Richard Thaler, Booth professor of behavioural science and economics, was awarded the 2017 Nobel Prize in Economic Sciences. The 9 million Swedish kronor ($1.1M) and eternal glory belongs to Thaler for his contribution to “understanding the psychology of economics”. According to the Royal Swedish Academy of Sciences, Thaler’s “contributions have built a bridge between the economic and psychological analyses of individual decision-making. His empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioral economics.“
Thaler gained his master’s degree and PhD from the University of Rochester and joined the Chicago Booth faculty in 1995. He teaches several PhD classes in behavioral economics. MBA students can join his summer class in Managerial Decision Making or Choice Architecture in Practice.
Thaler is an author of several books including best-selling Nudge and Misbehaving. For a long time, He has been considered one of economists with highest impact on the real world as his concept of “libertarian paternalism” was adopted by politicians around the world. For example, David Cameron, the former prime minister of the UK, set up whole government “nudge unit”. The unit focused on redesigning choice architecture to promote socially beneficial choices without limiting personal freedom to decide. Recommendations of the unit were applied on topics ranging from fine collection to organ donation.
Thaler is not the first behavioral economist awarded the Nobel Prize. One of his frequent collaborators, Daniel Kahneman, won the prize in 2012. Robert Shiller, another famous behavior economist, succeeded in 2013. Nevertheless, the discipline remains controversial in the economics world, which often attempts to abstract from human psychology and irrationality. Robert Shiller included in his assessment of this year’s award a story that Richard Thaler shared with him decades ago. According to the story, Merton Miller, another Booth Nobel Prize laureate, “would not even make eye contact (with Richard Thaler) when passing him in the hallway at the University of Chicago”. It is a great testimony of Booth’s tolerance and promotion of intellectual diversity.
Chicago Booth and the University of Chicago Department of Economics belong among the most successful economics schools in terms of Nobel Prize laureates. Richard Thaler is 8th Booth faculty member who won the prize during the 49 years of the economics Nobel prize history. He follows Eugene Fama (2013), Myron Scholes (1997), Rober Fogel (1993), Gary Becker (1992), Richard Coase (1991), Merton Miller (1990) and George Stigler (1982). Another 21 Nobel laureates are currently or were previously associated with the University of Chicago illustrating its excellent research reputation.
When asked how we would spend the prize money, Richard Thaler said: “As irrationally as possible”. So, have fun and congratulations!