Nobel Prize in Economics: Who is Richard Thaler?

A pioneer in the field of behavioral economics, he also made a cameo appearance in 2015's The Big Short

The Royal Swedish Academy of Sciences on Monday selected American economist Richard Thaler of the University of Chicago as the winner of the 2017 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, recognizing him for contributions to the field of behavioral economics.

Who is he?

Mr. Thaler, 72 years old, is from New Jersey. He attended Case Western Reserve University and earned his doctorate from the University of Rochester in 1974. Since 1995, he has taught at the University of Chicago, where he is the Charles R. Walgreen Distinguished Service Professor of Economics and Behavioral Science and director of the Center for Decision Research. He previously taught at the University of Rochester and Cornell University. In 2015, he served as president of the American Economic Association.

He is known well beyond the halls of academia. He is the co-author of the popular book Nudge, the author of Misbehaving and active on Twitter. He appeared as himself in the 2015 film “The Big Short,” explaining synthetic CDOs at a blackjack table with singer Selena Gomez.

What is behavioral economics?

Mr. Thaler is a pioneer in the field of behavioral economics, which studies the intersection of psychology and economics—fueled by the insight that human beings do not behave in a perfectly rational manner.

Among other things, he has studied the “endowment effect,” the idea that people more highly value an item if they own it; how concerns about fairness can restrain firms’ otherwise-rational price- and wage-setting behavior; and how public policy can influence people to behave in better, healthier ways by way of “nudges” instead of bans, mandates or other forms of legal coercion.

In the words of the Royal Academy, he “has incorporated psychologically realistic assumptions into analyses of economic decision-making. By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes.”

Source: The Wall Street Journal