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Richard Thaler Quotes:

Richard Thaler quotes

Ocupation: Economist

Life: b. September 12, 1945

Birthday: September 12

famous quotes

When an economist says the evidence is "mixed," he or she means that theory says one thing and data says the opposite.

Topics: Mean, Opposites, Data

quote when an economist says the evidence is mixed he or she means that theory says one thing richard thaler Quotes

I don't go by the ratings. I buy wine that tastes good. Statistically, anybody's ability to predict what will be a good wine a decade from now is limited.

Topics: Wine, Taste, Rating

Rip Van Winkle would be the ideal stock market investor: Rip could invest in the market before his nap and when he woke up 20 years later, he'd be happy. He would have been asleep through all the ups and downs in between. But few investors resemble Mr. Van Winkle. The more often an investor counts his money - or looks at the value of his mutual funds in the newspaper - the lower his risk tolerance.

Topics: Rip, Tolerance, Risk

Why tie to gold? Why not 1982 Bordeaux?

Topics: Money, Ties, Gold, Bordeaux

People exaggerate their own skills. they are optimistic about their prospects and overconfident about their guesses, including which managers to pick.

Topics: Optimistic, Skills, People, Overconfident

There's no reason to think that markets always drive people to what's good for them.

Topics: Thinking, People, Reason

Investors must keep in mind that there's a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it.

Topics: Differences, Car, Mind

A good rule of thumb is to assume that everything matters.

Topics: Risk, Matter, Thumbs, Risk Management

My mantra is if you want to help people accomplish some goal, make it easy.

Topics: People, Goal, Want

So, what's a nudge? A nudge is some small feature of the environment that attracts our attention and alters our behavior.

source: - Big Think Interview, bigthink.com. June 19, 2009.

Topics: Attention, Nudge, Environment

The lesson from behavioral economics is that people only save if it's automatic.

Topics: People, Lessons, Economics, Behavioral Economics

Recall that people like to do what most people think it is right to do; recall too that people like to do what most people actually do.

Topics: Thinking, People, Recalls

People worry that if they buy an annuity and then die before the policy starts to pay off, their heirs will lose out. I tell them, "What you should be more worried about is if you outlive your money, you will have to move in with your kids. Ask your kids which of these outcomes they are more worried about."

Topics: Moving, Kids, People

If people just put away what's left at the end of the month, that's a recipe for failure.

Topics: People, Recipes, Months

I'm all for empowerment and education, but the empirical evidence is that it doesn't work. That's why I say make it easy.

Topics: Empowerment, Easy, Empirical Evidence

I think one lesson we have to learn is that there's a lot more risk than we're giving credit to, a lot more what economist calls systematic risk.

source: - Source: bigthink.com

Topics: Thinking, Giving, Risk, Giving Credit

There are cases when I can make myself better off by restricting my future choices and commit myself to a specific course of action.

Topics: Choices, Action, Cases

I think the people who've been the most overconfident in our business in the last decade have been the people that called themselves risk managers.

source: - "Big Think Interview With Richard Thaler". bigthink.com. June 19, 2009.

Topics: Thinking, People, Risk, Overconfident

Most economists, including me, agree that longevity insurance would make sense for a lot of people.

Topics: People, Longevity, Economist

Everyone's lost a lot of money on their 401k plans. I've heard some people calling them 201k plans. So it's even more important to get people to be saving more for retirement. Behavioral economics has helped us learn a lot about how to do that.

source: - Source: bigthink.com

Topics: Retirement, People, Important, Behavioral Economics

Retirement savings is probably behavioral economists' greatest success story. It is a prototypical behavioral-economics problem because saving for retirement is cognitively hard - figuring out how much to save - and requires self-control.

Topics: Retirement, Self, Saving, Behavioral Economics

I think we also have learned the lesson that we have to have better incentive structures.

source: - Source: bigthink.com

Topics: Thinking, Lessons, Incentives

The reason is they failed to learned the primary lesson we should have learned from when Long Term Capital Management went belly up ten years ago. That is, investments that seem uncorrelated can be correlated simply because we're interested in it.

source: - "Big Think Interview With Richard Thaler". bigthink.com. June 19, 2009.

Topics: Should Have, Years, Long

So the world is much more correlated than we give credit to. And so we see more of what Nassim Taleb calls "black swan events" - rare events happen more often than they should because the world is more correlated.

source: - Source: bigthink.com

Topics: Swans, Rare Events, Giving, Black Swan

The assumption that everybody will figure out how much they have to save and then will just implement that plan is obviously preposterous.

Topics: Assumption, Figures, Plans

"Save more tomorrow" is a nudge to help people do what they know they want to do, which is save more, but they can't bring themselves to save more now. Just like many of us are planning to go on diets next month, or maybe in two months, certainly not tonight.

source: - "Big Think Interview With Richard Thaler". bigthink.com. June 19, 2009.

Topics: Two, People, Tonight, Nudge, Two Months

Maybe you'll take the cash out. So a credit card company or a bank that goes into the business of saying we're going to be the broker, we're going to sell you a mortgage that you're going to be able to pay off, we're going to help you reduce your credit card debt, we're going to help you save for retirement, we're going to put you into mutual funds that have low fees rather than high fees.

source: - Source: bigthink.com

Topics: Brokers, Credit Card Debt

The same with the mortgage brokers that were selling people mortgages they couldn't afford. We shouldn't pay them on each mortgage they write. They should have what they call "skin in the game," where they've got to reimburse us if the guy who sold the mortgage defaults.

source: - Source: bigthink.com

Topics: Brokers

LTCM lost money when Russia defaulted on a certain class of bonds, and then they had other investments like on the spread between two different kinds of shares of Royal Dutch Shell Oil Company. Now that seems completely unrelated to Russian bonds. But they were related because other hedge funds saw similar discrepancies and they were all making similar bets.

source: - "Big Think Interview With Richard Thaler". bigthink.com. June 19, 2009.

Topics: Oil Companies, Lost Money, Discrepancies

The money has to be deferred with what they call "clawback," which means they can get it back if I lose it all. So that guy making ten million a year selling credit default swaps, if we're going to keep five million of it in escrow for ten years, and with the right to go back and get it, if he starts losing money, then we're going to give people the right incentives not too take so much risk.

source: - Source: bigthink.com

Topics: Losing Money, Credit Default Swap

One simple step firms can take is make sure that people that are getting paid a lot of money, say more than a million or two, that a big chunk of that money is deferred. That's going to change the whole ballgame.

source: - Source: bigthink.com

Topics: Chunks, Ballgame

When should we nudge and when should we shove, I think, it's a political judgment. Obviously in some situations we need shoves, we need laws. Fraud is against the law, murder is against the law, drunk-driving is against the law. We don't need just nudges.

source: - "Big Think Interview With Richard Thaler". bigthink.com. June 19, 2009.

Topics: Drunk Driving

In a typical 401k plan, when you first become eligible you get a big pile of forms and you're told, fill out these forms if you want to join. Tell us how much amount you've saved and how you want to invest the money. In, under automatic enrollment you get that same pile of forms but the top page says, if you don't fill out these forms, we're going to enroll you anyway and we're going to enroll you at this saving rate and in these investments.

source: - "Big Think Interview With Richard Thaler". bigthink.com. June 19, 2009.

Topics: Enrollment

Credit cards have been extremely profitable to banks. They're profitable not from the fees they collect from the retailers that use the credit cards, that pays the bills, but the real profits come from the interest payments and the charges to users that are unexpected.

source: - Source: bigthink.com

Topics: Retailers

It turns out, that men, when they're taking care of their business, they're not fully attending to the task at hand, but, I'm sure there's an evolutionary explanation for this, if you give them a target, they will aim.

source: - "Big Think Interview". Big Think Interview, bigthink.com. June 19, 2009.

Topics: Task At Hand

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