Thaler’s nudging workers towards better retirements is already in play
New York — If you have a pension plan at work, there’s a good chance you’re saving more for retirement because of Richard Thaler. The Nobel Prize for Economics tries to recognise important research with far-ranging consequences — but Thaler, awarded the prize on Monday, may be its first winner to have had an almost immediate effect on millions of people’s pay slips. Over the past few decades, as more and more American employers killed off their pensions, workers were offered retirement plans, with defined contributions instead of defined benefits. These voluntary accounts should have worked, in theory. Standard economic theory assumes people act rationally: workers, left to their own devices, should save and invest properly to meet their long-term goals. But Thaler and other adherents of behavioural economics pointed out that workers saving for retirement can be their own worst enemies. Without help, Thaler argued, they’ll never retire. "Probably, [behavioural economics’] biggest im...
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