> Calculating the Irrational in Economics
> the average investor is hardly the superrational "homo
> economicus" that mainstream economists depict.

Who depicts it?  What's the difference between "superrational" and

> behaviorists are essentially calling for an end to economics as we know
> it.

A good reason to be wary.
Most revolutions are just spin.

> The point is that too many options
> can flummox a consumer. 

So what?

> Standard economics would argue that people are
> better off with more options.

Where does standard economics argue this?
This sounds like straw.

> But behavioral economics argues that people
> behave less like mathematical models than like - well, people.

No doubt many mathematical models are unrealistic.
But their purpose is not to be realistic.
> Among the behaviorists, there is the common sentiment that
> economics has been ruined by math.

Others say this also.

> Richard H. Thaler. His paper, written with the legal scholar Cass R.
> Sunstein, was called "Libertarian Paternalism Is Not an Oxymoron." 
>  Mr. Thaler has concluded that too many people, no matter how
> educated or vigilant, are poor planners, inconsistent savers and
> haphazard investors. 
> His solution: public and private institutions should gently
> steer individuals toward more enlightened choices. That is, they must be
> saved from themselves. 

> Mr. Thaler's most concrete idea is Save More Tomorrow (SMarT), a
> savings plan whereby employees pledge a share of their future salary
> increases to a retirement account. 

That's a good idea, but it does not overturn economics.

> an automatic asset
> reallocation to keep an employee from holding more than 20 percent of his
> portfolio in company stock.

Better yet, use modern portfolio theory and invest only in index funds.
Fred Foldvary


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