Given how many psychologists and economists have already won the Royal Swedish Academy of Sciences Sveriges Riksbank Prize in Economic Sciences 1 — Daniel Kahneman (2002), Robert Shiller, Eugene Fama (2013) 2 — it seems contradictory to suggest that the Nobel Committee is finally recognizing the impact of behavioral psychology on economic decision-making by handing its 2017 award to Richard H. Thaler.
Counterintuitive as that history may make this proposal, it is consistent with the history of the Nobel Prize. It is, after all, funded by money made in dynamite. If any group wants its legacy to be that organizations, governments and companies need to pay more attention to how humans operate in the real world, it’s this one.
Officially, the Riksbank prize was for Thaler’s work on “the consequences of limited rationality, social preferences, and lack of self-control, [showing] how these human traits systematically affect individual decisions as well as market outcomes.”
Unofficially, Thaler, perhaps more than anyone else, is best described as the father of behavioral economics. The repercussions of his work in helping organizations better understand human behaviors — and why traditional economics has failed so badly at this — are hard to overstate.
RTFA. Go read Thaler. If you’re anywhere near Dartmouth, try to find where Professor Danny Blanchflower is drinking tonight!
Thanks, Barry Ritholtz