In case you missed them today, two articles in the NY Times discussed interesting applications of behavioral economics. The first article talks about anchoring -- using numbers as a reference point for decision making. While one of the examples in the article talks about buying gelato (an excellent example for this hot summer day), anchoring also comes in to play when people make other financial decisions, like buying a house or car or selling stocks. It might even come in to play when saving. If your bank suggests a $25 monthly transfer into your savings account from direct payroll deposit, you may be likely to base decisions about saving from payroll based on that suggested number. nytimes/2013/08/26/your-money/a-sweet-lesson-in-price-perceptions.html?ref=your-money&_r=0 The second article talks about behavioral nudges -- using defaults to help people make better choices for themselves. Here, the emphasis is on using nudges to help customers make healthier food choices in the grocery store, like putting arrows on the floor directing customers to the produce aisle or mirrors in shopping carts so customers see their reflection while putting food in their carts. Nudges might also relate to financial decisions, like setting direct payroll deposits as the default on savings accounts or automatically opening savings accounts or 401(k)s for employees. Nudges like these start with the assumption that people would likely prefer to make these decisions for themselves, but often do not do so. An employee might not get around to opening a 401(k) for years even though they want to; but they may start saving for retirement much sooner if their employer makes automatic enrollment into 401(k) the default. nytimes/2013/08/28/dining/wooing-us-down-the-produce-aisle.html?pagewanted=2&hp
Posted on: Wed, 28 Aug 2013 01:05:17 +0000
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