I'm pretty pleased to have The New York Times' David Leonhardt refer to me as a "liberal economic writer," and figured I'm now officially credentialed to offer some liberal economic writer commentary on his article distinguishing the domestic policy approaches of Obama and Clinton. In it, he argues that Hillary Clinton offers a traditional set of incentives-based policies, tax credits and subsidies and savings that encourage everything from socking away retirement money to using less carbon. Obama's ideas, by contrast, "draw heavily on behavioral economics, a left-leaning academic movement that has challenged traditional neoclassical economics over the last few decades...To Mr. Obama, a simpler program — one less likely to confuse people — is often a smarter program." If that were true, it would be fascinating indeed. But I'm not convinced that Obama's platform is heavily influenced by behavioral economics. Leonhardt mentions his promotion of opt-out 401(k)s -- which essentially means the default position for workers would be automatic enrollment in a their employer's 401(k), which they could opt-out of if they chose. It's a good idea that draws heavily on insights from behavioral economics, namely, that we discount the future, and heavily advantage inertia (i.e, we'll neither opt-in, nor out, of many good programs, so you may as well stack the deck in the right direction). But opt-in 401(k)s are a very mild example of the insights of behavioral economics, so mild, in fact, that they're often associated with the work of Gene Sperling, one of Hillary Clinton's chief economics advisers. So I'm not sure there's a lot of daylight between the two candidates there. And as Leonhardt then goes on to point out, Obama's opposition to health care mandates is rather the opposite of what a behavioral economist would propose, as he'd know that, sometimes, we don't do what's good for us unless an outside force gives us a nudge. The only other example he gives of Obama's behavioral economics is a broad-based tax credit that doesn't have strings attached to it (i.e, you qualify by living, not by doing something economically virtuous), but by that standard, most any tax cutter is a behavioral economist.
