When Prof. Richard Thaler, behavioral science and economics, University of Chicago, first stepped onto Cornell’s campus to take on a professorship at the Graduate School of Management, he was already working on material that won him a Nobel prize on Monday.
Thaler took home the prize in what was apparently an overdue win for the 2017 Nobel Memorial Prize in Economics Sciences, The New Yorker said. Thaler turned economists’ attention to human behavior in a discipline perhaps better known for its emphasis not on humanity, but on the numbers.
“In order to do good economics, you have to keep in mind that people are human,” Thaler told The New York Times after his victory was announced.
Thaler’s genius comes from questioning a simple but precarious assumption: that human behavior is inherently rational. Thaler, who has been a long time partner of Princeton psychologist Daniel Kahneman — also a Nobel Prize winner — questioned this assumption, arguing that people behave in predictably irrational ways, The Times reported.
For example, Thaler argued for making participation in retirement plans or school lunches the default, according to the report. As people are far less likely to act than to stay with the status quo, more people would benefit if the status quo were the more wholly beneficial option.
Thaler’s field is far from typical in economics. His field of behavioral economics, drifting outside the mainstream, made him a less likely recipient of the Royal Swedish Academy of Science’s greatest academic honor.
“Everybody knew that he was bright, that he was brilliant,” Kahneman said in an interview with The New Yorker. “But he wasn’t doing what they considered to be economic research. He wasn’t doing anything mathematical. His story is the success story of behavioral economics.”
Thaler’s 1980 paper “Toward a Positive Theory of Consumer Choice” was one of the first instances of his publicly proposing his theory, according to The New…