A cautionary “Simpsons” and “Star Trek” analogy pretty much sums up the power of behavioral economics, said University of Chicago’s Richard Thaler, who’s widely regarded as the founding father of the discipline.
Traditional economic theory assumes a person is “super-rational, has no self-control problems, never has a hangover, saves exactly the right amount for retirement and then invests it perfectly,” Thaler said Monday on CNBC’s “Squawk Box.”
Have your students summarize the video in one sentence. Then ask them how this insight will impact their decisions about money. Hint: Where possible, make it automatic. For example, take a percentage of your paycheck and transfer it into your savings account, invest for retirement through a 401(k), etc.
Check out this NGPF Activity on Calculating Compound Interest