore untaxed - capital gains.

- Richard Thaler

Wealth, Been, Capital, Taxed

Lotteries are just one way to provide positive reinforcement. Their power comes from the fact that the chance of winning the prize is overvalued.

- Richard Thaler

Winning, Chance, Fact, Reinforcement

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.

- Richard Thaler

Reason, Been, Large, Complicated

High school seniors should receive help in how to think about a student loan and how to make sure that the education bought with the loan offers good prospects for repayment.

- Richard Thaler

Think, Offers, Receive, Bought

I don't think it says anywhere in the Bible that tithing should be calculated on a before-tax basis.

- Richard Thaler

Bible, Think, Should, Calculated

Coining a term is not the same as creating a field!

- Richard Thaler

Creating, Field, Same, Term

If you want to encourage some activity, make it easy.

- Richard Thaler

Want, Some, Activity, Encourage

We all need a lot of humility, and especially about the economy.

- Richard Thaler

Need, About, Lot, Humility

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