CHIBEblog

Q&A with Richard Thaler, PhD

By December 10, 2020February 16th, 2021No Comments

What’s one common misconception about the field of behavioral economics that Richard Thaler, PhD, often tries to dispel?

“That behavioral economists think that people are dumb. We don’t. We think the world is hard,” he said in our interview with him this December.

The University of Pennsylvania’s Center for Health Incentives & Behavioral Economics’ (CHIBE) hosted its 10th annual Behavioral Science and Health Symposium December 3-4, 2020, and the symposium’s final session was a thought leader interview with Dr. Thaler, the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the Chicago Booth School of Business, and co-author of Nudge: Improving Decisions About Health, Wealth, and Happiness, alongside Cass Sunstein, JD.

Katy Milkman, PhD, Co-Director of the Behavior Change for Good Initiative, which co-hosted the interview with CHIBE, introduced the Nobel Prize winner, then turned it over to Kevin Volpp, MD, PhD, Director of CHIBE, to conduct the interview.

Read selected highlights from the interview (which was open to the public) below, or you can watch a recording of the interview with Dr. Thaler here to see the full conversation.

richard thalerKV: You are widely credited with popularizing the concept of nudges—bringing this into the popular lexicon and changing the way tens of millions of people in the United States and worldwide think about their choice environments. How does that feel?

RT: Well, I would say surprising. When we wrote that book, no one wanted to publish it. It was a book on libertarian paternalism. So you can see why publishers were running away from us. And one of the publishers who turned us down said, “You know, this book did make me think of the word ‘nudge.’” And so we said, “Oh, that’s a good idea.” So that guy is the one who coined the term nudge. And I will say that it did sell a lot of books, but I have a few regrets about the word because I think it makes people think of tweaks, and I prefer to think about sort of big choice architecture picture. We never expected the reaction that we got. We’re happy to have it, and as you know, Cass [Sunstein] and I decided to spend our COVID summer rewriting it, and there will be a new edition coming out next summer that I’m calling Nudge: the Final Edition as a commitment strategy never to do this again.

KV: You clearly have a great knack for finding interesting problems to work on, and I’m wondering if there’s a recipe for picking a good problem that you would advise others to use based on your experience.

RT: My former student Cade Massey always quotes me as saying that I only work on things that I find amusing, which I think is right. I also often give the advice to students that they should make their research about the world, not about the literature. I think most graduate students and young scholars spend too much time reading and not enough time thinking. You don’t want to be the 100th person to be writing on some narrow little topic. It’s better to be the first one, and it may be that I have a short attention span, but I’ve rarely written more than two papers on any one topic. Now, I suppose you can say, well, they’re all about behavioral economics, but that was a field that didn’t exist. So, you know, they range from finance to football. So, keep being interested. That’s my advice.

KV: How would you recommend approaching vaccine hesitancy? 

RT: I have one suggestion I’m going to make. I don’t know whether anyone will take it very seriously. And that is that we have what I’m calling a charity auction (See Dr. Thaler’s New York Times piece here). We know that there will not be a legal way for people to jump the queue. On the other hand, let’s look at testing. Somehow, the sports leagues had all the tests they needed, and fast. The NBA players were getting tested every day and getting results in a few hours. Now, I don’t know about you, but I can’t get that service.

So here’s my proposal: that after we get through the first tranche of say 20 million (where we take care of all the frontline healthcare workers), I would auction off [some number of] vaccines a week and use those proceeds to help the people who have suffered the most from COVID. I’ll let somebody else decide how to do that. The argument I would make for doing this is that if we don’t do it, the rich and powerful will find other ways to jump the queue. So let’s let them pay and use that money for something useful.

The other thing I’ve been thinking about is if we want to give people an incentive to get vaccinated, one of the things we can do is make it give you access. Airlines are already talking about requiring you to be vaccinated to get on the plane. United is requiring you to have had a test in the last 24 hours to take a flight to Hawaii, and some countries are thinking of similar things. A vaccine would obviously be better than a recent test.

So, I think it would be a good idea if people, when they got their second vaccination, get an electronic passport. If they have a smartphone, it could be on their phone, a QR code or something that you would wave, or the same technology used to swipe your way into a hotel room or a building.

I was disappointed to learn that that doesn’t seem to be what the government is planning to do. Instead they’re going to give you a piece of paper where they will write down the day that you got your vaccine. It’s not even clear if they’re collecting contact information from the people who got the first shot. And one of the problems we’re going to face is getting people to come back for the second one. For two reasons: One, people are absentminded and procrastinate about things, but the other is that like a lot of vaccines, but particularly this one, it causes side effects. I saw an interview with Atul Gawande, who was in a trial, and he says he’s pretty sure he got the vaccine because he had a fever for a day. So if taking the first shot made you sick for a day … Never mind the anti-vaccine movement, just the fact that you had a fever for a day or maybe a few days. That’s not like a flu shot for me. For me, I’ve never had a reaction to a flu shot. So I don’t think anything about getting them. So anyway, I worry about that. And I worry about whether we’re going to have the ability to prompt people to come back and to give them a reward. I’m sure every university would like to say, “If you want to come back to camp campus next fall, you have to be vaccinated,” and to make that work you need proof.

KV: What would you do if you were in charge of the coronavirus response for the country? How would you try to help us move forward in way that would be more effective than what we’re doing now?

Well, obviously, the President did immense damage by politicizing this, and you know, even libertarians wear clothes when they go out in public. So the requirement that you wear something is not a new one.

I think President Biden will set a good example, and I think the sports leagues have done very well on this. I think people like to do what is expected of them, but they don’t like to be told they have to. Fortunately, with the vaccine, if we can get two-thirds or 75% that’ll be fine. I’m not so worried about the crazy anti-vaxxers. I think a lot of people just didn’t trust the Trump administration to monitor this. I think we’re going to have 20 million doses administered mostly to health care workers, and we can think of that as one gigantic trial. So at least safety will have been tested at massive scale and presumably efficacy as well in pretty trying circumstances. So I think people are processing this reasonably, rationally. I think by February or March, we should have a lot of data, and I think we’ll win the day on that.

KV: What would you tell President-Elect Biden, if you could tell him, let’s say, three or four things you should prioritize as part of your policy agenda that behavioral science would suggest you consider?

RT: We need to think top down about creating the right choice architecture. It’s clear that Biden is very strongly committed on climate change. If you look at the people he’s appointing to his economic team, many of them have that interest. I think labor markets and the environment are the two big themes on the domestic side, and obviously dealing with COVID. I think that we have to get the structure right. For climate change, we need a carbon tax. Progressives, especially environmentalists, don’t like carbon taxes, and I don’t know why. I guess they don’t think they’ll be high enough? But if that’s the case, then raise them – or if you prefer cap and trade, they’re the same thing. In one case, you set the price, and you hope to get the right quantity, and the other set the quantity and you wait to see what the price is, but one’s the dual of the other. I think we have to start with that. And that’s going to have to be true for every big problem, and then the behavioral science can help us think about how to create those environments. Then we can start to think about things like framing and social norms, but getting the structure right – that has to be step one.

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