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Richard Thaler Wins Nobel Prize for Showing the Research in Behavioral Economics

10 October 2017
Richard Thaler Wins Nobel Prize for Showing the Research in Behavioral Economics

University of Chicago professor Richard Thaler won the 2017 Nobel Economics Prize for his research on behavioral economics, the study of how humans make decisions.

According to the panel which voted on this category, Thaler's work contributed to an understanding of the psychology of economics.

When India announced demonetisation last November, Nobel Prize victor Richard Thaler described it as a "policy I have long supported" but also remarked "damn" when it was brought to his notice that the government was introducing ₹2,000 currency notes. When asked if a point has come when behavioural economics can be used for making tools for setting public policy, Thaler told Smith, "Well sure".

Speaking by telephone to a news conference immediately after he was announced as the prize victor, Thaler said the most important impact of his work is "the recognition that economic agents are humans".

"He's a pioneer of integrating economics and psychology", the Nobel committee stated during the prize announcement.

It is worth 9 million kronor (1.1 million dollars), the same as the other Nobel prizes in medicine, physics, chemistry, literature and peace.

While few economists are household names, past winners have included Milton Friedman, in 1976, whose work is a cornerstone of current monetary policy, and James Tobin, in 1981, who proposed countries should tax financial transactions. Mr. Thaler made a cameo appearance as himself in "The Big Short", the 2015 film centered on the housing bubble collapse that shook financial markets a decade ago.

He's the director of the Center for Decision Research, and is the co-director, with now fellow Nobel laureate, Robert Shiller, of the Behavioral Economics Project at the National Bureau of Economic Research.

That "incorporates more realistic analysis of how people think and behave when making economic decisions", it said.

Last year, Oliver Hart and Bengt Holmström shared the prize for their contributions to contract theory.

While Americans have dominated the Nobel science and economics prizes, another category of researchers - women - have been few and far between.

The economics prize was established in 1968.

"I will try to spend it as irrationally as possible!" the 72 year-old economist was quoted by BBC.