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Headshot of Richard Thaler in his younger days

The Human Side of Economics

As a graduate student in economics, Richard H. Thaler divided his time between studying economic theories and collecting stories that appeared to undermine those theories.

At a dinner party, for instance, he whisked away a bowl of cashews to prevent his guests from ruining their appetites for dinner. Economic theory posits that it’s always better to have more choices, so why were his guests happy to see the cashews disappear?

On another occasion, he and a friend had free tickets to a basketball game 75 miles away but skipped it because of a snowstorm. Had they paid for the tickets, Thaler knew, they would have gone to the game—despite the prevailing economic belief that sunk costs don’t matter.

How to reconcile these instances of irrational behavior with the standard economic assumption that people act in their best interest? That question put Thaler on a path to a groundbreaking career in the field now known as behavioral economics.

Influenced by the work of psychologists Daniel Kahneman and Amos Tversky, Thaler began to apply insights from psychology to examine how everyday people make economic decisions. In his pioneering research, he has studied everything from self-control and loss aversion to how consumer concerns about fairness affect business practices.

In the international best seller Nudge, for instance, he and law professor Cass R. Sunstein outlined ways to leverage psychology to guide people toward better choices—such as automatically enrolling employees in a retirement plan, or making organ donation the default mode on driver’s licenses. Today, countries and businesses all over the world are using his frameworks to encourage saving and improve lives.

In 2017, Thaler won the Nobel Prize in Economic Sciences in recognition of these contributions. “Thaler’s work has had a significant impact on real-world policymaking,” said Per Strömberg, chairman of the Nobel Committee, in the award ceremony. “His idea of nudging people to save more has helped to create literally billions of dollars of retirement wealth for ordinary people throughout the world.”

Richard Thaler smiles on his balcony overlooking green trees

“My mantra is: If you want to get people to do something, make it easy. Remove the obstacles.”
—Richard H. Thaler

Nobel Prize–Winning Impact

Richard H. Thaler’s Nobel Prize–winning work has played a critical role in advancing the field of behavioral economics, influencing public policy, and improving people’s lives worldwide.

For example:

  • The United Kingdom’s “Nudge Unit” has leveraged Thaler’s work to increase the number of workers with pensions by 20 percentage points, triple the number of people who include charities in their wills, and bring in £210 million in unpaid taxes in one year.
  • Thaler’s “Save More Tomorrow” (SMarT) program influenced the 2006 Pension Protection Act, which encouraged companies to automatically enroll employees in retirement savings plans. Thaler estimated that by 2013, this “nudge” had increased annual savings in the United States by $7.6 billion.
  • According to a 2014 study, 51 countries worldwide had established state-led policy initiatives to capitalize on behavioral science ideas, such as those introduced by Thaler.
Richard thaler speaking at a podium during his Nobel Prize press conference

Milestones

Milestones
Chicago Booth Harper Center

1967

Earned BA in economics from Case Western Reserve University

1967
Chicago Booth Harper Center

1974

Earned PhD in economics from the University of Rochester

1974
Chicago Booth Harper Center

1995

Joined the faculty at Chicago Booth

1995
Chicago Booth Harper Center

2008

Published global best seller Nudge with Cass R. Sunstein

2008
Chicago Booth Harper Center

2015

Appeared as himself in the hit movie The Big Short

2015
Chicago Booth Harper Center

2015

Published Misbehaving: The Making of Behavioral Economics

2015
Chicago Booth Harper Center

2017

Received the Nobel Prize in Economic Sciences for his contributions to behavioral economics

2017
Chicago Booth Harper Center

2018

Elected a member of the National Academy of Sciences

2018

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