Effective July 30th (not 31st) Peter Orszag has left the Obama administration, and the fact that he has may speak volumes about what the administration was, and is, thinking. Orszag, now former director of the OMB, was a proponent of Behavioral Economics, and he had brought other like-minded people on board with him. Most notable of these was Cass Sunstein (of Nudge fame). He then went on to get involved and leave his mark on the economic stimulus plan and the health care reform law. And yet: now he’s leaving.
Critics, like Glenn Beck and pundits on Fox News, blasted his “voodoo economics”, and in the end Larry Summers started disagreeing over fiscal consolidation. It could have been this, or it could have simply been that Mr. Orszag is planning on getting married soon. Regardless, Behavioral Economists will have less of a voice now that he’s gone (Sunstein, while taken seriously many times, seems to be ridiculed the rest of the time). Orszag is being replaced by Jacob Lew, who held the same position from 1998 to 2001.
Some behavioral economics principles that Orszag introduced to the Obama administration are: Opt-in retirement savings, Easy to understand financial aid forms and simplified “obesity” rating on foods (using stars). We’ll see where we go from here.
