Richard Thaler, in conversation with Hal Varian, Google’s Chief Economist
Richard Thaler, co-author of Nudge, will discuss his new book, Misbehaving: The Making of Behavioral Economics. In this book, he couples recent discoveries in psychology with a practical understanding of incentives and market behavior to tell us how to make smarter decisions in an increasingly mystifying world. He reveals how behavioral economic analysis opens up new ways to look at everything from household finance to assigning faculty offices in a new building, to TV game shows, the NFL draft, and businesses like Uber. Bonus: “antic stories of [his] spirited battles with the bastions of traditional economic thinking”.
Dr. Thaler is an American economist and the Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business. His previous books have sold millions more copies than yours or mine.
welcome you all to this session where richard thaler is going to tell us about his new book and I should tell you both Richard and I were on a panel in San Francisco last night so this is kind of a lot of instant replay deja vu for us and but I'm gonna change the answers I go it's it's kind of like the distinction microeconomics and macroeconomics because the micro is different questions with the same answers in macro it's the same question with different answers so this is kind of a behavior economics esses in Commons some other parts of economics but one of the good lead-in questions that we had last night I'm going to run again today is what does this mean misbehaving what kind of title is that where to come from so the title kind of has reflects three aspects of the book the first is that economists have a particular view of humanity if we want to call it humanity or inhumanity and so if you read a graduate level textbook like Hal's that'll be a dollar please for the point you'll the the people he's describing in the models are not ones you recognize and very life they're as good at math as how they're as good at self-control as Gandhi and they're complete jerks if if you left your wallet lying around they would take it if they were sure they wouldn't get caught so for the last 40 years or so I've been studying humans I call those mythical creatures econ's and I've been studying humans and by economists standards humans misbehave and so that's the first meaning of misbehaving in this book it's the people I talk about the second meaning is the fact that I've devoted my career just studying that was itself an act of misbehaving because economists are supposed to study cons and what are you doing studying these other people and maybe a third is and it's kind of consistent with the second the book is not written as a proper book or at least everyone in the publishing industry told me one is not supposed to write a book like this so it's structured kind of as a memoir but it's a primer in behavioral economics so there's a lot of substance in there and it's at least meant to be funny and I was told that the set of books that are substantive funny memoirs and have sold as many as a hundred copies is the null set and so you probably shouldn't write a book like that but that's the book I wrote it was the only book I could write you might say also that the econ's are misbehaving from the viewpoint of the humans like for example humans are expected to leave tips at restaurants when that kind of thing that's right I mean econ's don't leave tips at restaurants they don't plan to go back to because why would you of course that's a bit of an exaggeration well oh only a bit I mean I know I mean it is true that many economists have taken seriously some of the departures my late colleague Gary Becker in some ways his career it was devoted to the opposite of mine although we both studied odd kinds of behavior his approach was modeling everything through the lens of a rational economic agent so he has a rational model of addiction and you know he could rationalize anything and – sorry that is misbehave I know and I'm so sorry that's a new chapter take the books back I had the chapter on cell phone misbehaving so uh so yeah I mean you you could write down a model where you care about the opinion of the waiter and so therefore you leave a tip but that's kind of a tautological model that isn't very helpful and I should say we warned people last night the American economics Association meeting annual meeting is going to be in San Francisco in January and we expect all waiters and waitresses to leave tout yeah it's probably gonna be a really bad time unless unless they don't either they don't realize that the AAA is in town in January or they don't know that economists are bad tippers but yeah otherwise it would be a good time to go on vacation if you're a waiter I once did a informal study of this of tipping just by talking to people unusual methodology I know but yeah but you know you could lose your credentials as a real economist by doing that so it turns out that I think the best explanatory variable for whether or not you leave a generous tip is whether you ever work as a waiter or waitress ya know that I think that's true you know I saw an interesting op-ed about tipping that I've kind of taken to heart which is that if if you're concerned about inequality of the sort that Piketty talks about here's one small thing you can do become a better tipper and so I've just just decided to leave bigger tips it's not gonna change the world but all the people who get tips from me are much poorer than me and I can spread a little wealth that way that's a very useful tip nice one I could resist so tell us about some of these anomalies in fact tell me tell me how you got started in the oh yeah well there's fishing for a compliment no earthly so so how once uh introduced me to someone and said this is Richard Taylor actually I invented you and so here's what how meant we've known each other for longer than we would care to admit and let's say this was about 1986 we were at a conference together I don't remember where but we were eating a meal together and how was telling me about a new journal the AEA was starting called the journal of economic perspectives and the aim of the journal was to have articles written in what economists would pass from plain English so and so not really articles for laymen but articles for non specialists so an article that any economist or economics grad student could read and so I said oh that's interesting and then he and I dreamed up the idea for a column in that journal that I ended up starting to write called anomalies and for four years once a quarter I wrote about an anomaly and I think that so I owe a Ledet and the field of behavioral economics for that he convinced joe stiglitz who was the editor at the time who I think didn't need much convincing no he was easy to become Joe's a bit of a troublemaker so he liked the fact that I was going to stir the pot and you know the kuhn the great philosopher of science talks about paradigm shifts and how do you create a paradigm shift and the only way to do it is to create a long list of anomalies because any one or two can be explained away okay so people leave tips even at restaurants they don't go back to but you know maybe you know and if if the set of excuses for each anomaly has to be different then people start to wonder oh yeah maybe there's a more basic problem here so the fact that I could write 14 anomalies columns about different things I think changed some people's mind and the fact that the 1987 stock market crash occurred during the very period when I was writing these columns may have also helped you didn't do that I don't think no no wasn't my fault the in the book you said it was partly a tutorial about behavior economics and you go through this long list it was a long list of aspects of human behavior that are not accounted for by conventional theory and the first one both temporally and in the book is in fact the endowment effect so why don't you tell us about the endowment effect so let me tell you I first discovered what I later came to call the endowment effect I my PhD thesis was on the topic that's funny or not funny but odd the value of a life and this wasn't a philosophical economics problem and it's a problem that all governments have to deal with week we can make things safer we can make highways safer we could lower the speed limit we can do all kinds of things to reduce the chance you're gonna die how much should move me willing to spend on that and we don't want to spend all our money on that so we need a number and so that was that was what my thesis was about and it was the very straight economics econometrics exercise estimating how much you had to pay people to get them to take risky jobs like the in logging or coal mining or weed no washing on skyscrapers but while I was working on that so it was a break from writing Fortran code I decided I'd ask a question so I asked the following question suppose by attending this lecture today you've been exposed to a rare fatal disease and there's a one in a thousand chance you're going to drop dead next week quick and painless death not to worry we have one cure it's in this glass right here and we'll sell it to the highest bidder how much will you pay that's question one question two is Stanford is running some Studies on that same disease and they need volunteers for an experiment all you have to do is walk into a room and expose yourself to one in a thousand risk of death there will be no cure available what would you have to be paid to participate in that now according to economic theory the answers to those questions should be approximately the same and the responses I got were wildly different so someone would say oh I'd pay five thousand for that cure but I wouldn't do that experiment for half a million so orders of magnitude difference and then I started lowering the stings and you know suppose you have somebody offers you two tickets to one of the Warriors playoffs games and let's say the market price for those tickets is a thousand dollars each would you be willing to pay a thousand dollars to get those tickets probably not would you sell them for a thousand dollars probably not okay well that's that's the endowment of it and what it what it implies is a kind of status quo bias that if somebody gives us the tickets will go but if they don't give us the tickets we won't go and you know here econ 101 quiz question if you've got those tickets and the market prices a thousand dollars how much does it cost you to go to the game answer 1,000 dollars but that's not the way people think about it and that eventually I started having a list on my blackboard as an assistant professor of weird people do and that was the first thing on my list and maybe the second one goes back to a dinner party I hosted as a graduate student and while some roast or something was cooking in the oven creating delightful aromas I brought out a bowl of cashew nuts and we all started munching away and the bowl of cashew nuts and our appetites were in danger and so after a few minutes I took the bowl and eating a few more nuts on the way went and hidden in the kitchen and came back and this was a group of econ grad students and so we immediately started analyzing what had just happened there's a rule of thumb I mentioned in nudge my previous book which is that the conversation at a dinner party will be ruined if more than half the guests come from the Economics Department and this story is an illustration of that since the removal of a whole occasion that's led to a decision tree and and what economists all know is that one can't be made better off if one's choice set is made smaller and that's what I just did we previously had the choice eat nuts or don't eat nuts now we had that didn't have that choice and we were happy how could that be okay it was on my list and so for a long time all I had was a list and dwindling professional aspirations because a list of weird people do doesn't get you tenure I think last night at our meeting I cited a well-known 20th century philosopher who said the Lord above made liquor for temptation to see if man could stay away from sin the Lord above made liquor for temptation but with a little bit of luck when compassion come she'll give right in and in fact at that point we broke for drinks yeah I don't think you're serving drinks after this talk right just for you so so that was one of them and by the way the tickets is a nice example because tickets come up at another place in the book and that's on scalping this is also a case where economists may not like tipping so much but they really like scalping they like scalping and economists have no trouble with ubers surge pricing no matter how high the surge goes and economists are unique in that I did a study with my good friend and colleague Danny Kahneman in 1985 I was 12 and and we it was a study of basically what pisses people off and so we had a whole series of questions that where we would ask whether something is fair so here's an example from that that study a hardware has been selling snow shovels for $15 the morning after a blizzard the store raises the price to $20 rate that a 1/2 for scale of fairness from completely fair to totally unfair people hate that now I give that same question to my MBA students they all say Yeah right because they took a price theory class and in that class this was the right answer right demand has shifted price goes up so in New York City there was a blizzard and uber thought it was a really good time to raise the price of cab rides by a factor of ten ten yes but many people including the state attorney general decided that wasn't really a good idea and in fact many states have a law against what's called gouging that literal meaning of gouging is to poke a hole in something and that's what most humans feel like you're doing if you charge them ten times the usual fare because it happens to be snowing uber ended up making an agreement with the state attorney general to cap the amount by which they would surge in an emergency it's I write in the book that it's my opinion that they should have done that unilaterally and a similar thing happened in Sydney there was I don't remember the details of what happened but there was some terrorist attack or maybe it was thought to be a terrorist something something like that and there was a surge and as I described in the book imagine had oberon been around on 9/11 and all the cabs were snagged by investment bankers who needed a ride to Greenwich I think that would have been the last day in business so the the norms of fairness say in emergencies we help each other out and I've actually talked to several uber drivers about that and said what would you want to do in that situation and most of them say I'd want to help and uber doesn't make very much money on those surges and I I think they could do better and I may try to convince them that they should do better so one thing in your book that I think is it could use a little more exposition is this distinction between a psychologic logical preval action or something and a social convention so let's take the example like tipping well some countries tipping some practice so of course you don't tip that's a service charge or something build in ready record and the same thing with with fairness norms so I mentioned scalping originally and scalping some people thought that was this terrible thing that you buy tickets at a low price and resell my high price but now they're organized markets like StubHub everybody expects well if I don't use the tickets I could go into the secondary market and I don't think scalping is really considered immoral anymore right I don't know was the audience think is scalping immoral yeah now nobody nobody thinks about one point that was a that way you know so look I think these things here's so do you to the specific question you're raising which i think is a really good one ah what the distinction I would make is what is the cultural norm and then do people adhere to it and what the cultural norms are will depend on the cultures so one of the reasons why Greece is in so much trouble is the cultural norm in Greece is that if you pay your taxes you're a sucker that's a problem right none of us love paying taxes most of us grumble about how high our taxes are but we think that we have to do it and I mean people may be imaginative in thinking of deductions but basically in this country people pay most of the tax they owe and that's not the case in Greece and so they have an economic problem but they have kind of a social norms problem and there's all kinds of discussion about whether they should have more or less austerity the only way Greece is going to solve their economic problems in the long run is to change their cultural norms and I it's not that I haven't an answer about how to do that I kind of know some of the things you'd want to do we have knows that I have been doing some work for the British government for the last five years after I wrote with my friend Cass Sunstein the book nudge David Cameron created a tiny little government unit called the behavioural insights team that everyone now just calls the nudge unit and started out with five people that's now over fifty and one of our big success stories early on I say we because I've been working with that team from its conception was exactly on collecting money from people who owed on their taxes and we were able to run an experiment so we met some guy one of the very first meetings I had over there was with a guy whose job it was to collect from people who owed money on their taxes and we say all right what do you do and he says well we send them a letter dear mr. Varian you owe $15,000 on on your 15,000 pounds we'll make that your taxes here's how to pay and if you don't pay we're going to be mean to you and so we got permission to run experiments of the sword Google does every minute changing the wording of that letter and the winning letter uses a trick from the Robert Chill Dini Bible Robert shield amy is a social psychologist wrote the famous book influence and so what we told people truthfully is that the residents and that we localized this because it turns out that helps so the residents of Manchester ninety percent of the residents of Manchester pay their taxes on time you are in the minority of those who don't that increased the percent who pay within the first window which happens to be 23 days by 5 percentage points now that means millions of pounds right and it costs nothing to add that sentence to that letter already mailing the letter out and right so that there are several lessons from that one is people people respond positively to social norms if you you know what do you do when you go to another country going back to tipping those of us who like to behave we ask what's the tipping norm in this country and then we try to behave the way the natives do so if everybody pays their taxes on time you try to bathe that way as well the second lesson from that is one that Google has largely learned although not completely which is when you can you should run experiments and the only way you really to learn is to run experiments and most organizations are really terrible at this and Google is not terrible but I would argue even Google could run more experiments they were very good in the domain in which it's very easy to run experiments like changing the order of fads and wording of various things but probably not as good at experimenting on what kinds of people to hire and what kinds of jobs to give them so one thing I'm going to say a word in defense of the Greeks because I think your analysis is right but of course this is developed over 100 years they didn't really like paying taxes to the Ottomans and in fact the Americans didn't like paying taxes to the Brits because they weren't getting perceived value in return and so but once you develop that norm then it's good yeah no that's right the Ottomans have been gone a long time right almost as long as the Brits how did you you know we've gotten over it so one thing I wanted you two to talk a little more about the savings because I think that's extremely interesting part of the book of how you can help people increase savings in a kind of unobtrusive way yeah so probably the domain in which behavioral economics has had its greatest impact is in the domain of retirement saving and you know as I think most of you know once upon a time there were pensions before many of you were born but dinosaurs like us remember pensions al had a very nice one at UC Berkeley where all you did is work and then when you were done working you got a paycheck and you got that paycheck until you died now you have to figure out you have to join the 401 k plan you have to figure out how much to save and how to invest it and then you're going to at some point figure out what to do with that money so that's asking a lot of people who don't know very much about financial markets so the first step is just to get people to join the plan and there we encouraged people to make a very simple change which is to change the default and so this is called automatic enrollment and under the old regime when you're first eligible for the plan you get a pile of papers to fill out and if you don't fill those out you don't get in the plan under automatic enrollment I assume you have automatic enrollment at Google do yes good then you're told unless you fill out this form we're going to enroll you however the sentiment what is the saving rate at which you get started if you're automatically enrolled at Google ten percent excellent that is really good I'm impressed I'd say 90% of companies that use automatic enrollment enroll people at 3% and the reason for that is sad and funny so back in the mid-90s when this idea was new companies would come to me and say you know we'd like to do this but we're worried about whether it's legal because we're going to sign people up without their permission so I called a friend of mine who worked in the Treasury Department and said can can you get some letter written clarifying that this is legal and he said yeah I can do that and so he and somebody from the IRS drafted a letter and the way those letters tend to be written is you give a general statement and then you give an example so for example suppose there's a company and it signs people up for their pension plan add a 3% saving rate and it's still now the case that most companies sign people up at 3% which yeah so this is called an unintentional anchor and it's had the effect of anchoring people at a very low saving rate which created the need for another favor elec anomic Sai dia that a former student of mine slomo Bernard C and I developed that we call save more tomorrow and say more tomorrow is based on the premise that we all have more self control in the future so I'm planning a diet but not tonight and probably not this week or at least not until the end of this book tour so you know lord give me strength but not now you know that so so the IDSA more tomorrow is you invite people to increase their saving rates in the future when they get a raise and so modern 401k plans now have automatic enrollment and you don't need it so much at Google if you start people at 10 but automatic escalation to get them up to ten or some number higher and then that plus a sensible default investment vehicle like a target date fund you know my mantra when I'm in the UK with the nudge unit and we're talking to these ministers in virtually every meeting I would find myself repeating the same three words make it easy if you want to get people to do something remove the barriers that are preventing them from doing it and automatic enrolment is a good example and there are now countries all over the world starting these nudge units and the advice I give them is start with low-hanging fruit and saving was low-hanging fruit because a it's hard both cognitively to figure out what to do and then willpower you have to get yourself to do it and we could solve all of that with one click or zero clicks if it's automatic enrollment there are other problems there's no one-click diet right it would be good for some of us if there were but there isn't technology may help but so you know if we can find other domains where we can make it easy and help with problems the that's the place to start I'll give you a Google example of this phenomenon if you ask what day of the year are the most queries for weight loss January one of course but at the same time what day of the year are the most queries for hangover January exactly so it's a kind of demarcation on both the future and the past right note notice econ's never of hangovers and never up to go on diets because they weigh the optimal amount right so I'm going to break for questions in just a minute but I would like you to say another word or two about the applications of behavioral economics and finance before I do that I want to throw in a another Google story back in when we had the IPO in 2004 I think we wanted to give advice to all of the people that were here Google at that time of how to to responsible money managers so on but we weren't allowed to company can't give financial advice to its employees which is unfortunate for the reasons you described but you can also understand why it might make sense to to to have such a rule and my boss at the time Jonathan Rosenberg said look we've got to do something how will you organize a seminar series so our lecture series so he brought in some of the real luminaries of Finance Bill sharp and Burt Malkiel we got some people a real estate and a charitable giving and a number of other topics and gave these tech talks really to the entire group of Googlers and I can't tell you how many times since then people come up to me and said what a great service that was to do and I will say it's Jonathan who really had the ideas is it was his vision and I think it was just a great help and I wish more Silicon Valley companies could do that yeah so financial markets the the conventional university of chicago view of financial markets is called the efficient market hypothesis it's coined by my friend and colleague gene fama and it has two components one is that you can't beat the market you can't predict the future from the past or from anything else because all information is impounded in today's price and the second component is what I call the prices right component which is that asset prices are equal to their intrinsic value whatever that is may be the net present value of future cash flows or something like that just like our optimal weight yeah exactly value right so I think the the first part is not far off I say that in spite of the fact that I'm a principal in a money management firm located about ten miles north of here in San Mateo that uses behavioral finance to try and beat the market and we are moderately successful nevertheless I don't advise any of you to try to do it and I do not own any individual securities I don't think I can do it I think our guys can do it but they work full-time on it and they have disciplines that we've given them and they have access to information that you don't the the second part of the hypothesis prices are equal to intrinsic value for a long time financial economists lived in the comfort of thinking that that part of the theory was untestable and there's no better feature in a theory then untested bility right I mean that's a really comforting fact but of course everything turns out to be testable in the end and you need some special circumstances to find obvious violations of of them let me give you a recent one there's a closed-end mutual fund I will give a 15 second definition of a closed-end mutual fund they sell a fixed amount of money and then the shares are traded and you buy and sell them and what that means is the shares can trade at a price different from the value of the assets they own which is already embarrassing to efficient market zealots but there is a closed-end mutual fund it happens to have the ticker symbol see you be a now needless to say it has never and cannot invest in Cuba in spite of its name it invests it's called the Caribbean something fund and it invests in things like cruise lines and companies in Mexico and but not in Cuba and has been trading at about a 15 percent discount to its net asset value for several years the day you can see where this is going the day that President Obama made his announcement about relaxed terms with Cuba the see you be a fund jumped to a 70 percent premium which means people were paying a hundred and seventy dollars for a hundred dollars worth of securities that they could have got for $85 a week earlier that is not an efficient market lucky for me I missed that opportunity yeah well I'm lucky for you that you didn't buy before you know you know my former co-authors wife is the ambassador to the UN if we had gotten a tip from her there you go you know we could afford to pay our bills how I think it's time suffering to open the open the for the audience questions I'm sure there are people who want to ask something so I think you guys know the rig I'll go to the mic so your questions are preserved for posterity go ahead hey there so I had a question about qualitative approaches to gathering some information about misbehavior you know user interviews or observational studies any ways on how to incorporate that with sort of the more quant data you get from experiments so so good question I think the answer is it's hard and my my little take focus groups I think people who watch a focus group think they've learned way more than they have and it look at small samples and I use those kinds of things to form hypotheses and then I go test them with large data sets so I I think it's great to talk to people and I think people who are developing new software absolutely should be watching real people use it and seeing that what was obvious to them wasn't obvious to somebody hadn't written the software but then you got to take it to scale hey professor good afternoon I wanted to first thank you I work in sales here at Google and I use anchoring all the time it's aa good idea my question is this given Google's enormous reach and how we're involved in so many different ways in millions and billions of people's lives I was wondering if there were any ways that you wish that we would nudge people towards something at all sure let's talk about organ donations and let me clear up a misconception first of all so many people even those who've read nudge think that I endorse and opt out solution to organ donation meaning that you prison it's this is sometimes called presumed consent we presume you give your permission unless you opt out I don't like that plan the reason I don't like that plan it is the case that almost no one opts out so it has some appeal the downside is that in most countries they don't really implement the plan strictly and so family members are presented with an extremely difficult problem a loved one has died often suddenly they have no clue what the donors wishes were and so I prefer what I call prompted choice and so for example in the state of Illinois when you renew your drivers license they ask you would you like to be an organ donor yes or no and I like that better because now family members know and in fact most states also have a law called first person consent which means the donors wishes count so now the transplant team goes to the family members and say you know our condolences about your loved one but you be comforted to know that your son or daughter wanted is or her organs to be used and it may prolong the life of ten other people and they actually get no say in the matter if they throw a complete fit they usually win but they usually don't all right so what does this have to do with Google driver's licenses are only one way to prompt there is I wrote a Hal and I both have spent time writing columns for the New York Times and I wrote one on on organ donation and it was around the time that Steve Jobs had gotten his liver transplant and I challenged him to make it as easy to sign up to be an organ donor as it was to download an app and a week later there was an app it Jobs had nothing to do with it somebody had written it so okay here's where Google comes in why not prompt people to be organ donors there there is an app and you guys could create another one it's very somebody here could do it in a few days all you need is a route into each of the state every state has an online registry and you know have a once a year a day and organ donation drive and that could matter if you want to really do it I mentioned this last night and used the same phrase google the phrase immortal fans and you will see an extremely powerful video that could be used for this organ donation drive and if anyone in the room takes this idea up seriously I would love to help you send me an email and we'll figure out how to make it happen there's another interesting thing about organ donation and it also depends hugely on cultural norms yeah great variation across cultures and not always the way you would would think and sometimes counterintuitive what but what's true is if you ask people would you like to be an organ donor you get at least 80% in this country saying yes so our goal should be to get all the people who want to be organ donors to be organ donors then the next step might be we maybe could get 80% up to 95 percent but if getting to 80 percent will get most of the job done yeah so you mentioned briefly inequality and Piketty earlier and I was curious because one of the weird things about our current inequality situation is depending on how you phrase the problem to Americans you get very different answers right a lot of Americans don't really like the idea of redistribution even if they'd be the beneficiaries of redistribution right but if you talk about equality of opportunity or better access to education or whatever then they're kind of excited about it and so in a democracy where we're not voting for more redistribution do you think there's partly a behavioral economics explanation for why there's that seeming mismatch and what we could do about it you know politics is all about words and all about framing the the most successful a political phrase in his in my memory is the word death tax now no one there's never been a death tax right you can die and it doesn't cost anything but calling the estate tax a death tax was extremely effective and if you ask people are you in favor of a death tax everyone says no and you know right now you only pay an estate tax if you have an estate for a married couple of excess of ten million dollars so this is not the 1% this is the 0.01 or 0.001 so it's quite striking that you know 90% of the people are opposed to something that would have nothing to do with in so politicians whichever side of the line you're on and need to be concerned about the words they use here's an interesting there was something in the Economist I saw this morning and I may get a chance to talk to some people in the UK about it this summer David Cameron has promised a vote on in or out of the EU i hasn't said what the phrasing of that would be and undoubtedly the way that question is worded will have a strong influence on the outcome and I don't know which way he wants it to come out but I intend to find out thank you by the way econ's are in favor of a death tax because if you tax it there'd be less of it nice that dummy cons yeah what do you think is the next breakthrough for behavioral economics affecting policy the next low hanging fruit as it were I'm not sure what the next low hanging fruit is but I can tell you I end the book with my hope and so my hope is that there's a new wave of behavioral macroeconomics and macroeconomics is the field that needs the most work I mean the state of macroeconomics is really pitiful and we don't agree on the most basic of things so should Greece have increased or decreased austerity right let we you know you'll get very strong opinions on both sides of that that's bad you know we pretty much all agree if you raise the price people will buy less that's microeconomics macroeconomics we can't agree on first principles and but of course macroeconomics is nothing more than microeconomics plus summation signs so we ought to be summing up based on behaviorally sound microeconomics and I'm hoping there are a bunch of smart young graduate students out there that are going to do that thank you and I'm going to give you the last word on this topic who is the best-known behavioral economist of the 20th century of macroeconomics John Maynard Keynes s exactly because if you read the book it's got chapter after chapter full of astute observations about how people actually behave and so that's a good start yeah anyone who is here or watches this talk if you want to go be the next great macro behavioral macro economist start by reading Keynes good place to stop so thank you very much and thanks for coming Richard thank you thank you we should do this every day we'll get good at it