Behavioral economics is entering the US presidential elections. David Leonhardt reports on the New Your Times in Democrats: More Than Health Care:
“Senator Obama’s ideas, on the other hand, draw heavily on behavioral economics, a left-leaning academic movement that has challenged traditional neoclassical economics over the last few decades. Behavioral economists consider an abiding faith in rationality to be wishful thinking. To Mr. Obama, a simpler program — one less likely to confuse people — is often a smarter program.”
and Mr. Obama would “require companies to deduct money automatically from their employees’ paychecks and place it in a savings account the employee owned. Employees could opt out of the program. But if they did nothing, they would end up saving money. It’s an idea that comes directly from academic research showing that savings rates have jumped when individual companies have adopted such plans.”
Free Exchange criticizes Mr. Obama’s libertarian paternalism (and libertarian paternalism in general) in Obama’s new-school paternalism. While economists Mario Rizzo’s and Richard Thaler’s debate on libertarian paternalism in Should Policies Nudge PeopleTo Make Certain Choices (on the Wall Street Journal Econoblog) and Richard Thaler and Russ Robert discuss libertarian paternalism on EconTalk.