December 7, 2020 BARRON’S 33
you think you’ve figured it out right
now, think again.
The other thing that we often point
to is what we call loss aversion. Peo-
ple are much more sensitive to losing
money than to gaining. What that’s
going to mean is when we do get to a
correction in the stock market, we
may see some overreaction. People
should be wary of that, as well.
You’re updating your book
Nudgewith Cass Sunstein, about
how to influence choices with-
out heavy-handedness.
Yeah, we’re calling it the final edition
to preclude ever making this mistake
again of attempting to revise it.
One place your work has made a
difference is in boosting 401(k)
enrollment by requiring workers
to opt out if they wish, rather than
in. What are some other ideas?
A term we’ve introduced in this
new version is “sludge”—the things
that get in the way. If you want
somebody to do something like
enroll in a 401(k) plan, then auto-
matically enroll them. Sludge is
what makes it hard. When we can
make things automatic, that’s when
things work best.
Here is something it’s criminal we
haven’t done. Why aren’t we sending
everyone who takes the standard [tax]
deduction a pre-filled tax return? Af-
ter the most recent tax reform, almost
90% percent of American taxpayers
take the standard deduction. For vir-
tually all of those, the IRS already has
all the information necessary to do
their taxes. Just send them a tax re-
turn and they can just say yes. In Swe-
den, you can file your tax return by
text message. Just say yes.
Where would you like to travel
after the pandemic?
Oh, Paris. A trip to Europe visiting
the kinds of places we used to take
for granted. I used to spend two
weeks every July teaching in Lon-
don. I’m looking forward to doing
that again. You know, a week in
Rome didn’t used to be something
that you would spend your time
dreaming about, if you’re in that
lucky group that I’m in, but now it
feels like a treat that would be nice
to be able to have back.
Thanks, Richard.B
Photograph by Andrew Segreti —Jack Hough