Richard Thaler

So the point I want to start with is economists don't have a good answer to the question, why do we have only subsidies rather than taxes?

because as far as economists are concerned, they're the same.

It's just a sign.

If we subsidize the good thing or tax the bad thing,

You know, if they're red mugs and blue mugs and the red mugs... In their model, they see no distinction between a subsidy and a tax.

Perfect.

You nailed it.

All right.

So if we're trying to understand the world...

It's important to understand this thing about losses and about status quo bias.

That the people tend to stick with what they have and we can use that to help or hurt people.

What have we done?

God, almost 20 years ago, I wrote a book with Cass Sunstein called Nudge.

Yes, I remember Nudge.

It was a book about how we can help in this kind of situation.

And so here's one example.

All right, we're in this world where

Gas guzzling cars are too cheap.

And we all would like to put a tax on that, but we can't.

Well, one thing we can do is we can put labels on the cars telling you how much it's going to cost you to operate this car.