"If you start thinking about our faulty perceptions, the first thing you realize is that markets are not perfectly efficient, people are not always good guardians of their own self-interest and there might be limited circumstances when government could usefully slant the decision-making architecture."
That was David Brooks in his NYT column today. The truth of the matter is we couldn't agree more. Brooks lists Richard Thaler and Cass Sunstein as sources of actual policy proposals that would "slant the decision-making architecture." He might also want to consider the ten innovative ideas offered in our recent paper "Behaviorally Informed Financial Services Regulation" by Eldar Shafir, Michael Barr and Sendhil Mullainathan. Or watch the video of the event we held on the paper.
People who aren't familiar with behavioral economics can learn a lot just by watching this short primer video featuring our own Ellen Seidman:
Brooks says "My sense is that this financial crisis is going to amount to a coming-out party for behavioral economists and others who are bringing sophisticated psychology to the realm of public policy." And again we find ourselves in agreement. That's why we've put forward ideas that are strongly influenced by behavioral economics, including: Autosave, The Saver's Bonus, and SAFE-T Accounts.