Quote

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.

Richard Thaler

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Richard Thaler
Age: 78
Born: 1945
Born: December 9
Economist
East Orange
New Jersey
Richard H. Thaler
Richard H Thaler
Call
Skin
Defaults
Games
Selling
Reimburse
Skins
Mortgages
Write
Shouldn
Brokers
Writing
Couldn
Default
People
Pay
Mortgage
Game
Sold
Guy
Afford

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There are cases when I can make myself better off by restricting my future choices and commit myself to a specific course of action.
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Most people start claiming benefits within a year of when they become eligible, although benefits increase substantially if they wait.
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The lesson from behavioral economics is that people only save if it's automatic.
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People exaggerate their own skills. they are optimistic about their prospects and overconfident about their guesses, including which managers to pick.
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A company invites their employees to sign up for a plan where every time they get a raise, some part of that raise goes to increasing their contribution rate to the 401k plan. In the first company we convinced to adopt this plan, saving rates tripled.
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If rather than setting the minimum balance as the lowest possible amount, so we keep people in debt for as long as possible, we raise the minimum payment and encourage people to pay off their credit cards, we're going to make less money, but we're going to have costumers that are more solvent.
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Most economists, including me, agree that longevity insurance would make sense for a lot of people.
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he card companies will often, as a courtesy, honor that credit card, but hit you with a penalty. And you keep swiping your card for $3 at Starbucks for your latté, and you're getting hit with a $25 penalty because it's over your credit limit.
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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.
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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.
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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.
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If people just put away what's left at the end of the month, that's a recipe for failure.
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It would be much more consumer friendly for them to beep you when you swipe your card that says, uh-oh you're over your limit, are you sure you want to use that?
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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.
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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.
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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.
Richard Thaler
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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.
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Why tie to gold? Why not 1982 Bordeaux?
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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.
Richard Thaler