![]() ![]() ![]() He has authored or edited four other books: Quasi-Rational Economics, The Winner's Curse: Paradoxes and Anomalies of Economic Life, and Advances in Behavioral Finance (editor) Volumes I and II. In 2015 he published Misbehaving: The Making of Behavioral Economics. Sunstein) of the global best seller Nudge (2008) in which the concepts of behavioral economics are used to tackle many of society’s major problems. He investigates the implications of relaxing the standard economic assumption that everyone in the economy is rational and selfish, instead entertaining the possibility that some of the agents in the economy are sometimes human. Thaler studies behavioral economics and finance as well as the psychology of decision-making which lies in the gap between economics and psychology. Thaler is the 2017 recipient of the Nobel Memorial Prize in Economic Sciences for his contributions to behavioral economics. Nudge for the greatest benefit of mankind. So please raise your glasses and join with me in a toast, in the proper Swedish manner of course – no clinking. Tonight we will modify that phrase to honour Alfred Nobel. That phrase which is meant as a plea is “Nudge for good”. So I would like to end this with the toast I promised using a phrase I write when I’m asked to sign books. People are being helped to save more for retirement, more poor kids – especially girls – are going to school, peasant farmers are retrieving more reliable harvests, and we are all being successfully nudged to use less energy. Around the world, governments and NGOs are working with behavioural scientists to design and test scientifically informed policies that are working. Each of these problems is, at its heart, behavioural.īut in these times when all news seems to be bad – or fake – I can report on progress. Consider the most important issues facing the world now such as climate change, health care, an ageing population, income inequality, xenophobia, and mounting threats to world peace. We need these helpful nudges now more than ever. As Cass Sunstein and I have argued, we can often do so with simple nudges that point people in the right direction, but don’t force anyone to do anything. Incorporating human behaviour into economic models improves the accuracy of economics, just as those fancy microscopes improve the resolution of images in biochemistry.Ĭrucially, once we acknowledge that humans are fallible creatures, we can ask how to help them make better decisions. ![]() But to make accurate predictions we need to enrich those theories by adding insights from other social sciences. To be sure, we still need traditional economic theories. We humans are absent minded, tend to be a little overweight, we procrastinate and are notoriously over confident. Over the past 40 years, along with many colleagues, some of whom are here, I have been trying to figure out how to introduce humans into economic theory. So – not a lot of laughter over there – we have a disconnect between the people economists know and the Econs that appear in their theories. Indeed economists love telling stories that ridicule the flawed decision making made by others, such as their spouses, offspring, Deans, students, political leaders, and – please keep this part to yourself – one even hears stories criticising the decision making made by the esteemed members of the Economics Nobel Prize committee. Furthermore economists engage with humans on a rather regular basis, and often find their behaviour to be deeply flawed. Customers and employees are human, even most CEOs are quite human. Now the presence of humans in our economy might seem rather obvious. These Econs solve problems like a super computer, have the willpower of saints, are free of emotion, and have little regard for their fellow Econs. ![]() Instead of humans, the world described by economists in text books is populated by a species referred to as homo economicus but I like to just call them Econs. So what did I do to get up here? I discovered the presence of human life in a place not far, far away, where my fellow economists thought it did not exist: the economy. And what about the beautiful speech Kazuo Ishiguro just gave? Breaking a one year tradition, he managed to win the Literature Prize without a single hit song. Their discoveries of colliding black holes, genes that know the time of day, and images of biomolecules using cryo-electron microscopy are rather daunting. My feelings of humility are accentuated by the invidious comparisons with my fellow Laureates. I’m truly, truly humbled to be standing here today. I had to run back because I decided we had a deficiency of toasts. Your Majesties, your Royal Highnesses, Excellencies, dear laureates, ladies and gentlemen. Thaler’s speech at the Nobel Banquet, 10 December 2017. ![]()
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