“Behavioral economics is full of new findings and new methods...”

Probably because we use behavioral economics to show how law can improve people’s lives without foreclosing their choices. We suggest the possibility of being both libertarian (respectful of private choices) and paternalistic (steering people in directions that will make their lives go better).

Behavioral economics is full of new findings and new methods, involving bounded rationality, and we enlist some of those findings in describing potential legal reforms. For example, a simple change in the default rule for organ donations could save thousands of lives—and a smart default rule for savings plans could do a lot to protect people when they retire.

The significance of the paper at first lies in the demonstration that people often don’t just "have" preferences and that what they prefer is a product of the context. The paper’s significance also lies in the claim that we can respect liberty while also being paternalistic—and vice-versa. Many people are surprised by that conclusion!

Richard Thaler has long worked on bounded rationality, and both of us have worked together on examining how law and policy should deal with real people, as opposed to "economic man." We’ve been developing ways for law to improve human welfare, but in a way that also respects freedom of choice.