Cognitive Design

One way to know if a topic is really “in the air” is to see how it is treated in a US Presidential election.  Although it is not rolling off Wolf Blitzer’s tongue, I have found at least one solid reference to cognitive-design like thinking that might generate some buzz.

Wired magazine, recently ran a cover story highlighting the views of 15 people the next president should listen to. Fortunately, they included a short piece on David Laibson, a behavioral economist from Harvard entitled, Tweak Human Behavior to Fix the Economy. The basic idea is that we do not need to overhaul the principles of the free market economy to resolve our housing, healthcare, retirement and various economic woes. Instead, small changes in programs and policies that nudge consumer behavior in a different direction is enough to fix the problem. After all, these problems are chiefly rooted in how we make decisions and behave. 

The example nudge discussed is something we have covered in this blog several times namely, changing the default on 401k plans so that people are automatically enrolled and have to opt out if they don’t want to participate. Studies show that such a small change can go a long way to addressing the fact that 50% of Americans do not save enough for retirement.

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