Richard Thaler just won the Nobel Prize in Economics*.  This is momentous for two reasons:

1. He is the first economics Nobel Prize winner to have a Bacon number of 2: he was in The Big Short with Ryan Gosling, Marisa Tomei, and Steve Carrell, who were all in Crazy. Stupid. Love. with Kevin Bacon.**

2. It’s continued recognition of the behavioral science revolution in economics.

Traditional economics courses say we assume that all people are rational actors who know what they want and work always to maximize their utility.

I remember sitting in econ wondering if my professors had met any actual people.  Assuming all people are always rational is like being asked to figure out how many cows fit in a railway car and assuming that all cows are cubes.***  Yes, it’s easier.  Yes, you will get an answer.  No, that answer won’t reflect reality.  And it will greatly vex the cows.

Kahneman, Tversky, Thaler, and their ilk exploded this notion.  They show that people are not just irrational but, to use Dan Ariely’s great book title, predictably irrational.  That is, we have biases hardwired into our systems.

This is a good thing.  If we were always looking out for our own self-interest, we would never donor to someone we would never meet.  And we certainly would make sure that when we passed, all of our money went to those who shared out genetic materials, not to plant trees in whose shade we will not sit.

So let’s honor Richard Thaler today by learning what biases will cause people to donate more and more joyfully.  Here are a few pieces from us here at DonorVoice:

• Our behavioral scientist Dr. Kiki Koutmeridou has written about how to get people to opt in with behavioral cues here and here
• She’s also presented on how to turn behavioral insights into action with real world examples of how to get additional donations with subtle cues
• DonorVoice’s paper on the science of ask strings covers behavioral biases you can use in ask strings to increase response rate and average gift. (One example: make sure $100 is in every ask string you have.)
• You can see how a nudge can get 43% more revenue with UNHCR’s award-winning test
• You can prevent donations using behavioral science (or do the opposite of that)
• And you can see how Wikipedia successfully used behavioral science in their end-of-year campaign

May you nudge in good health!

* Technically, there is no Nobel Prize in Economics, as it was not one of the five prizes endowed by Alfred Nobel – the Swedish National Bank endowed it in the 60s.  However, the Nobel Foundation embraced the endowment of the prize, the laureates are announced at the same time, and they get the award at the same ceremony.  So if it bothers you that I refer to this as the Nobel Prize in Economics, may I suggest that, somewhere on the Internet, someone is pronouncing “gif” wrong and you might want to correct them first?

** I didn’t actually check the filmography of all of the winners of the Nobel Prize in Economics, but can we agree that this feels true?

Also, there are other ways to make the connection, such as that Brad Pitt was in The Big Short and Sleepers.

*** I grew up in Wisconsin.  I have many cow analogies.