Richard Thaler Wins Economics Nobel for Recognizing People Are Irrational

Richard Thaler Wins Economics Nobel for Recognizing People Are Irrational

Richard Thaler of the University of Chicago, considered one of the founding fathers of behavioral economics, won the 2017 Nobel prize in economics for his influential work on how human nature affects markets. Thaler won the $1.1-million prize for “understanding the psychology of economics,” Swedish Academy of Sciences secretary Goran Hansson said. Although it may seem like an obvious feat, the truth is economists were once fond of thinking about humans as robots who always made choices that maximized their outcomes. But Thaler showed how very human traits, such as lack of self-control, habits, and fear of losing pushed people toward decisions that were not the most advantageous in the long term.

“In order to do good economics, you have to keep in mind that people are human,” Thaler said of the basic premise of his work. When the New York Times asked him how he would spend the 9-million-kronor prize money, Thaler didn’t miss a beat. “This is quite a funny question,” he said. “I will try to spend it as irrationally as possible.” . . .