A nudge toward better outcomes
Fresh from spending election night in Chicago, Cass Sunstein, the Felix Frankfurter Professor of Law at Harvard Law School (HLS), gave an audience there a peek at how the Obama administration has applied behavioral economics to regulatory decisions, from streamlining rules to raising fuel economy standards for new cars, to tightening regulations after the subprime mortgage crisis. Sunstein ’75, J.D. ’78, recently returned to the School more than three years after he left to serve as the administration’s regulatory czar. On Nov. 7, he discussed behavioral-economics concepts, such as libertarian paternalism, choice architecture, and hard and soft paternalism, with real-world applications still at the front of his mind. Sunstein, a former teaching colleague of Barack Obama at the University of Chicago Law School, was a key leader in applying cost-benefit analysis and insights from behavioral economics to the administration, emphasizing the notion of soft paternalism, or the nudge to encourage people and...