A Nobel Prize That Helps Make Better Decisions

The 2017 Nobel Prize in Economic Sciences has been awarded to Richard Thaler "for his contributions to behavioral economics", a discipline that seeks to understand economic behavior using insights from psychology. American, 72-years old, Prof. Thaler works at University of Chicago.

"By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes", says the motivation.

In a video-comment, Nicola Gennaioli, Full Professor of Behavioral Finance at Bocconi University, explains that the use of psychology "stands in stark contrast to the traditional economic approach whereby humans are emotionless optimizing calculators. Besides helping to better understand the world, Thaler's results have had a profound impact on economic policy. His research helps individuals make better economic decisions and governments design better economic policies".

The idea of incorporating psychological insights into economic analysis had already been acknowledged with a Nobel Prize in Economic Sciences, in 2002, given to Daniel Kahneman.

Prof. Thaler is known to a large readership as a co-author, with Cass Sunstein, of Nudge: Improving Decisions About Health, Wealth, and Happiness, a best-seller that explains how people can be "nudged" to correct their wrong choices through a sort of paternal libertarianism, without altering their will.