The science of human behavior is reshaping the US government

In September, President Barack Obama signed an executive order that directs federal agencies to incorporate insights from behavioral science into their programs, in order to help them achieve their policy goals. According to Dave Nussbaum, adjunct associate professor of behavioral science at the University of Chicago, it may turn out to be one of the most important acts of his second term.

Until recently, most economists held firmly to a worldview that assumed that people are rational utility maximizers. That is, they always behave rationally and go about their lives making fully informed decisions.

That can be a useful simplification in trying to understand how markets function and how economies work, but people don’t actually behave that way.

When we ignore the limitations of human rationality and the systematic errors those limitations produce, we end up designing policies that are logical but don’t end up working well for the people they’re supposed to serve.