U.S. economist Richard Thaler won the Nobel Prize in economics Monday for his research on how human traits affect individual decisions as well as financial markets.
The Royal Swedish Academy of Sciences recognized Mr. Thaler, a professor at the University of Chicago for more than two decades, for work that has helped bridge economic and psychological analyses.
Mr. Thaler “has given us new insight into how human psychology shapes decision-making,” the academy said.
Asked to describe the takeaway from his research, Mr. Thaler told the academy and reporters: “The most important lesson is that economic agents are humans and that economic models have to incorporate that.”
The 72-year-old economist will collect a 9 million Swedish kronor ($1.1 million) cash award funded by the Swedish central bank.
“I’ll try to spend it as irrationally as possible,” Mr. Thaler said.
He is known well beyond the world of economics. 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.
Mr. Thaler is from New Jersey and earned his Ph.D. from the University of Rochester in 1974. Since 1995, he has taught at the University of Chicago, following earlier stints at Rochester and Cornell University.
In 2015, he served as president of the American Economic Association.
Among other things, he has studied the “endowment effect,” the idea that people more highly value an item if they own it; how concerns about fairness can restrain a firm’s price-setting and wage-setting behavior; and how public policy can influence people to behave in better, healthier ways by way of “nudges” instead of coercion.
He outlined the latter idea in a popular book, “Nudge,” which he co-wrote in 2008 with Cass Sunstein.
Mr. Sunstein, a Harvard University professor and former White House official under President Barack Obama, called his friend “the Charles Dickens of the economics profession, because he has a sense of human foibles,” and someone who “has really revolutionized how economists think about people.”
Mr. Thaler’s influence on public policy is all around us, Mr. Sunstein said, from efforts to encourage auto-enrollment in retirement-savings plans to antismoking programs.
“I don’t think there’s an economist alive who’s had as large an impact on the economics profession and the world as Thaler,” Mr. Sunstein said. He added, “His influence on public policy and law is so great that people who have never heard the name Thaler and wouldn’t be able to say what behavioral economics is are marching to the beat of his drum.”
Last year, Oliver Hart of Harvard University and Bengt Holmström of the Massachusetts Institute of Technology shared the prize for work on contracts and, among other things, executive pay.
The award, which was established in 1968, wasn’t among the original Nobel Prizes established by Alfred Nobel’s 1895 will and first awarded in 1901.
