Economy

How Modi put Nobel Prize victor Richard Thaler's 'nudge theory' to use

How Modi put Nobel Prize victor Richard Thaler's 'nudge theory' to use

Thaler, who is considered the "father of behavioral economics", received the Nobel Memorial Prize in Economic Science on Monday for his work on integrating economics with psychology, the Royal Swedish Academy of Sciences reports.

"I think the most important impact (of my research) is the recognition that economic agents are human and economic models have to incorporate that", Thaler, a professor at the University of Chicago Booth School of Business, said in call broadcast at the Nobel news conference. Thaler's research has helped economists understand that "human behavior often contradicts traditional economic logic", according to a University of Chicago news release.

Thaler “is a pioneer in behavioral economics, a research field in which insights from psychological research are applied to economic decision making, ” a background paper from the academy said.

To address these shortcomings, Thaler and Benartzi pioneered their "Save More Tomorrow" (SMarT) program created to help employees increase their savings rates gradually over time by overcoming self-control problems and other behavioral biases.

Their book, titled Nudge: Improving Decisions about Health, Wealth, and Happiness became popular with some western politicians seeking ways to encourage their citizens to save and live healthily, without incurring voters' wrath for raising taxes or banning behaviour outright.

More news: Police find auto sought in Las Vegas shooting

Thaler made a cameo appearance in the 2015 movie "The Big Short" about the credit and housing bubble collapse that led to the 2008 global financial crisis.

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

Thaler receives about $1.1 million for winning the award.

The last of the Nobel prizes to be awarded this year is something of an outlier — Alfred Nobels will didnt call for its establishment and it honors a science that many doubt is a science at all.


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