How Nobel laureate Richard Thaler changed the way we think about economics

How Nobel laureate Richard Thaler changed the way we think about economics

How Nobel laureate Richard Thaler changed the way we think about economics

The Nobel prize in economics was awarded Monday to Richard Thaler of the University of Chicago for research showing how people's choices on economic matters - whether on savings or game shows like "Deal or No Deal" - are not always rational.

The work discusses how humans are often irrational beings whose behavior can be influenced, or "nudged", through their environment.

Over the years, Richard H. Thaler-announced as the victor of the 2017 Nobel Prize in economics on Monday-has provided a necessary corrective to traditional economic theory.

"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.

The award-giving body also announced a prize-money of 9 million Swedish crown ($1.1 million) for Thaler. "This is quite a amusing question", he said.

"I will say that I will try to spend it as irrationally as possible", he said.

As one of the founders of behavioural economics, Thaler showed the relevance of other social sciences in economic analysis.

According to Thaler, the flies are his favorite example of a "nudge" - a harmless bit of engineering that manages to "attract people's attention and alter their behavior in a positive way, without actually requiring anyone to do anything at all".

Thaler and others have already "nudged" individuals to make better decisions about their financial security, helped regulators better understand the drivers of excessive risk-taking, and provided investors with a better understanding of the perils of repeating past mistakes.

In the 2015 movie The Big Short, Thaler made a cameo with pop star and actress Selena Gomez.

The Sveriges Riksbank (Swedish National Bank) Prize in Economic Sciences in Memory of Alfred Nobel was first awarded in 1969, almost seven decades after the series of prestigious prizes that Nobel called for.

It was not part of the original group of awards set out in dynamite tycoon Nobel's 1895 will.

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