Could economics tell us as much about well-being as it does about wealth? Professor of Economics Laura Argys thinks so, particularly if economists incorporate the multidisciplinary approach championed by Nobel Prize-winner Richard H. Thaler.
Argys, who also serves as Associate Dean for Research and Creative Activities, studies the impact of health education and poverty policies. Long before interdisciplinary work came into fashion, Argys recognized the value of taking a multifaceted approach to questions of economic well-being. Over the course of a prodigious research and publishing career, Argys has co-authored studies with a wide assortment of sociologists, legal scholars, and psychologists.
Argys discusses her research with a candor and accessibility that come from years of translating her ideas to researchers, policy-makers, and students across multiple fields of expertise. Fittingly, her office showcases dinosaur fossils and dazzling photographs alongside the expected calculator. In conversation, Argys’ excited insightfulness and intellectual generosity are infectious. “I’m an accidental economist,” she jokes. Indeed, Argys’ collaborative spirit stems from her admiration for surprise, and her conviction that disciplinary boundaries are made for breaking—or at least reaching across.
In that light, Argys points to Richard Thaler as a kindred spirit. A pioneer of behavioral economics, Thaler was one of the first economists to suggest that human behavior and perception are as crucial to financial trends as are principles of supply and demand.
In advance of her Dec. 12 Nobel at Noon presentation on Thaler’s work, which she will present with Professor of Health & Behavioral Sciences Meng Li, Argys met with CU Denver Today to discuss demography, “Freakonomics,” and the gentle art of getting people to do what you want.
What interests you about the work of Richard H. Thaler? Why do you think Thaler deserved to win this year’s Nobel Prize for Economics?
The goal of economics is to understand and predict how people make decisions. Economists tend to take a fairly mathematical approach; we model the costs and benefits that people consider with an underlying assumption that people behave rationally — but there have been an awful lot of anomalies!
Richard Thaler started working to understand the patterns behind that apparent irrationality. Thaler changed the way economists think about things. Thaler’s work is largely behavioral economics; the intersection between psychology and economics. It really isn’t that people are irrational, it’s that we have to think beyond simply the costs and benefits and think about how people perceive costs and benefits. His work moves us from a rational model of economics to a model that recognizes cognitive biases.
In a more recent book, Nudge: Improving Decisions about Health, Wealth and Happiness, Thaler and Sundstein discuss how to develop policies that use our understanding of psychology to encourage people to do something. For example, if you want people to make certain choices, you should set up the default that you think is in their best interest, and then give them the option to change to any other selection. They’ll most likely stick with the defaults.
So, Thaler’s work both helps us to come up with better ways to think about the factors that affect people’s choices, and then — maybe more importantly — provides us with a bigger menu of choices about how to develop policy to change behavior. What you’re not trying to do is punish people for their choices, but to encourage them to make choices that have some social good attached to them — to help people be healthier, to be more financially secure, those sorts of things.
How does Thaler’s work speak to your own research?
The thing I take from [Thaler’s work] in the big picture is that you can try to answer a question theoretically, but you really need to watch people and do empirical work to understand how they’re really going to behave. What you can write down in a model on paper may not provide the full answer.
Where does your passion/inspiration for your work come from? Why did you enter the field of economics?
I’m an accidental economist. I took a course in high school and really liked it; I had an inspiring teacher. I went to college and my plan was to teach at a school for deaf kids, but they didn’t have a program in deaf education at CSU Sacramento. So, I just kept taking economics classes, because I liked them and I was good at economics. In grad school, I really discovered that I have a passion for research. I really like wanting to know the answer to a question, and thinking up what are hopefully clever ways to try to answer it.
What do you know now that you wished you knew when you were entering grad school?
I think the thing that served me best in grad school was pursuing an interdisciplinary field in demography. The thing I gained from it the most was learning how to speak other ‘languages.’ I learned how to talk to sociologists, geographers, anthropologists and other social scientists. And I learned to translate economics into terms that made sense to them, and that we could work together on. As a result, I think I had an edge in writing grant proposals, getting grants and working with a collaborative group of people. Pretty early on, I realized that just being able to talk to other PhD economists wasn’t really going to have as big an impact as also being able to talk more broadly across the disciplines.
Where you look for answers is often limited by your discipline, and rarely does one discipline tell the whole story. Economists have tools that we bring to the party; economists tend to think very carefully about how to do analysis that helps you understand if one action actually causes another. But nevertheless, the questions I ask, a sociologist asks them, a psychologist asks them — they’re not exclusive to economics.
NOBEL AT NOON SCHEDULE
Dec. 12 – Economics, Laura Argys & Meng Li
Jan. 23 – Physiology/Medicine, Chris Phiel
All presentations are at noon in the Jerry Wartgow Welcome Center in the Student Commons Building, 1201 Larimer St.
The presentations are free and open to the public.
What quote or text grounds your work in academia? What helps get you through really rough days?
Surprisingly, Ben Bernanke — the former Chairman of the Federal Reserve — said something like “The point of economics is to figure out how to enhance well-being.” And I thought, “Oh yeah, that’s exactly why I do this.”
If you weren’t a professor, what would you be?
I still think a career [in deaf education] would have fit me really well, but I also have sort of latent artistic aspirations. I have a potter’s wheel; I can throw pots. I really like techniques for pit firing, so you make really strange colors come out, and I really enjoy that.
What gets you up every morning?
I like being around family; I like being around people. Every day I get to interact with people and learn something new. Social scientists probably go into studying people and their behavior with an interest in interacting with lots of people.
Even though I am in administration, I cannot leave behind the fact that I’m a professor — that is still the way that I identify. I still teach classes, I still do research; that part of my career is really important to me. But, I like problem solving, and I like helping people. I’m the Associate Dean for Research and Creative Activities, so I work with a lot of people on grant proposals and research projects and helping students and faculty do good work. It’s rewarding and fun!