Theories are made great by those whom they inspire. Perhaps then, it is not surprising that the fresh new face of the US presidential race has been inspired by behavioural economics, one of the fresh new faces of cognitive science.
The New Republic magazine has an article on how the Obama campaign have adopted behavioural economics – the science of how people actually reason about money, as opposed to how they should – as their mainstay of economic policy.
Unsurprisingly, The New Republic, generally a centre-left publication, hold out great hope for the partnership of this new science and an Obama government.
You can find subtle evidence of this influence across numerous Obama proposals. For example, one key behavioral finding is that people often fail to set aside money for retirement even when their employers offer generous 401(k) plans. If, on the other hand, you automatically enroll workers in 401(k)s but allow them to opt out, most stick with it. Obama’s savings plan exploits this so-called “status quo” bias.
What is more interesting though is that cognitive science is starting to make inroads into policy development outside the traditional area of defence (where psychology, and more recently neuroscience, have traditionally been key in driving defence spending).