Time's Mike Grunwald has a great piece out about Obama's use of behavioral economics to implement change. I knew the administration was sympathetic to this way of thinking but hadn't realized quite how deep its ties with the behavioral community ran. As Grunwald reports:
The existence of this behavioral dream team — which also included best-selling authors Dan Ariely of MIT (Predictably Irrational) and Richard Thaler and Cass Sunstein of the University of Chicago (Nudge) as well as Nobel laureate Daniel Kahneman of Princeton — has never been publicly disclosed, even though its members gave Obama white papers on messaging, fundraising and rumor control as well as voter mobilization. All their proposals — among them the famous online fundraising lotteries that gave small donors a chance to win face time with Obama — came with footnotes to peer-reviewed academic research. "It was amazing to have these bullet points telling us what to do and the science behind it," [deputy field director Mike] Moffo tells TIME. "These guys really know what makes people tick." ...
And Harvard economist Sendhil Mullainathan is organizing an outside network of behavioral experts to provide the Administration with policy ideas.
Mullainathan is a particularly interesting guy, and a name I hadn't heard associated with Obama before. (See this Harvard Magazine piece if you're interested in reading more about his work.)
For what it's worth, I think this may be the administration's most important behavioral application so far:
The first sign of the behavioralist takeover surfaced on April 1, when Americans began receiving $116 billion worth of payroll-tax cuts from the stimulus package. Obama isn't sending us one-time rebate checks. Reason: his goal is to jump-start consumer spending, and research has shown we're more likely to save money rather than spend it when we get it in a big chunk. Instead, Obama made sure the tax cuts will be paid out through decreased withholding, so our regular paychecks will grow a bit and we'll be less likely to notice the windfall. The idea, an aide explains, is to manipulate us into spending the extra cash.
I'll be really curious to see how it turns out.
--Noam Scheiber