US economist wins Nobel prize for work in behavioural economics

The Nobel jury said Dr Richard Thaler's research had bridged the gap between economics and psychology.
The Nobel jury said Dr Richard Thaler's research had bridged the gap between economics and psychology.

STOCKHOLM • American economist Richard Thaler won the Nobel economics prize yesterday for showing that economic and financial decision-makers are not always rational, but mostly deeply human.

Bridging the gap between economics and psychology, the research of Dr Thaler, 72, who teaches at the University of Chicago, focuses on behavioural economics, which explores the impact of psychological and social factors on decisions by individuals or groups in the economy and financial markets.

"He has made economics more human," the Nobel jury said, calling him a pioneer on integrating economics and psychology.

Dr Thaler brought to prominence the idea of "nudge" economics, where humans are subtly guided towards beneficial behaviours without heavy-handed compulsion, the theme of a 2008 book he co-wrote.

"In total, Richard Thaler's contributions have built a bridge between the economic and psychological analyses of individual decision-making," the award-giving body said, on announcing the nine million Swedish kronor (S$1.5 million) prize.

"His empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioural economics, which has had a profound impact on many areas of economic research and policy."

Dr Thaler is one of the leading experts in the relatively new field. He has studied everything from how people save for retirement to how National Football League teams select players.

He earned his PhD in economics at the University of Rochester in 1974 and appeared briefly in the 2015 film The Big Short.

The economics prize was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel's 1895 will.

The United States has dominated the economics prize, with American economists accounting for roughly half of the laureates since the inception of the award. Indeed, between 2000 and 2013, American academics have won or shared the prize every year.

The total amount for each of the prizes this year is up from eight million kronor last year.

The economics award brings to an end this year's Nobel prize cycle.

AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS, WASHINGTON POST

A version of this article appeared in the print edition of The Straits Times on October 10, 2017, with the headline 'US economist wins Nobel prize for work in behavioural economics'. Print Edition | Subscribe