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N.Y. Times Bestseller Explores How Tally Makes it Easier for People to Make Better Financial Decisions

Nobel Prize winner Richard Thaler features Tally in a new edition of Nudge.


December 8, 2021

Nudge, the New York Times best-selling book from Nobel Laureate Richard Thaler and legal scholar Cass Sunstein, has influenced governments and companies alike since it was first published over a decade ago. In the latest edition, the authors continue to explore “nudge theory” — a concept in behavioral economics that cites positive reinforcement and indirect suggestions as ways to influence better human behaviors and decisions.

This time around, Thaler and Sunstein examine “nudge theory” as it relates to personal finance. In their research, they sat down with Tally CEO Jason Brown to learn how his company has applied the “nudging” technique to encourage people to pay off their credit card debt sooner and make better decisions about money.

The book describes Dan, a guy with $3000 in credit card debt who signs up for Tally: 

“After doing a soft credit check, Tally would automatically pay off all $3,000 of Dan’s credit card debt and take responsibility for managing his accounts. Tally would then monitor all activity on those cards and Dan’s checking account, and make sure that all bills were paid on time. Most important, every month Tally would nudge Dan to pay off his debt faster by recommending a higher default payment based on his available cash and upcoming expenses.”

In many ways, Tally was designed by reverse-engineering how credit cards work to help people get out of debt faster. “If you have a zero balance [on your credit card] and buy something for $1,000, you will not have to pay any interest to the credit card until the due date on your next bill, which can be as many as fifty-five days away.” 

If you’re not already on auto-pay and paid as little as one penny less than the full amount on a previous bill, “interest would start accruing on that $1,000 purchase starting the day you bought it. Ouch.” By design, credit cards want you to make mistakes and be forgetful. That’s how they make money. 

“Anyone who can help people reduce the costs of their credit card habit gets a thumbs-up from us.”

The authors conclude, “Tally is not a choice engine. It is a user engine. Wouldn't it be nice if there were more of those in life?”

They go on to say they hope Tally’s business model spawns lots of imitators and competition as “anyone who can help people reduce the costs of their credit card habit gets a thumbs-up from us. And although Make It Easy remains our mantra, one of the best ways to make it easy is to make it automatic.”

In the first edition of “Nudge,” Thaler and Sunstein provided a thought-provoking exploration of how people make decisions. They described two ways in which human beings think:

  • The automatic system is almost instinctive. It happens when you smile when you see a puppy or duck when a ball is thrown at you. 

  • The reflective system is deliberate and self-conscious. This comes into play when you make decisions like what career to pick or whether to have children. 

But because of biases, heuristics and fallacies, people lean into one decision-making system over the other and end up making mistakes.

To encourage people to make better decisions, the book introduces the concept of “choice architecture” to minimize those very same biases, heuristics and fallacies. At its core, this is about the design in how choices are presented.

For example, how many options you make available, how the options appear and whether there is a “default” option can all have a big impact on how people make decisions.The authors endorse architecting choices in a way that nudge people towards personally (and socially) desirable choices like eating healthier, exercising more and yes, making the most of your money.