Random Quote:
Monday, May 12, 2008
Laissez-faire fails because all of us are complete idiots a lot of the time:
I pretty much know I'm an idiot.
One way you may soothe your Homer Simpson mind is by patiently explaining to it that he is not only stupid, but that public-policy decisions made to get around him are already quite common: Sunstein and Thaler tell us that Chicago's Lake Shore Drive features white stripes on the most dangerous parts of the road that offer drivers the illusion that their speed is increasing. Drivers slow down. An Amsterdam economist had black houseflies etched into the wells of the urinals at Schiphol Airport under the theory that "If a man sees a fly, he aims at it." Spillage decreased by 80 percent. Some of these suggestions for libertarian paternalism in savings have already been enacted into law. Automatic enrollment is becoming the norm for 401(k) plans. In 2006 Congress passed the Pension Protection Act, which offers employers incentives to match employee contributions and resets certain enrollment defaults to maximize contributions. And the ATM beeps to remind you that you've walked away without your bank card.
[. . . .]
As Sunstein and Thaler explain, another common cognitive error is the heuristic called "optimism and overconfidence." It's what leads more than 50 percent of Thaler's MBA students to predict they will all perform in the top two deciles of their class and allows 94 percent of professors at large universities to believe themselves better than the "average professor." In other words—painful though it may be to admit—the mere fact that we believe ourselves smart enough to optimize complicated choices may be the most Simpsonic thing about us. I know: D'oh!
[. . . .]
As Sunstein and Thaler explain, another common cognitive error is the heuristic called "optimism and overconfidence." It's what leads more than 50 percent of Thaler's MBA students to predict they will all perform in the top two deciles of their class and allows 94 percent of professors at large universities to believe themselves better than the "average professor." In other words—painful though it may be to admit—the mere fact that we believe ourselves smart enough to optimize complicated choices may be the most Simpsonic thing about us. I know: D'oh!
I pretty much know I'm an idiot.
