Explorer

Richard Thaler wins 2017 Nobel prize in economics

STOCKHOLM: The Nobel prize in economics has been awarded to Richard Thaler of the University of Chicago for research showing how people's choices on economic matters — whether on savings or game shows like "Deal or No Deal" — are not always rational. The 9-million-kronor ($1.1-million) prize was awarded to the academic for his "understanding the psychology of economics," Swedish Academy of Sciences secretary Goran Hansson said Monday. Thaler is considered one of the founding fathers of behavioral economics, a field that shows that far from being the rational decision-makers described in economic theory, people often make decisions that don't serve their best interests. That could include, for example, refusing to cut their losses when their investments plunge in value or making big bets at the casino because they are convinced their hot streak will continue. The illogical behavior has economic consequences: People don't save enough for retirement. They make investments — in houses in the mid-2000s, for instance, when prices are already dangerously high. The Nobel committee said Thaler has provided a "more realistic analysis of how people think and behave when making economic decisions." Speaking by phone to a news conference immediately after he was announced as the prize winner, Thaler said the most important impact of his work is "the recognition that economic agents are humans." In 2015, Thaler had a cameo alongside pop star Selena Gomez in the film "The Big Short," about the global financial crisis. In the scene, he explains the "hot hand fallacy," in which people think whatever's happening now is going to continue to happen into the future. Asked at the news conference Monday if he thought this observation applied to the U.S president, who had success as a business executive before entering politics he said: "As to President Trump, I think he would do well to watch that movie." In 2008, Thaler co-wrote a paper examining the choices contestants face in games such as the TV show "Deal or No Deal," including about how early outcomes affect decisions later in the game. In the paper, Thaler and the authors say that contestants become bolder in their choices when their initial expectations of how much they would win are shattered, whether by big losses or big gains. On Monday, Thaler told the news conference that he will likely use the prize money in ways consistent with his research. "I will say that I will try to spend it as irrationally as possible," he said. Peter Gardenfors, a member of the prize committee, said that one of the practical applications of Thaler's work was development of the "save more tomorrow" strategy for retirement-savings accounts. Under that model, many employees who resist immediately raising the portion of their salary put into retirement accounts will agree to raise their contributions in the following year and usually continue with the higher level. The economics prize is something of an outlier — Alfred Nobel's will didn't call for its establishment and it honors a science that many doubt is a science at all. The Sveriges Riksbank (Swedish National Bank) Prize in Economic Sciences in Memory of Alfred Nobel was first awarded in 1969, nearly seven decades after the series of prestigious prizes that Nobel called for. Despite its provenance and carefully laborious name, it is broadly considered an equal to the other Nobel and the winner attends the famed presentation banquet.
View More
Advertisement
Advertisement
25°C
New Delhi
Rain: 100mm
Humidity: 97%
Wind: WNW 47km/h
See Today's Weather
powered by
Accu Weather
Advertisement

Top Headline

Another Blow To Congress As I-T Dept Serves Rs 1,700-Crore Notice Ahead Of Lok Sabha Elections: Report
Another Blow To Congress As I-T Dept Serves Rs 1,700-Crore Notice Ahead Of Lok Sabha Elections
'Kejriwal Ko Ashirwaad': Wife Sunita Kickstarts WhatsApp Campaign For Delhi CM
'Kejriwal Ko Ashirwaad': Wife Sunita Kickstarts WhatsApp Campaign For Delhi CM
Lok Sabha Polls 2024: JD(S) Announces Candidates For 3 Seats; HDK To Contest From Mandya
Lok Sabha Polls 2024: JD(S) Announces Candidates For 3 Seats; HDK To Contest From Mandya
Arvind Kejriwal Arrest: UN Steps In As Case Against Delhi CM Heats Up Ahead Of Lok Sabha Elections
Arvind Kejriwal Arrest: UN Steps In As Case Against Delhi CM Heats Up Ahead Of Lok Sabha Elections
Advertisement
for smartphones
and tablets

Videos

Mukhtar Ansari Death: Jailed Gangster-Politician Mukhtar Ansari Dies Of Heart Attack | ABP NewsABP Shikhar Sammelan 2024: Rajnath Singh explains the current scenario of Indo-China BorderMukhtar Ansari Death: Gangster Turned Politician Passes Away From Cardiac Arrest  | ABP NewsMukhtar Ansari Death: Akhilesh Yadav slams state govt over law & order, calls it 'govt anarchy'

Photogallery

Embed widget