Richard Thaler was awarded the Nobel Memorial Prize for Economic Sciences yesterday for his contribution in Behavioural Economics. Here are nine things you need to know about the Modern economist, his contributions and publications –
Richard Thaler, a noted American Economist, is also the Ex Officio Member of the American Economic Association and a professor at Chicago Booth School of Business. Born in 1945, in New Jersey, he completed his Bachelors at Case Western Reserve University and did his Masters and PhD from University of Rochester.
Richard Thaler is considered to be the founding father of modern Behavioral Economics. His research on the irrational behavioural patterns behind the decisions individuals make and the resultant economic outcomes is widely used by politicians and business leaders around the world.
Richard Thaler and Cass Sustein published the book “Nudge” – a theory in behavioural science to improve Health, Wealth and Happiness in 2008. According to the theory, Nudge is any aspect of the choice architecture that alters people’s behaviour without forbidding any options or changing the economic incentives. Thaler explores the power of default participation, inertia in various scenarios such as marketing and sales, quit smoking drives, tax reminders, etc.
Here’s an example of the theory’s application – Theresa May introduced an organ donation drive according to which all individuals are presumed to have signed up for organ donation after death unless they decide to opt out.
In addition to Nudge, he has popularized many other concepts such as the Endowment Effect, Mental Accounting and Libertarian Paternalism.
Some of his popular publications include –
Richard Thaler did a cameo in the Oscar-nominated movie “Big Short”, where he is seen explaining Synthetic CDOs along with Selena Gomez.
According to Thaler, during the Brexit, the British voters were given a choice that was impossible to evaluate sensibly. He also suggested that there must be a second referendum where citizens can vote against an immediate Brexit.
Thaler in November last year tweeted his support for Demonetization and Modi government’s move to encourage cashless transactions and eradication of corruption. The economist, however, tweeted a lukewarm response when one of his followers pointed out the introduction of new Rs. 2000 bills.
This is a policy I have long supported. First step toward cashless and good start on reducing corruption. https://t.co/KFBLIJSrLr
— Richard H Thaler (@R_Thaler) November 8, 2016
Richard Thaler added 9 million Swedish krona ($1.1 million) to his retirement funds after winning the Nobel Prize for economics. When asked how he plans to spend the prize money, his reply was – “Will spend it irrationally”, alluding to his popular theory of how economics is after all governed by humans who can behave irrationally.