Why did Nate Silver get it right in 2012 when so many others were so wrong?
Conventional wisdom held that in last year's U.S. presidential campaign, a leader saddled with a weak economy running against a smart, accomplished businessman backed by hundreds of millions of dollars did not stand a chance. But data-driven geeks like Silver nailed the election forecast while many old-fashioned pundits flopped.
One reason President Barack Obama won a convincing victory that surprised so many was his campaign's quiet, methodical use of a combination of tools from the world of behavioral science: highly motivated volunteers armed with sophisticated technology and field-tested messages to deliver voters. Call it the rise of evidence-based campaigning.
This scientific approach to winning elections is just the tip of what should now become a rapidly expanding iceberg. To start fixing some major global problems -- from balanced budgets to climate change -- both in the United States and around the world, we should be using the same methods that worked in the campaign. It's time to bring in the geeks -- and apply behavioral science to find solutions to persistent problems.
Economists have long had a strong influence on government policy, while other fields of social science are rarely paid much heed. The problem is that economists tend to have one solution for everything: If you want to discourage something, raise the price; if you want to encourage it, lower the price (or offer a subsidy). But prices, while important, are only one aspect of policy design. A better approach would take into account everything from understanding how lazy we really are when it comes to filling out forms to why we cheat or skimp on our taxes.
Consider the goal of helping people save for retirement, a problem governments all around the world are facing because of the underfunding of both public and private pensions. In creating special savings vehicles such as 401(k)s and IRAs in the United States, it has long been thought that the tax shelter such funds offer is crucial to their success. However, the design of such plans, what Harvard University law professor and former White House advisor Cass Sunstein and I have called "choice architecture," also matters. Setting up a plan so that workers are automatically enrolled (with the ability to opt out) and giving workers the opportunity to automatically increase their contributions when they get a raise (a plan called "Save More Tomorrow") have proved to be highly effective methods of increasing savings rates. And a recent study by Harvard economist Raj Chetty and his colleagues, using Danish data, has shown that these automatic features are actually more important than the tax subsidy in increasing savings rates.