By now you have heard that Richard Thaler won the 2017 Nobel Prize in Economic Sciences because his, “… contributions have built a bridge between the economic and psychological analyses of individual decision-making.” What a bridge! To my knowledge, there are no sub-fields in economics that haven’t been infused with psychological insights. For example, see survey articles on behavioral and experimental economics and:
- Public Policy (Chetty, 2015)
- Law and Economics (Camerer and Talley, 2007)
- Industrial Organization (Grubb and Tremblay, 2015)
- Labor Economics (Dohmen, 2014)
- Macroeconomics (Duffy, 2014)
Also, current and recent AEA Presidents Al Roth (2017), Robert Shiller (2016), Richard Thaler (2015) are an acknowledgement that psychology and economics are at the cutting edge of the economics discipline. The entrepreneurship of Richard Thaler is a big reason for that.
Other people will write more thorough reviews of Thaler’s research. The review at Marginal Revolution, is the best I’ve read this morning. At MobLab, we have a number of games related to Richard Thaler’s research. Dictator and Ultimatum games help to showcase issues related to fairness, something Richard Thaler has written a lot about. Our survey-based experiments help illustrate the power of framing effects like mental accounting, endowment effects, acquisition utility v. transaction utility, and so on. This week, I will build into our pre-built survey-based experiments questions from his classic piece on constraints on profit seeking.
I have been a big fan of Thaler’s research and thoroughly enjoyed the books Quasi Rational Economics and Misbehaving. If I were teaching a class on behavioral economics, I would probably use Misbehaving. It’s a good intellectual autobiography, helps show the evolution of the field, and also reveals neat backstories to different research topics. In Fall 2018, I will be teaching a class on State and Local Public Finance and I’ll be assigning his most famous work on Nudges which has vast implications for public pensions, tax compliance, and more.
Congratulations to Richard Thaler!